1540-7977/17©2017IEEE74 ieee power & energy magazine may/june 2017

IIN ADDITION TO THEIR AGE, PARTICULARLY IN large metropolitan areas, electric power systems through-out the industrialized world face challenges brought on by new technology trends, environmental concerns, evolving weather patterns, a multiplicity of consumer needs, and regulatory requirements. New technology trends include the development of more efficient, reliable, and cost-effec-tive renewable generation and distributed energy resources (DERs), energy storage technologies, and electric vehicles (EVs), along with monitoring, protection, automation, and control devices and communications that offer significant opportunities for realizing a sustainable energy future. The medium- to long-term vision for the electrical grid is to transition away from carbon-based fuels toward increased penetration of renewable DERs and use of energy storage and electric transportation.

In the past, the transmission and distribution (T&D) system was designed and built to serve peak demand (and comply with reliability and quality of service requirements); it was a passive delivery infrastructure with a radial “down-and-out” paradigm for delivering energy to consumers. Con -sumers used what they needed or wanted, the wholesale infrastructure provided the energy, and the T&D system pro-vided it with no need for real-time operation. Distribution operations consisted of construction, maintenance, and out-age management—not of managing delivery per se.

Today, customers increasingly use the grid as a means to balance their own generation and demand and as a sup-plier of last resource when their own generation is unavail-able. They expect to deliver excess generation back to the

By Julio Romero Aguero, Erik Takayesu, Damir Novosel, and Ralph Masiello

Digital Object Identifier 10.1109/MPE.2017.2660819Date of publication: 19 April 2017

Modernizing the Grid

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grid—and to be paid for it—without restrictions on their production. Moreover, they still expect the grid to “be there” when they need it. To meet these needs, the very architecture of the distribution grid has to change and adopt new technologies, ways of plan-ning, and ways of operating. Consumers are demand-ing changed business models, and regulators and pol-icy makers are striving to satisfy and even encourage them, sometimes running ahead of the grid’s abilities to accommodate the new policies.

Several U.S. states, such as California and New York, and countries like Germany, Spain, and Australia have ambitious goals for achieving high penetration of re -newable generation and DERs in the electric power system in coming years. These goals are necessary if the energy infrastructure is to adapt to the transition away from carbon-based fuels required to mitigate climate change. In achieving these goals, a key question arises: How much should be invested in the grid, as more and more DERs—e.g., microgrids or systems using phot-voltaics (PVs) plus energy storage—serve loads with-out utilizing the grid for extended periods, if not most of the time? Then there’s the follow-up question: What is the value of the grid in the presence of DERs, includ-ing energy storage?

Industry well understands [as documented by inde-pendent, objective organizations such as the IEEE, e.g., the contributions of the IEEE and IEEE Power & Energy Society to the U.S. Department of Energy (DOE) Quadrennial Energy Review) that reliability and safety in terms of serving electric power load will be negatively affected if the T&D grid is not equipped to accommodate and enable the increasing penetration and use of DERs. Grid modernization is an essential step in achieving this vision and these goals.

While the electrical power system is expected to continue to become more distributed, it is important to note that today’s interconnected grid began as a distrib-uted grid. Interconnected grids were created to improve cost efficiency, reliability, service quality, and safety. As technology advances make it easier to deploy renewable resources along with controllable, more efficient dis-tributed grids, the fundamental benefits of a connected grid still hold—and, in fact, become more important. While the present grid is generally considered reliable, as dependency on the digital economy grows, users will demand even more reliability from the electric power delivery system in the future, including resilience dur-ing major weather or security events.

T&D systems enable the deployment of renewable resources by providing pathways for transporting clean energy between production and consumption centers and also a means for resource movement and delivery, while at the same time fortifying electri-cal system efficiency and stability as well as reliability

Challenges and Opportunities for a Sustainable Future

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of supply. Integration of DERs and distributed grids can increase efficiencies in the use of the existing grid and become part of the overall development strategy for balanc-ing supply and demand uncertainties and risks with a variety of different resources. In cases where distributed grids become predominant (e.g., renewable intermittent DERs paired with energy storage) and grid usage becomes equally variable, assuring a secure and reliable supply will require an intel-ligent, modern, resilient, flexible, and safe grid. Develop-ing this modern digital grid requires a comprehensive, holistic approach that includes foundational and enabling infrastructure deployed at a pace reflecting the regulatory environment in which companies operate and the pace of DER adoption.

