California and Texas Smart Grid Success Shows Way Forward For US

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California and Texas lead a new ranking of American states succeeding in smart grid integration – but for very different reasons, with big implications for the future of U.S. grid policy.

GMI 2013 top smart grid states

GMI 2013 top smart grid states image via GridWise Alliance

The top 15 ranked states in the 2013 Grid Modernization Index (GMI), released this week by the GridWise Alliance and Smart Grid Policy Center, had three factors in common: retail energy consumer choice, participation in a regional grid system, and renewable portfolio standards.

But while the top states had common underlying reasons for their smart grid success, California and Texas (which both scored 83 out of 100 possible points), demonstrate how grids can be modernized even under completely different policy settings.

Smart Policy: The Recipe For Smart Grid Success

GMI is the first-ever assessment of smart grid integration in America based on policy and activity effectiveness. The report evaluated success based on three metrics – state policy and regulatory mechanisms, customer engagement, and grid operations.

Data was gathered on 41 states and the District of Columbia, and while each state has different drivers for grid modernization, a clear path forward for smart grid growth is apparent in GMI’s findings. As a whole, the top 15 states all demonstrated the following attributes:

  • Participation in a regional grid system – 23 of the states belonged to a regional grid operator, and they scored 14% higher on average in every component than the 19 states that operate their own grid.
  • Renewable Portfolio Standards (RPS)  – 26 of the states have a mandatory RPS, scoring 8% higher on average than states with voluntary renewable goals and 16% higher than states with no renewable energy goals.
  • Retail energy choice – 16 of the states offer retail customer choice in competitive energy markets, meaning individual homeowners or businesses can choose which utility they purchase power from, and these states scored 17% higher than states with monopoly utility structures.
Top smart grid state scores

Top smart grid state scores image via GridWise Alliance

The top 15 states also have three smaller contributing factors in common: proactive efforts on cybersecurity and data privacy, investment from federal stimulus smart grid grants, and widespread smart meter deployment. These factors aren’t too surprising, as research has shown more than a 2-to-1 return on smart grid investment from stimulus funding, and 10 of the top 15 states have installed smart meters for at least 60% of their customers.

Different Routes To Smart Grid Integration

Even though the top-ranked states had clear common factors, GMI’s two top-ranked states show how smart grid policy can adapt to individual state settings to build a modern grid. California and Texas tied atop the rankings for both policy/regulation and customer engagement, but in very different ways.

California, considered the epicenter of America’s clean tech economy, is investing in smart grid technology as a way of integrating renewables and moving toward a clean energy future. High penetration of smart meters have allowed perks like net metering, and energy storage has taken hold as a way to even out high amounts of renewable electricity.

Residential smart meter
Residential smart meter image via Shutterstock

In Texas, retail energy choice has driven smart grid efforts. The state is considered to be America’s most mature competitive energy market, which has encouraged suppliers to offer flexible pricing systems and customer engagement programs. High smart meter penetration rates are credited with empowering customers to take advantage of these innovative service offerings.

Once Again, States A Laboratory For National Policy

The policy implications of GMI’s findings are clear – smart policies spur smart grid modernization efforts, which create a cleaner and more secure energy infrastructure, regardless of political leanings.

“Modernizing America’s electric grid is vital to ensuring our electric system will be able to meet the demands of our digital society,” said Becky Harrison, GridWise Alliance CEO. “If the US is to achieve a modernized grid, the states will play a major role regarding how, and at what pace, this transition will occur.”

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