As Grid Investments Increase with Infrastructure Upgrades, Flexible Policy and Economic Models Become Important Factors

As Grid Investments Increase with Infrastructure Upgrades, Flexible Policy and Economic Models Become Important Factors

Billions of dollars will be spent in the coming years to upgrade ailing infrastructure; smart grids and other energy distribution components comprise an important piece of the investment puzzle.

Maintaining and modernizing a nation’s utilities production and distribution sources is a costly endeavor. To help implement decentralized, secured energy generation for industries and communities, Team Gemini integrates a specific set of technologies in its overall development approach. As part of a closed-loop, consistent renewable energy supply, the application of microgrids within a facility’s utility management infrastructure is integral in combining different energy sources, backup power, utilities like water, and more.

Smart grids and other modern upgrades to traditional utility technologies provide many benefits, but the economic model still needs to be sound in order for those benefits to warrant and sustain any major investments. Finding the right fiscal model to finance billions of dollars’ worth of upgrades and new construction will be a balancing act for a variety of stakeholders, and vary in details based on the location. Discussions around solutions, and efforts to narrow down and implement working models, are ultimately needed to mitigate lost revenues and failed opportunities.

A newly published paper by America’s Power Plan outlines the need for flexible policy and economic options for integrating smart grids throughout infrastructure investment projects:

In a new paper, the nonprofit research group laid out a four-step process for utilities and regulators to choose their goals (clean energy and carbon reduction, fair and low prices for all, and utility-specific grid values) and then compare the cost of making smart grid upgrades versus not making them in order to achieve those goals.

The nonprofit research group also called out for alternatives to traditional rate cases to push utilities to spend less and get more value out of grid modernization, such as conditional rates of return (holding back increases in customer rates if certain performance metrics aren’t met) or budget caps for projects.

[I]t’s going to be critical for utilities and regulators to figure out these issues to get the most out of the upcoming wave of utility investments — and avoid any regulatory backlash against projects that might be seen as soaking the ratepayer for technology without a clear purpose and value.

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