NEEP identified two innovative and advanced policy mechanisms to advance the energy grid to meet climate goals: 1) Integrating buildings as grid assets and enabling grid optimization with building-level zero carbon energy production and 2) developing power systems with zero-carbon energy.
While states have various plans to achieve decarbonization, it is likely that more end uses in buildings will become electrified, placing new and different types of demands on the energy system. Distributed energy resources and other grid flexible technology will become more prevalent, changing how and when energy is used. Yet current energy regulation does not easily incorporate these technologies, nor is it able to correctly value their benefits. Decarbonizing the energy system will require states to modify the ways that they regulate and oversee grid and energy infrastructure. States and regulatory bodies can start shifting goals and policy objectives to include state climate goals by implementing the following policies:
- Prioritize Innovative Demand-Side Grid Resources: Incorporating demand side energy resources will require a significant change in how energy regulation and planning is done. This includes energy pricing, the role of utilities versus private actors, and how to regulate a more dispersed and diverse energy system. Programs that explore these new policies – including energy storage, community solar, and geothermal micro-grids – exist now, but states must look to incorporate changes into the regulatory space to embrace this technology on a wider scale. For more information about how data is evolving to help plan, forecast, and assess the value of these resources, see NEEP’s .
- Regulate for Energy, Climate, and Equity: Shifts in state climate and equity goals should also be reflected in approaches to state energy regulation. This can be done through legislation that shifts a regulatory agency’s mandate, , or by modifying current regulations to include additional mandates that are reflective of state policy.
- Align Energy Regulation with Clean Energy Policy: Unlike the current grid infrastructure, where supply side resources are limited to a few resource types, energy efficiency and distributed energy resources take many forms. States have prioritized these policies in climate plans, but regulators still need tools to evaluate and incentivize them. While states have started the process of incorporating non-pipe or non-wires alternatives into infrastructure planning, steps should be taken to embed clean energy policy into important regulatory tools such as cost-benefit analysis, utility business model structures, and transmission and distribution planning requirements.
- Plan for a Climate Resilient Grid: Climate change will bring with it extraordinary weather events. To accommodate these changes, utilities and regulatory actors will need to reconsider how they plan and monitor their territory of the grid. To understand the effects of climate on the system, utilities will need to understand changes in their service region, identify weak spots in their infrastructure, and recognize potential ways the grid will need to adapt to the changing climate and landscape.