Modern Grid IngredientsBuilding this intelligent grid is a monumental task (particu-larly on the distribution and grid-edge sides, which are vast and heterogeneous) that has led to the emergence of new concepts, technologies, and paradigms. Examples of this include debates regarding future grid architecture (whether, for example, the grid should be distributed, hybrid, or central-ized); advances in grid modeling, simulation, and analysis; the introduction of the microgrid concept to enhance resil-iency and facilitate DER integration; and the convergence of information and operations technologies.

Evolving with the TimesThe emerging utility of the future must evolve in ways such that all elements within the utility industry adapt to this new and dynamic customer-centric reality. This new paradigm is overarching and encompasses

✔✔ infrastructure and engineering aspects such as system-wide, real-time monitoring, protection, automation, and control of power delivery systems with DERs and enhanced grid resiliency, reliability, and power quality

✔✔ processes and organizational aspects such as updated planning, operations, and engineering practices and standards; a trained workforce; and a suitable stake-holder organizational structure

✔✔ business aspects such as asset ownership of new tech-nologies and concepts (DERs, microgrids, and so forth) and service diversification

✔✔ regulatory and policy aspects such as rate and market design and business models for power delivery sys-tems with DERs.

Furthermore, changing weather patterns are leading to an increased frequency of severe events and associated risks for electric utilities, such as extreme temperatures accompanied by abnormal peak demands and severe droughts accompa-nied by wildfires and infrastructure damage. Average tem-perature rise stresses grid equipment (e.g., transformers and T&D lines) and reduces its lifetime.

In addition to adapting planning and operations prac-tices to this “new normal,” the future will require updated

equipment design as well as different engineering and con-struction practices to counteract the impact of climate change and enable the adoption of new technologies. For instance, impacts caused by the adoption of inverter-based DERs tech-nologies such as voltage fluctuations, reverse power flows, low-fault currents that affect system protection performance, and potential loss of inertia (requiring frequency regulation) need to be addressed.

Advanced monitoring, protection, automation, and control technologies; new tools for operations, planning, and com-munications; and robust and foundational infrastructure—all of these will be needed to facilitate the transition to a high-renewables/high-DER grid. Although potential solutions related to grid technology are challenging and complex, they are at a more advanced stage than those needed to address emerging regulatory, policy, and business problems and needs (some of which are being triggered or enabled by technol-ogy developments). In short, significant work is required to address the business, legal, regulatory, and policy side of the emerging utility of the future.

Integration: Looking at the Bigger PictureIntegrating high penetration levels of renewables, DERs, energy storage, and EVs into the electric power system requires increasing the T&D system’s ability to host and enable the use of these resources while improving the reli-ability, resiliency, and safety of the electrical power supply. Grid modernization is key to realizing this potential. The traditional assumption that T&D systems could be analyzed separately is no longer valid: joint modeling, simulation, and analysis of T&D systems (and particularly subtransmission and distribution systems) increasingly require new model-ing approaches and simulation tools. This interdependency is growing progressively and beginning to impact T&D sys-tems’ operations and planning.

DER proliferation is already a reality in states such as California and Hawaii, and innovations are under way not only to proactively address potential operations, planning, and engineering challenges and inefficiencies but also to achieve the potential benefits derived from adopting these technologies—both for customers and society as a whole. Utilities operating in these markets must continue the evolu-tion toward a modernized distribution grid at a faster pace than utilities operating in emerging DER markets.

Furthermore, even larger-scale penetration of DERs is expected given the imminent—and, in some cases, already well under way—grid parity achieved by distributed genera-tion (DG) technologies, such as PVs, in these markets; con-sequently, modernization of grid infrastructures and systems should be considered necessary rather than optional invest-ments to enable the normal operation of modern and future distribution systems. It is worth noting that even utilities oper-ating in states with only incipient penetration levels of DERs recognize the imminence and urgency of preparing for the transition to this new paradigm and are actively working on

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modernizing their distribution grids and overall practices so that they are suitable for operation in this new reality.

