Governors will play a key role in preparing their states for a smooth energy transition. They can work alongside other state officials, federal and local governments, utilities, technology providers and others to advance innovation and stay ahead of the curve.
Executive Summary
An energy technology revolution in the United States is moving us toward a future based on an evolving generation mix of natural gas, wind and solar generation coupled with increasing use of distributed energy resources (DERs), all of which operate in a more tightly coordinated manner because of advances in information and control technologies at all levels. This transformation promises many benefits but also raises challenges and concerns. Governors will play a key role in preparing their states for a smooth transition. They can work alongside other state officials, federal and local governments, utilities, technology providers and others to advance innovation and stay ahead of the curve.
Newer, connected energy technologies and applications are in increasingly widespread use across the country and include efficient natural gas generation (driven by lowcost and plentiful shale gas), utility-scale and distributed
renewable energy, advanced energy storage, the emergence of microgrids, a broad mix of energy efficiency and demandresponse technologies, the beginnings of electrified transportation, smarter grids and advanced digital metering
and sensors applied across the supply chain. Emerging technologies include small-scale nuclear and coal-based generation as well as advanced communications networks that allow for more connected systems and the related use of
big data and analytics that inform energy development and usage. The result is a more diverse mix of energy resources that serves a variety of consumer needs and policy goals.
Many states are seeking to advance the use of new technologies and innovative strategies to achieve public policy goals such as creating jobs and enhancing competitiveness, maintaining or enhancing grid reliability and resiliency, reducing costs, enhancing consumer choice and improving environmental sustainability. States are also integrating new energy technologies with more traditional ones (for instance, coordinating the use of solar and natural gas to help lower overall costs and address intermittency concerns or adding sensors to coal generators to improve system efficiency and environmental performance) and looking at ways to maximize the benefits of each.
However, as with any technology transformation, states are experiencing concerns, including those related to resource intermittency, cybersecurity, workforce gaps and strains, data privacy and ownership and various technology limitations. States face several challenges as they seek to address these concerns and reap the benefits of new energy technologies. One overarching challenge is that the existing regulatory structure and related incentives that drive traditional utility business models have not kept pace with the new technologies. Utilities may not be rewarded for enabling or encouraging the adoption of optimal technologies, whether DERs or more traditional generation, transmission and distribution technologies. Moreover, modernizing the electric power system calls for new market structures and financing mechanisms. There may also be gaps in the skill sets of the current workforce, which may not be familiar with new technologies, and impacts to existing workers whose jobs are affected by a decline in the use of older technologies. In addition, consumers may not be comfortable with the pace of change and the amount of choice that they are being offered.
Governors can help prepare their states to embrace energy innovation by pursuing the following seven actions:
- Support technology innovation.
- Modernize legislation, regulations and incentives.
- Provide funding and financing mechanisms to drive technology deployment.
- Prepare the workforce.
- Update communications networks and data systems.
- Address cyberthreats.
- Educate citizens about the benefits and risks of technological innovation.
