“Aligning Retail Pricing and Grid Needs: Introduction to a White Paper Series” is one of eight white papers from ESIG’s Aligning Retail Pricing with Grid Needs Task Force. The task force examined ways that retail pricing may be used more widely and more efficiently to allow flexible demand to respond to grid needs as the role of demand becomes increasingly important for the reliability of the grid. It brings together experts in rate design and electricity markets, transmission and distribution planning and operations, consumer advocates, and others to explore current issues, potential solutions, and practical implementation challenges involved in utilizing the flexibility in price-sensitive loads.

All of the white papers can be found here.

A Summary of “Aligning Retail Pricing and Grid Needs: Introduction to a White Paper Series” by Debra Lew, Erik Ela and Carl Linvill

The decarbonization of energy systems will bring significant electrification of buildings, transportation, and industry along with high levels of wind and solar generation to provide clean energy at low cost. To balance supply and demand, the future grid will require a great deal of flexibility. Retail pricing, in addition to being a mechanism for utilities to recover their revenue requirement from consumers, is a way to signal the need for changes in consumption in order to better align demand and grid needs. Today, roughly three-fourths of U.S. households have advanced metering infrastructure, and control and communication technologies are available for everything from water heaters to space heating and cooling equipment to electric vehicles.

What retail pricing structures will incentivize customer behavior to align with the reliability needs of the future grid? How do we unlock value for both the consumer and the grid in a practical manner without adverse impacts to customers who are disadvantaged or are unable to respond as well as others?

The Aligning Retail Pricing with Grid Needs Task Force examined this topic from the grid, consumer, economic, and regulatory perspectives. Seven white papers address different aspects of retail pricing and propose solutions or best practices. This introductory white paper provides context for the issues considered by the task force, offers insights from the white papers, and briefly summarizes each.