✔✔ California’s investor-owned utilities, which are experi-encing some of the highest penetration levels of DERs in the country, are investigating the use of numerous advanced technologies to manage the increasing adop-tion of PV-DG in their service territories. These include microgrids, energy storage, synchrophasor technology, and distributed energy resources management sys-tems (DERMS). Two examples suggest the scope of these plans.•Southern California Edison (SCE) has articulated its

vision for grid modernization in its 2015 Distribution Resources Plan (DRP) and 2018 General Rate Case filing. In this vision, SCE is planning to improve safety and reliability while enabling DERs by deploy-ing technologies in an integrated asset-management approach with aging infrastructure and other needed upgrades. These include advancing distribution and substation automation such as bidirectional sensors and fault location, isolation, and service restoration (FLISR) technology; upgrading aging communica-tion systems; improving long-term planning and power flow tools, DERMS, and grid management systems; and streamlining interconnection processes. Together, these will be coordinated through an enter-prise architecture across its modernized grid to opti-mize the use of DERs out to the grid edge, including the use of smart inverters, and facilitate the aggres-sive growth of plug-in EVs, energy storage systems, and solar PVs, together with demand response (DR) and energy efficiency.

•San Diego Gas and Electric has implemented a mi-crogrid in the community of Borrego Springs that consists of a variety of DERs including substation and community energy storage, conventional gen-eration, PV-DG, and DR. This microgrid has been successfully used to minimize the reliability impacts of planned outages, windstorms, flash floods, and intense thunderstorms (in the latter case, providing power for up to 1,056 customers for over 20 h).

✔✔ Hawaiian Electric, which has some of the highest pen-etration levels of DERs in the United States and a re-newable portfolio standard goal of 100% renewables by 2045, is currently investigating the use of power-electronics-based shunt and series devices installed at the grid edge for reactive power support and voltage regulation of distribution feeders with the prolifera-tion of PV-DG. These solutions are intended to miti-gate voltage rise and fluctuations caused by PV-DG output variability and effectively increase the hosting capacity of these feeders. Further, the Hawaii Pub-lic Utilities Commission approved interconnection rules requesting that customer self-supply systems, customer grid-supply systems, and standard intercon-

nection agreements comply with 11 advanced inverter requirements—or, upon interconnection approval, comply with two requirements (fixed power factor and frequency and voltage ride-through) and have the ca-pacity to be updated for the remaining nine.

There are numerous additional examples of ongoing imple-mentations of various technologies to facilitate DER adop-tion. For instance, Figure 1 shows the results of a recent sur-vey conducted among U.S. utilities regarding interest in and ongoing implementation of advanced inverters, DERMS, and microgrids. The results show that, while utilities expressed similar interest in all of these technologies, most imple-mentation projects involve advanced inverters, followed by microgrids and DERMS.

Individual Approaches to Grid ModernizationAn important point to emphasize is that the pace of the tran-sition toward a modernized grid, particularly on the distri-bution side, is a function of every utility system and market’s existing and expected conditions and trends. Grid moderniza-tion and DER proliferation are certainly interrelated, but the latter is not a requirement for the former. Utilities such as Com-monwealth Edison (ComEd) and CenterPoint Energy, which operate in service territories with only incipient penetration lev-els of DERs, have successfully implemented grid moderniza-tion initiatives to improve grid reliability, resiliency, and system efficiency; address growing expectations regarding customer service; and replace foundational aging infrastructure.

✔✔ ComEd’s Energy Infrastructure Modernization Act, which includes the deployment of 2,600 smart switches

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figure 1. Utility interest versus implementation of advanced grid integration technologies. (Source: Smart Electric Power Alliance, 2016.)

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and 4 million smart meters (among other improve-ments), has been able to avoid over 4.8 million cus-tomer interruptions since 2012. An additional benefit of this modernized infrastructure will be to facilitate the transition toward a new paradigm that includes high penetration of DERs.

✔✔ CenterPoint Energy has deployed 2.3 million smart meters along with communications and data analyt-ics infrastructure, remotely controlled automation devices on distribution feeders, and an advanced distribution management system. CenterPoint Ener-gy is currently working on using this infrastructure for the implementation of advanced predictive and prescriptive data analytics applications. Benefits de-rived from these initiatives include executing more than 11 million electronic service orders (e.g., turn on/off service), resulting in vehicle fuel savings of more than 1 million gallons, reducing CO2 emissions by more than 9,300 metric tons, restoring power to nearly 1.2 million customers without placing a phone call, avoiding more than 102 million customer out-age minutes, and improving power reliability by 28% in 2014 alone.

