Study Shows Need for Continued Electricity System, Smart Grid Investment

A combination of hotter summers, an aging electrical grid and uneven adoption of smart grid technology has increased the need for electric infrastructure investment, according to a University of Minnesota research study cited by CNN reporter Thom Patterson.
 
COMPETE agrees significant investment is needed in our national grid to reach our nation’s sustainable energy goals and maintain electric reliability needs. But CNN missed an important opportunity to highlight how competitive electricity markets are helping ensure reliability and encourage innovation and investment while protecting consumers from the financial risk of poor or failed investment decisions.
 
Innovation in competitive markets has been credited by several of the nation’s largest grid operators for meeting this summer’s peak demand – including in New York, a focus of CNN’s article. Demand response has helped mitigate the electricity supply crunch when demand is highest on the grid, and transparent price signals have encouraged new transmission and generation investments needed to keep pace with rising national energy demand. “The competitive marketplace for electricity provides strong incentives for the innovation and investment that hold the key to reliably meeting our current and future electricity needs,” said Stephen Whitley, NYISO President and CEO.
 
Transparent price signals sent by competitive markets have also attracted private investment – without placing financial risk on ratepayers. A recent report by GTM Research showed seven of the top 10 states leading smart grid implementation participate in competitive electricity markets. Billions of dollars have been invested in the Texas, New York, New England, Midwest, and Mid-Atlantic grids.
 
In addition, the unique characteristics of competitive markets enable clean energy generation to thrive – two of the top three states in installed wind capacity are competitive markets, and more than 70 percent of wind energy resources are in competitive markets despite the fact that only 44 percent of potential wind energy is found in these areas.
 
Contrast all of these positives with the situation in non-competitive states, where utilities isolated from market pressures have little incentive to innovate. In these states, utilities and bureaucrats decide investments, and consumers captive to monopoly service providers guarantee a return on the investment, regardless of whether the investment ultimately turns out to be prudent or successful.
 
CNN is drawing attention to an important public interest topic, but urge them to ensure any discussion of the trillions of dollars in investment needed in the electricity sector also addresses the positive impact competition and market forces are having in meeting our national electricity objectives.