Electricity in Transition

A survey of the current landscape of the U.S. electricity sector

Dramatic changes are underway in the electricity sector. A convergence of factors is putting unprecedented stress on traditional actors in the electric utility industry, from merchant generators to vertically-integrated utilities to state and federal regulators. These include accelerated technological change, shifting consumer preferences, business model disruption, a rapidly evolving fuel market, and a changing public policy landscape; this stress is especially acute within the context of slow to flattening demand growth. More than ever, the electricity sector is the focus of public policy debates about the relationship between climate change, energy security, and economic growth.

Over the last decade or so, several visions of a new electricity system have been put forth by a variety of stakeholders. From the concept of a national grid, to the evolution of a smart grid, to a network of distributed generation systems and microgrids, there has been a steady stream of competing or complementary visions, each designed to address one or all of the perceived challenges to the sector. At the same time, each category of challenges, whether it is reliability, decarbonization, cybersecurity, congestion issues, or innovation, have all witnessed state and regional initiatives seeking to resolve or alleviate stresses on the system or initiate further reform. The latest iteration, sometimes called grid 2.0 or the grid of the future, attempts to integrate all of these.

Policymakers and industry have made positive strides but certainly have not resolved a great many of these existing challenges. In some cases, the accumulating regulations have further complicated a picture already made complex by new demand patterns, technology and customer options, and a rapidly evolving supply mix. Many of the main initiatives addressing the future of the electricity sector broadly consist of groups focusing one or more of these fundamental challenges or promoting a specific model/outcome as a solution (e.g. distributed generation and the promotion of micro-grids, greater regional integration). Very few, however, attempt to comprehensively tackle the broad suite of challenges facing the sector and chart plausible policy pathways for reform that balance economic, environmental and security interests.

Project Approach

The CSIS Energy Security and Climate Change Program seeks to leverage its strong reputation as a bipartisan, non-advocacy think tank to bring together a discussion of the various challenges facing the electricity sector, the market and policy solutions being pursued, and the disparate voices pushing for reforms of various kinds. ENS will survey the current landscape in the electricity sector, and help drive a public conversation about the role of utilities and regulators and the structure of the electricity sector as the United States seeks to find a balance among climate priorities, energy security, and economic growth.

The program proposes to convene a series of broad, high-level, and policy-relevant public discussions on the changing dynamics in the electricity sector.

Key questions this series will address include:

What are the main issues confronting participants in the U.S. electricity sector, including state and federal regulators, electric utilities, merchant generators, wholesale market operators, and consumers?
How rapidly are various changes challenging traditional operational models and to what extent can the portended changes be managed under existing systems?
Will these technological drivers and shifting supply and demand trends force change in the utility industry, and if so, how fast? What is the risk to the industry, investors and to consumers of stranded assets? How are these various changes affecting various utility stakeholders differently?
What is the role of state and federal regulators in accelerating these changes/promoting new technologies? How have they come together to deal with issues of overlapping jurisdiction? What innovative ways have regulators attempted to deal with these complex changes?
What role should state and federal regulators play in the evolution of the power system? How can regulators incentivize change among utilities and enable greater efficiencies and services without saddling consumers with unacceptable levels of risk?
How can regulators and utilities work to promote reliability in a system that is increasingly dynamic and heterogeneous in both demand and supply?
Do utilities and regulators agree on the need for change? Do various utilities agree with each other on the need for change? What kind of changes are utilities and regulators making operationally, technologically, and culturally? Is change more rhetorical than real?