There are numerous examples of successful implemen-tations of grid modernization initiatives and technologies involving distribution automation (DA) schemes based on smart reclosers and switches, which are driven not by DER proliferation per se but rather by the need to improve ser-vice reliability, resiliency, and operational efficiency. Table 1 summarizes the reliability benefits [measured via the System Average Interruption Frequency Index (SAIFI), System Aver-age Interruption Duration Index (SAIDI), and Momentary Average Interruption Frequency Index (MAIFI)] achieved by 42 projects implemented via the DOE’s Smart Grid Invest-ment Grant, which included the deployment of automated feeder switching on 1,250 distribution feeders. Here nega-tive values represent reductions in reliability indices attained by the projects (with respect to the base case), i.e., reliability improvements. The results show the tremendous potential and benefits of DA to improve reliability performance.

Existing and Developing Technologies: Facing a CrossroadsAs the previous examples show, many of the underlying tech-nologies needed to accomplish grid modernization objectives

already exist and are either commercially available today or nearly so. Many others are caught in the conundrum that low adoption would delay cost reduction and higher penetration, whereas higher adoption would lead to cost reduction and higher penetration. Many technologies that enable integra-tion—especially in analytics, planning tools and operations, and communications and control architecture—have been slower to develop. And, in many cases, business models to facilitate economic development of new technologies and the modernized grid can be improved with regulatory action.

The industry is at a crossroads in terms of making busi-ness and technical decisions that will allow it to optimally and cost-effectively manage electric power delivery. As business models and technology change, traditional grids and distrib-uted grids/microgrids should be purposefully integrated as hybrid grids to fulfill all consumer needs (e.g., resilience and cost-efficiency), with transmission as an enabler to support the integration of renewable resources. Policy should support grid modernization and value creation with performance-based rewards and should not unduly favor either incumbent utilities or nonutility developers and operators.

Technology development and energy policy that encour-ages competition and advances renewables have led to rapid penetration of DG (particularly PVs) and DR, especially at industrial and commercial facilities. Other technologies of interest, such as microgrids, are driven by energy resil-iency needs, while energy storage, EVs, and smart buildings all promise more end user flexibility and control. In many regions, the adoption of new DG technologies has progressed more quickly than regulatory policy and rule making, whole-sale market adaptation, and, especially, the grid moderniza-tion necessary to accommodate a new world of independent choice for consumers in terms of energy technology imple-mentation and operation.

Smart Technologies for the Changing Nature of the Electric Power SystemNew technologies promise solutions to many of the chal-lenges identified in the previous section. However, legacy planning and operations analytics and systems need to be more “DER friendly” and “DER ready,” including the fol-lowing considerations.

✔✔ Distribution monitoring, protection, automation, and control. Increasingly, advanced automation schemes such as FLISR are already being deployed in distri-bution systems to improve reliability. Such schemes, essential for cost-effective reliability improvement, are frequently monitored and controlled in real time by supervisory control and data acquisition (SCADA) and can provide added support for enabling DERs by incorporating the visibility and flexibility necessary for operations. DA systems should facilitate DER in-tegration and address safety, reliability, and aging in-frastructure issues, resulting in more efficient means to modernize the electric system.

table 1. A summary of changes in distribution reliability (source: U.S. DOE).

Reliability Indices

Range of Improvement: % Change

Range of Baselines

SAIFI −13% to −40% 0.8–1.07

SAIDI −2% to −43% 67–107

MAIFI −28% 9.0

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✔✔ DER data and cybersecurity. While vendor and de-veloper information systems keep track of new DER sales and installations, these sources of information should be better integrated with utility information systems. At the same time, privacy and cybersecu-rity issues must remain a high priority, particularly in tackling consumer confidentiality and data ownership implications for DERs not owned and operated by utilities. The Internet of Things (IoT) promises low-cost, ubiquitous communications with DERs, which would facilitate incorporating them into advanced market and operations processes. However, distribu-tion systems are expected to have a high level of reli-ability, security, and availability, even in catastrophic situations, requiring upgrades to improve capacity and reliability with increased automation.

