January 26, 2021

Nikhil Vijaykar

Midwest Grid Planning: Transparency and Inclusion to Maximize Distributed Energy Resources

Growing customer demand for solar, electric vehicles, energy storage, and other forms of “distributed energy resources” (DERs) has added new considerations to the utility planning model.

Electric utilities have planned, built, and operated distribution grids for over a century. Generally, utilities build grids with one primary objective: meeting peak demand, that is utilities must ensure that distribution infrastructure can handle, without failure, the days (and hours) when customers demand the greatest electricity. When distribution infrastructure ages or nears its capacity, the utility upgrades the transformer, line, or substation. Utilities routinely assess the risk of failure on each distribution system component and plan investment accordingly. However, utilities—even regulated ones— generally do so with little regulatory oversight or public input.

This traditional paradigm of distribution system planning is changing. Growing customer demand for solar, electric vehicles, energy storage, and other forms of “distributed energy resources” (DERs) has added new considerations to the utility planning model.

DERs allow customers to not only be passive consumers of electrons, but also smarter “prosumers”—who produce, store, and shift energy use in ways that benefit the grid.

DERs can play many of the roles that traditional utility infrastructure plays, including providing capacity and regulating voltage. In order to not only accommodate increasing levels of DERs, but also leverage them in ways that avoid wasted spending on “traditional” grid infrastructure (for example, voltage regulators, capacitor banks, feeders, and substations), utility distribution system planning must evolve beyond planning for peak demand. The urgent need for more DERs to help decarbonize the grid means that evolution must proceed rapidly.

How is utility planning changing in the Midwest?

In some Midwestern states, regulators have directed utilities to make distribution planning more transparent and more inclusive of DERs. In 2018, Minnesota established a formal “Integrated Distribution Planning” process. The Minnesota Public Utilities Commission requires utilities (including Xcel Energy) to make detailed distribution system data available to stakeholders, evaluate DER “non-wires alternatives” to traditional distribution system infrastructure, and analyze the “hosting capacity” of its distribution circuits to determine where upgrades are necessary in order to add distributed generation. The Michigan Public Service Commission also requires its utilities to file detailed long-term distribution plans. The three major investor-owned utilities (Consumers Energy, DTE, and Indiana Michigan Power) have started exploring the integration of both non-wires alternatives and hosting capacity analysis into its distribution planning process.

Recognizing the importance of changing the traditional distribution planning paradigm, other Midwestern states including Illinois and Ohio have previously initiated ambitious stakeholder processes to develop statewide “grid modernization” strategies. Legislators and regulators in those states, however, are yet to institute robust requirements for transparent and inclusive distribution planning. This creates the risk that utilities in those states will make significant grid modernization investments that either could have been avoided with DERs or that do not actually enable greater DER penetration.

As more Midwestern states establish critical and ambitious decarbonization targets, distribution grid planning will become an increasingly important strategy for utilities and stakeholders to ensure those targets are met. ELPC is litigating cases before utility Commissions in several of those states—including in key upcoming cases involving Xcel Energy in Minnesota and the major investor-owned utilities in Michigan—to advance transparent, thoughtful distribution planning regionally.

*This article was written for Rise Up Midwest, a coalition of organizations across the Midwest committed to advancing clean energy.