DOE: Utilities must act now to unlock latent grid capacity

The Department of Energy’s latest “liftoff” report, focused on innovative grid technologies, has a few marked differences to prior installments. First, the bulk of the 20-odd solutions highlighted are already primed for immediate deployment and scale. And, unlike clean hydrogen or geothermal, they’re poised to serve as near-term stopgap measures, rather than as long-term solves.

The report, out today, found that a suite of solutions including advanced transmission and grid enhancing technologies (or GETs) can be deployed without increasing costs for either utilities or — inevitably, ultimately — their rate-payers. However, traditional incentive structures present a barrier; the status quo encourages utilities to invest in new transmission or generation over improvements to the existing grid. 

• The top line: Deploying technologies like advanced conductors, dynamic line ratings, and virtual power plants has the potential to increase transmission and distribution capacity in the U.S. to support up to 100 gigawatts of incremental peak demand, DOE found. That deployment, which could happen over the next three years, would represent a sizable chunk of predicted peak demand growth — and potentially defer billions in transmission costs. Deployment, though, is slow.
• The market grounding: The report, which is the tenth that the department has released in an attempt to jump-start industry investment in key technologies, focused on how to make the most of the existing grid. New generation will of course still be needed given the load growth expected; indeed, one report from the International Energy Agency found that reaching global climate goals will require doubling the capacity of the existing grid. But, as DOE officials emphasized on a press call about the report, there are a suite of proven technologies that can help make up the gap.
• The current take: Maria Robinson, director of DOE’s grid deployment office, said it is important that utilities explore the use of these technologies in tandem with one another, because “no one technology is a silver bullet” on its own. “Utilities can really look to deploy these individually and in strategic combination with one another based on their own individual needs and objectives,” she added. “Unfortunately, deployment at scale is still lagging relative to the potential value of these solutions.”

Deploying the grid technologies DOE outlined in its report could reduce the immense pressure facing the existing transmission system thanks to factors including electrification, the proliferation of data centers and domestic manufacturing, and the fact that building new transmission can take up to ten years.

Unlike technologies like advanced nuclear or advanced geothermal that DOE has researched previously, the report found that deploying advanced grid solutions need not take years or even decades. In fact, a significant scale-up of utility deployment of technologies like dynamic line rating is possible in under three months, with the potential to increase transmission capacity by up to 30%. And it could come at less than 5% of the cost of rebuilding the line to expand capacity.

The goal, DOE officials said, is to spotlight the immediate potential of the technologies to provide a few extra years of cushion while the U.S. builds up additional grid capacity for long-term peak load.

“What we’re trying to do with this liftoff report is show people where the business case is and how this actually can unlock existing supply to shave off the peak demand that’s coming as it buys time for other technologies to also get lifted off,” said Vanessa Chan, who leads DOE’s office of technology transitions.

Achieving “liftoff” within three to five years, DOE said, will require six to 12 large operational deployments for each technology, either deployed together or individually.

While the liftoff report represents the most comprehensive analysis of the potential of these technologies, DOE has long encouraged their adoption via, for instance, its Grid Resilience and Innovation Partnerships program. The latest funding round, in October, dedicated $1.6 billion to projects focused on clearing the grid’s renewable integration “logjam”; high-voltage direct current projects got particular attention, and DOE said at the time that it is looking to fund reconductoring projects in the future.

Misaligned incentives

Despite the immense potential (and instant gratification) of these technologies, misaligned incentives remain a major barrier to scaled adoption — even as it is increasingly clear that the grid is ill-prepared to weather the load growth to come.

For many utilities, expensive long-term infrastructure projects like building new transmission lines are more attractive than GETs; despite higher up front costs, they allow utilities to earn a set rate of return. A change to that structure could go a long way toward increasing deployment of grid-expanding tech, DOE said.

The utility business model is “biased towards a stasis approach rather than a forward-leaning approach,” said Avi Gopstein, who works for the grid deployment office and is one of the authors of the report. Under the status quo, “like for like” replacements are treated differently than capacity expansions, he added. 

“What we need to think about as we look strategically into the future is how utility commissions and regulators can treat any infrastructure investment similarly,” Gopstein said. “If we can get more out of a replacement or an end-of-life investment, we can expand capacity of the system without treating it as something fundamentally different from just replacing the old asset with the same thing that was there before.”

Utilities themselves are already recognizing that they need that help. 

According to Jigar Shah, who heads DOE’s loan programs office, applicants for funding are requesting $25 billion for transmission-related projects. Those projects play a foundational role for all of the other manufacturing and energy generation grants and loans DOE doles out, Shah said, because each of those grantees and applicants needs to be able to connect to the grid.

“If our applicants can’t connect to the grid quickly, that’s going to meaningfully impact our ability to underwrite their debt,” he said. And, as the liftoff report highlights, “we can get a lot more out of the infrastructure we’ve already paid for with advanced grid solutions and demand flexibility, with energy storage, and virtual power plants.”

Deploying dynamic line rating at scale across the U.S., for instance, could unlock at least 10-30% more grid capacity, for less than $10 billion of investment, Shah added. Comparatively, utilities spent $26 billion last year on replacing transmission and distribution systems.

Shah emphasized that taking advantage of additional grid capacity can and should start immediately. 

“As we continue to refind and evolve our approaches with advanced grid technologies, we don’t need to let the perfect be the enemy of the good — we should take the great technologies we already have and start deploying them at scale,” he said.

Editor's note: This story was updated on April 24 to correct the fact that Avi Gopstein spoke about the "bias towards the stasis approach" on a press call about the report. A previous version falsely attributed the quote to Avi Shultz, who leads the department’s industrial efficiency and decarbonization office, instead.