✔✔ Smart inverter technology. The sometimes extreme variability that comes with higher penetration of re-newable DERs, particularly distributed PVs, will create problems for the distribution system (in terms of volt-age and power flow fluctuations) and, eventually, for the bulk power system (in terms of managing system frequency and area generation-load balance). Inverters are helpful technologies to facilitate DER integration, as shown in Figure 2. However, the use of this tech-nology introduces additional challenges related to the monitoring, control, coordination, and interaction be-tween fleets of smart inverters and existing distribution voltage control, regulation, and protection equipment.•Unless addressed by more advanced adaptive pro-

tection schemes, inverter technologies will not con-tribute enough current to activate protection devices

during fault conditions, when there could be sub-stantial loss of conventional rotating machines, thus affecting the safety of the electric power system.

•As smart inverters have no inertia, a California Inde-pendent System Operator study—conducted in sup-port of the state’s goal of achieving 30% renewable penetration by 2020—suggests a significant reduc-tion in system inertia to the extent that normal sys-tem contingencies can drive the frequency below the presently set underfrequency load shedding levels.

•While smart inverters can regulate voltage, the miti-gating impacts of reducing voltage may increase the grid’s reactive power requirements. Thus, close co-ordination with volt/var control is required.

•Large utility-scale PV installations using older invert-ers can impact several different aspects of distribution systems planning, engineering, and operations, such as creating temporary overvoltages under fault condi-tions that can damage customer and utility equipment.

•“Pirate” PV installations without proper intercon-nection technology can energize downed overhead conductors, causing safety problems for the public and maintenance personnel seeking to repair the damaged circuit.

•Legacy inverter-based DERs may trip off and discon-nect during transient low voltage or frequency condi-tions caused by a transmission fault. In a scenario that includes high penetration of DERs, this may lead to losing the contribution from a large amount of DG, with an aggregated effect that might be comparable to or greater than the outage of a single conventional power plant. Concerns in this area have prompted the

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figure 2. Example benefits of using advanced inverters to mitigate the impacts caused by PV proliferation (over 5 MW). Plots show the voltage profile difference for operating a PV plant at (a) unity power factor and (b) absorbing reactive power at 0.99 constant power factor using advanced inverters. Positive voltage values represent increases caused by PV interconnection. Each dot is the voltage difference (PU) of a feeder node (miles from substation) at a specific time of the day for the respective cases.

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introduction of voltage and frequency ride-through and similar capabilities in smart inverters and their accompanying standards. However, additional solu-tions, including more resilient distribution circuit de-signs, are needed to ensure continuity of service and DER supply during such events.

Smart PV inverters and new wind turbine con-trols can help solve some of the previously discussed technical issues but require additional equipment upgrades: much improved grid monitoring and con-trol systems, new planning methods and tools, grid management systems that feature more interaction with DERs, and the implementation of appropriate interconnection standards.

✔✔ Electric transportation holds significant promise for reducing oil dependence and total carbon footprint. Electrical systems can help improve the livability, workability, and sustainability of smart cities. Ad-dressing EVs specifically, studies have shown that the first purchase of an EV is likely to inspire more in the same neighborhood, which can lead to “clusters” and overload of system components. Distribution sys-tem capacity upgrades in combination with solutions based on DERs and intelligent load control could ad-dress these issues.

✔✔ Emerging technologies such as energy storage prom-ise the ability to mitigate renewable DER variability and improve T&D utilization and economics, but techni-cal, regulatory, and economic barriers still impede

adoption, even in states with ag-gressive programs for deploy-ment. It is widely understood that “shared applications”—meaning multiple use of the same energy storage device—is key to real-izing the greatest economic po-tential from these technologies. However, regulatory barriers and legacy paradigms are major ob-stacles to their rapid adoption and most effective use. Energy storage is forced to fit into a particular ge neration, transmission, distri-bution, or customer “bucket” and follow rules established for that asset class. Energy storage is, from many viewpoints, a new asset class of its own. Figure 3 shows an ex-ample of the benefits derived from the application of distributed en-ergy storage (DES) for integrating PVs and EVs.

In short, successful and seam-less DER integration requires a comprehensive, holistic approach

that includes 1) investment in foundational and enabling infrastructure, e.g., distribution system components (lines, equipment, transformers, and so forth), DA, communications, and information systems; 2) a review and update of existing operations, planning, and engineering standards and design practices; and 3) changes to current regulatory, policy, and business approaches.

