An Invisible Hand is Not Solving Our Distribution System Problems

If we are going to try to solve the issues increasingly manifesting themselves at the electric network distribution level, we can’t be looking at the Generation and Transmission (G&T) levels – identifying problems/concerns there, then attributing those issues to be solved within the distribution systems.

G&T, Independent System Operator (ISO) / Regional Transmission Operator (RTO) and Balancing Authority (BA), collectively “The Grid”, issues/concerns are not the same as at the Distribution System Operator (DSO) level… even though they are starting to take the appearance of smaller versions of the “The Grid” space with the increasing addition of Distributed Energy Resources (DER); i.e., rooftop solar PV, behind the meter (BTM) storage, etc.

These are not the same.

Yes, let us continue acting like Manifest Destiny and the Wild West mentality that followed, solved itself through some incarnation of Adam Smith’s Invisible Hand magically bestowing itself upon our distribution systems.

Prior to rooftop solar PV, effectively distribution grids had no generation resources other than some emergency backup or large customer DER (i.e., onsite generators or UPS), and the distribution networks had single takeoff points at the substation – often captured by the G&T or part of the vertical integrated utility. Electric Member Cooperatives (EMC), Rural Electric Associations (REA) and Municipals (Munis) all meet this criteria and far outnumber (in number of systems, not customers) Investor Owned Utilities (IOU), whether vertical, regulated or deregulated is not the defining or universal factor requiring discussion.

Let’s get away from the discussions of IOUs, verticals [and horizontals] or [large] Grid dynamics, and focus on what are the issues at the distribution network levels, highlight the issues, concerns, needs for DSOs to function in similar fashion to “The Grid” and get to work solving those problems with real solutions.

Real solutions are not digital, software or accounting-based energy trading “solutions” coming out of Silicon Valley, attempting to recreate ENRON – The Sequel following deregulation. Real solutions are not simplistic overlays of our current ISO/RTO electric markets upon the distribution networks; identify known weaknesses and exploit them with a software program, a blunt force regulatory enabler (i.e., NEM – Net Electric Metering) or aggregating geographically disparate DERs within proprietary platforms (i.e., Amazon, Google or Apple) to sell into the wholesale G&T markets indifferent to the needs of the distribution systems.

With hundreds (some 2000) distribution systems in the US… as well as maybe another 100 in Canada; Who are the DSOs leading in this space? Who are the DSOs doing nothing or just taking for gospel whatever their captor G&T tells them? Who are the DSOs recognizing there are problems, but don’t know what to do, etc.?

What are the primary issues the distribution system owners require state regulators to “regulate” or establish guidelines to move a “Smart Grid” forwards? Why are distribution systems owners effectively being required to “sort this out” on their own or conversely, to do nothing at all???

I’ll go even further… why are our national laboratories offering a “distribution system laboratory” for distribution system operators to “test out their systems“, while US DOE – Department of Energy funds FOIK – First of its Kind deployments, in contrast to developing a functional DSO platform that can be rolled out uniformly allowing all market participants to function on a level playing field? In general, there are too many “pilot” programs occurring, not enough (if any) DSO neutral rollouts taking place.

We have some 150 million customers/meters in the US against some 30-50,000 generators/G&Ts, ISO/RTO/BAs/State Regulators and project developers. And we have collectively decided we are going to let the free markets solve the problems of the 150 million and come up with “solutions“.

Yes, let us continue acting like Manifest Destiny and the Wild West mentality that followed, solved itself through some incarnation of Adam Smith’s Invisible Hand magically bestowing itself upon our distribution systems. During the 20th Century we tamed “The Grid” through disparate state regulations, established important safety standards and opened up interstate and interregional market opportunities, but we never codified basic “citizen’s obligations” or “ordinances” all must adhere to in order to participate as technological attainment had only reached a collective, top down or “centralized” level of capability. We sent Wyatt Earp in to cleanup Tombstone, Arizona, and satisfied with those results, we arguably never went further.

A quick takeaway on our current impasse, largely unable or unwilling to recognize the distinct differences between ‘The Grid” dynamics and the real needs required within our distribution networks.

The two most common arguments I hear are; 1) “Load growth is stagnant or declining”, from the Utilities; and 2) “Utility spending on capital improvements is too much”, from the DER proponents. Thus lines are drawn in the sand and no one is willing to budge.

But reality is, in order for the electrification of everything to happen – a critical pathway in reducing our collective carbon emissions, we must transition a massive amount of energy from our oil and natural gas networks into our electric grids. This will largely occur at the DSO level, not “The Grid”.

This means, those supposedly “overbuilt poles & wires” are allowing us much more capacity for DERs than otherwise – if we actually plan it. On the other side, “load” may not be increasing per se, but the quantity of kilowatt-hours moving through the distribution networks will increase as we optimize its utilization and move away from “peaks and troughs” dynamics.

This is a win-win situation for both sides. It’s time we set aside our past grievances and work together on solving the real problems we have no past experience from which to model upon.


If you have a passion for solving these complicated problems through collaborative, holistic systems thinking, join Bryce Johanneck, Erwin Heuck, Malcolm Metcalfe, myself and many others, challenging the new conventional “disruptive” wisdom on distribution network assets and their optimized operations.  We are having these discussions on a regular basis – that is when we are not expending valuable time and resources unproductively moderating the current “hype & mania” over DERs, CCAs, IOU destruction simply for the purpose of IOU destruction itself, Microgrids and Battery Storage.


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