In this fast-pace environment, standards are increasingly critical for both users and vendors to streamline deployment of existing and new technologies and support interoperability among devices and systems as well as best industry practices. For example, the IEEE 1547 series of interconnection standards is critical for reliable and cost-effective DER deployment.

Grid Modernization RequirementsThe following are areas that require further evolution and modernization to optimally enable future T&D system.

✔✔ Integrated, holistic T&D planning and operations. As the variability of distribution system net load in-creases, better coordination and information transfer is required. The ISO can no longer rely on simple load forecast bus allocation factors to forecast bus net loads but must be able to forecast, as one example, PV pro-duction. More importantly, the use of DERs to provide aggregated energy supply to the T&D system and an-cillary services to the wholesale markets will be in-creasingly valuable.

✔✔ Visibility and control of DERs. Achieving this objective will require more advanced SCADA-level monitoring

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figure 3. An example of the benefits of applying the demand control capabilities of DES for integrating PV-DG and EVs. The results show the distribution circuit demands for the base case (no PVs and no EV), a combined PV and EV adoption scenario (PV+EV), and a combined PV, EV, and DES scenario (PV+EV+DES). The latter shows how DES can be used to control circuit demand and mitigate impacts created by both PV and EV adoption.

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on the distribution system (where sensors cost more to acquire and install) as opposed to simply obtain-ing information from the DERs. If the utility of the future is to operate the distribution system in real time to manage the reliability and operational challenges derived from DER variability and load (and, just as important, if the system is to be engineered to allow for that management and its associated savings), then visibility and controllability are essential. Hosting in-creased DER penetration levels and avoiding worst-case distribution investments require a significant level of real-time DER visibility.

✔✔ Improved flexibility, reliability, and DER hosting via advanced distribution system technologies. The ideal scenario for the distribution system of the future in-cludes the ability to monitor and control, in real time, all key components of distribution circuits. This is dif-ficult to achieve over the short term, given the monu-mental size and complexity of the distribution grid and the sizable investment and infrastructure (including communications systems) required. However, a gradual transition toward this vision is possible and necessary to achieve reliable, resilient, and secure service and op-erate the complex, highly dynamic distribution grid as-sociated with a high penetration of DERs.

✔✔ A well-trained workforce. New knowledge and skills will be required to deal with a changing grid in the utility of the future.

Future Distribution System ArchitectureThe key technologies at the device, substation, and system level for distribution grid modernization include the following.

✔✔ Advanced sensors and management systems. These will be required to provide cost-effective monitoring

of key electric variables, including bidirectional power flows, voltages, currents, equipment, and DER status as well as provide fault information to circuit breakers and other protection devices. For instance, the ability to control DERs on a 5-min basis will require overall bandwidth beyond the typical capac-ity of advanced metering infrastructure networks. It will be essential to have enough real-time monitor-ing of circuit conditions to provide situational aware-ness and support applications such as distribution state estimation. Moreover, faster, more intelligent, and more flexible volt-var schemes (such as distribu-tion-class, power-electronics-based static compensa-tors) that work in coordination with smart inverters are required.

✔✔ Advanced distribution and substation automation technologies.•Distribution and substation automation promises

enhanced grid flexibility as well as improved as-set management that will increase asset lives, re-duce costs, and improve reliability. However, today only about 50% of U.S. distribution substations are fully automated.

•Digital relays, substation automation computers, and data concentrators, as well as gateways to SCADA and distribution and energy management systems, are proven, fully commercial technologies. They need to be implemented on a large scale with full utilization of their key capabilities.

•Intelligent and adaptive reclosers and switches oper-ating in FLISR schemes can isolate faults in smaller sections to support increased flexibility and improve reliability for both traditional and distributed grids, as shown in Figure 4.

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figure 4. The reliability benefits (SAIDI reduction) resulting from FLISR deployment via two DA schemes using reclosers. The colors in (b) and (c) indicate the relative magnitude of SAIDI values: areas in red have higher SAIDI values than those in green. Plots (b) and (c) show SAIDI before and after deploying the FLISR schemes, respectively. N.C.: normally closed; N.O.: normally open. (Source: CENTROSUR and Quanta Technology.)

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✔✔ Digital system protection. System protection, adap-tive to system conditions, will need to be widely used. DERs with inverter technologies create various oper-ating scenarios not addressed by existing protection schemes. Circuit power flows and fault-current levels will change based on DER size, output, and location.

✔✔ Emerging alternative distribution grid configurations and operation modes. These include grid-integrated mi-crogrids and closed-loop distribution feeders that allow utilities to take advantage of the potential benefits de-rived from DER adoption. It is worth noting that these require protection, sectionalizing, monitoring, automa-tion, and, most importantly, control capabilities beyond those typically used in distribution systems today.

The Role of Markets in Grid ModernizationThe ongoing evolution of the electric power industry also involves changes to existing electricity market and regula-tory frameworks, aimed at satisfying the growing expecta-tions of end users. The advanced monitoring, protection, automation, and control infrastructures and capabilities introduced by grid modernization are vital enablers for the successful implementation of these initiatives.

In the specific case of electricity markets, transactive energy (TE) and distribution system operator (DSO) are two concepts being widely discussed as key elements in the utility of the future to integrate DERs with wholesale markets and apply market concepts to DER dispatching and operations on the distribution system. The focus of these discussions ranges from radically new paradigms to the application of wholesale market design to the distribution system, including the intro-duction of distribution locational marginal pricing.

TE advocates envision a future market where a “plat-form” allows buyers and sellers to find each other and where the energy markets are built around bilateral, individual transactions ranging from real time to months forward. These models take other commodities markets as their guid-ing principle. However, TE models have so far not shown how real-world implementation—including reliability issues and obligations to critical customers—can be made to work and so are not yet considered mainstream.

The DSO (also called a distribution system platform) model is becoming more mainstream, linking requirements to mutually coordinate DER markets and the grid. Basically, current wholesale concepts of day-ahead, hourly, and real-time markets using locational pricing to manage conges-tion are the guiding principles for the model. Considerable theoretical work, including some rigorous cost-benefit stud-ies, has been done in this area. And, while some alternative schemes might need to be appended, the concept seems to hold promise as a blueprint for bringing DERs to market. New York’s ongoing Reforming the Energy Vision program is seriously considering the model.

However, as the DSO model is based primarily on the wholesale model (which relies on gross profits from dynamic

energy markets and ancillary prices to incentivize invest-ments in generation as needed), more analysis is needed. For example, any (in fact, one could argue, most) DER locational needs will not reduce congestion but will be able to avoid backfeed (curtailment or local energy storage) and manage voltage and power fluctuations. These may turn out to be both “zero marginal cost” kinds of resources and also ones with significant capital costs—in which the relationship to the energy markets is tenuous, especially in the case of volt-age support. So alternative schemes such as distribution-level capacity markets may be called for. Furthermore, advanced sensors and tools are required to properly operate the distri-bution market. The conclusion is that initial DSO functional-ity and design should “keep things simple” to avoid error-prone complexity and be robust against likely early-stage data base and data errors.

RecommendationsTo conclude, we detail some overarching recommendations for achieving reliable, resilient, and cost-effective delivery of electric energy, while supporting environmental targets for years to come. The following are some basic principles.

✔✔ There is a need for grid modernization, with speed of implementation adjusted to the realities of each mar-kets pace of integration of clean DERs and environ-mental and other regulatory targets.

✔✔ The architecture and design of the grid must be updated to accommodate a very high penetration of DERs and operations and planning practices driven by prosumer dynamic consumption/produc-tion patterns.

✔✔ Enabling the transition to a modern grid requires changes in business models and regulatory policies, as well as the identification of technical needs for de-veloping new technologies.

✔✔ A continuous focus on improving reliability, resil-ience, safety, cost-efficiency, and customer flexibility in terms of choice is crucial.

Actions That Utilities Can Take Today✔✔ Vision•Develop a vision for the modernized future grid that

includes, for instance, a high penetration of DERs; alternate distribution system architectures (such as looped or meshed networks for enhanced operational flexibility, resiliency, reliability, and power quality); and incorporation of advanced power electronics for grid control.

✔✔ Implementation•Pursue grid modernization within regulatory frame-

works, such as California’s integrated DERs and DRP filings and plans to address the integration of DERs. Combine grid modernization with synergistic needs to address future safety, reliability, aging in-frastructure, and capacity requirements.

may/june 2017 ieee power & energy magazine 83

•Develop plans and pursue implementation of ad-vanced distribution control and operations systems.

•Develop communications and control architectures for grid modernization: substation and DA and DER integration, control, and communications systems.

•Deploy and implement commercially available tech-nologies such as digital protection, advanced auto-mation, FLISR, and remote fault sensing.

✔✔ Innovation•Implement pilot projects to test and validate the feasi-

bility of innovative technologies, solutions, and con-cepts to enable grid modernization.

•Develop advanced facilities capable of testing the performance and operation of modern grid architec-tures, including advanced communications and con-trol systems, and apply these testing methodologies to advanced pilot installations.

•Develop utility standards for emerging technologies, DER interconnection, and utilization of advanced automation systems.

✔✔ Partnerships•Develop partnership models with suppliers, including

software developers, to accelerate the detailed model-ing of DERs within planning and operations analytics.

•Work with universities and community colleges to develop training curricula in support of the modern-ized grid.

Actions That Regulators and State Agencies Can Take

✔✔ Pursue regulatory frameworks, policies, and business models for emerging technologies (such as microgrids and energy storage) that better allow utilities to har-vest all their potential value streams and benefits—in particular, by removing barriers to combining reli-ability and market applications and allowing utilities to offer services (ancillary services, local/community reliability, and so forth) to groups of customers on a tariff basis.

✔✔ Support and foster open comparisons of different ana-lytical tools that address evolving problems such as the valuation of emerging technologies and concepts, and provide incentives for utilities to embrace open platforms as the basis of new analytics in operations and planning.

✔✔ Resolve business issues related to the integration of DERs via the IoT, which will inevitably increase grid complexity and present cybersecurity and privacy concerns in addition to a need for greater DERs vis-ibility and control. Where these are federal rather than state issues, support industry efforts to achieve clarity and resolution in ways that will foster rather than hin-der grid modernization.

✔✔ Support the development of state-level standards that help remove barriers to adopting emerging technologies and solutions, such as energy storage and microgrids.

✔✔ Support experimentation and careful cost-benefit anal-ysis of different distribution market models, emerging technologies, and grid architectures via pilot projects.

Actions That Require Support from Industry Vendors

✔✔ Develop open platform models and/or open applica-tion program interfaces for ongoing integration of ad-vanced DER models and control algorithms into plan-ning and operations tools.

✔✔ Develop advanced analytics for distribution planning, forecasting, and operations.

✔✔ Develop adaptive protection and control products.

Actions That Require Cross-Industry Attention✔✔ Continue to develop and implement DERs, energy stor-age, and EV integration and interoperability standards, as well as information and control models, especially via the IoT, and convert information and control models into standards. Both industry standards and coordinated utility/developer deployment standards are needed.

✔✔ Address third-party data ownership issues in the con-text of DSO and, potentially, markets.

For Further ReadingIEEE Joint Task Force on Quadrennial Energy Review. (2015, 5 Sept.). IEEE Report to DOE QER on priority is-sues. [Online]. Available: http://www.ieee-pes.org/images/files/pdf/IEEE%20QER%20Report%20September%205%202014%20HQ.pdf

J. Romero Agüero, A. Khodaei, and R. Masiello, “The utility and grid of the future: Challenges, needs, and trends,” IEEE Power Energy Mag., vol. 14, no. 5, pp. 29–37, 2016.

D. M. Staszesky, D. Craig, and C. Befus, “Advanced feeder automation is here,” IEEE Power Energy Mag., vol. 3, no. 5, pp. 56–63, 2005.

J. Romero Agüero, “Applying self-healing schemes to modern power distribution systems,” in Proc. IEEE Power & Energy Society General Meeting, 2012.

R. Masiello and J. Romero Agüero, “Sharing the ride of power: Understanding transactive energy in the ecosystem of energy economics,” IEEE Power Energy Mag., vol. 14, no. 3, pp. 70–78, 2016.

BiographiesJulio Romero Aguero is with Quanta Technology, Houston, Texas.

Erik Takayesu is with Southern California Edison, Po-mona, California.

Damir Novosel is with Quanta Technology, Raleigh, North Carolina.

Ralph Masiello is with Quanta Technology, Raleigh, North Carolina.

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