Maine will not move forward with creating a pioneering distributed system operator (DSO), but state officials appear open to exploring other ways to advance distributed energy resources (DERs).
Used in several other countries, the DSO model reframes how the electric grid operates, creating more opportunities for local energy through open and transparent markets. Maine would have been the first state in the nation to institute a DSO, an approach it explored to reduce energy costs, achieve climate goals, and improve electric reliability.
The Maine Governor’s Energy Office (GEO) recently halted the plan after reviewing a draft feasibility report from Strategen commissioned earlier this year. While the report recommended that the state move forward with the DSO, the energy office balked at the investment and effort required to undertake the reforms.
At the same time, the energy office said there may be alternative means to achieve the same outcome and that it “intends to consider the information and findings contained in the initial study to inform future prioritized areas of analysis to support achievement of the broader objectives of the state related to grid planning, infrastructure, and management.”
Still, some distributed energy advocates found the decision disappointing.
“Our energy future needs to be a symphony, not a cacophony — or worse, a solo act by a single utility. A neutral, expert, not-for-profit DSO could be the conductor to make it happen. A well-built DSO could improve trust, planning, coordination, innovation and competition. Utilities, customers and others could all benefit,” said Seth Berry, executive director of Our Power, a Maine-based nonprofit advocating for energy democracy, and a former state lawmaker who served as House Chair of Maine Legislature’s Joint Standing Committee on Energy, Utilities and Technology.
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The energy office examined the DSO concept under a 2023 legislative directive (LD 952) sponsored by Rep. Gerry Runte, who worked in the energy industry for 45 years before being elected to the Maine House. The bill set up a two-part approach, beginning with the feasibility study followed by what would have been a more detailed implementation plan had the energy office decided to move forward.
Part of the problem was that the state simply ran out of time to do the second report, Runte said.
“The GEO chose not to proceed to Part 2 for several reasons, but, as a practical matter, getting Part 1 done consumed all of the available time specified in the bill that initiated the study,” Runte said. “The GEO will be providing a final report to the energy committee in the Legislature next month, and discussions are ongoing on how to incorporate lessons learned from the study in future energy planning and policy, as well as any follow-up work that might be necessary.”
Others pointed out that the feasibility study, alone, marks a win for distributed energy in that it lays out in one place a vision for grid decentralization that other states can use as a roadmap.
“I believe that this study provides valuable guidance for all jurisdictions considering how to enhance their distribution systems and system operators to realize the greatest total benefits — societal, grid, climate and ratepayer — from the exciting revolution in clean, flexible DER technologies we’re witnessing,” said Lorenzo Kristov, a consultant who specializes in electric system policy, structure and market design. Kristov was part of the team that developed the draft feasibility study.
“The DER revolution is both necessary and inevitable,” Kristov added. “There is a renewed sense of urgency with each new climate disaster. The question for policymakers and industry stakeholders is how to ensure the maximum and most equitable distribution of benefits are realized.”
The 103-page paper examines grid operation, integrated system planning, distribution-level DER markets, and coordination with the regional grid operator, ISO New England. It also looks at DSO development elsewhere, such as the United Kingdom, Canada, Australia and the European Union.
As described in the study, the DSO structure would fundamentally change energy resource planning. Today, utilities and energy planners typically evaluate system needs over a 10 to 20-year period and then plan bulk power resources — such as power plants and transmission lines — to meet the need. This made sense for a 20th-century electricity system but doesn’t work as rooftop solar, home batteries, electric vehicles and other distributed technologies come into play. Because they produce power near where it’s used, they avert some of the need to build bulk power infrastructure.
The paper proposes, therefore, that resource planning be done from the “bottom-up” rather than in the current centralized fashion. A more granular approach, bottom-up planning starts by identifying where local energy resources are needed and are technically feasible and cost-effective.
“Resource planning will therefore need to engage city and county planners and other local entities not traditionally involved in electricity planning, such as transportation, water and sanitation districts, to identify and evaluate potential sites for local energy supply,” says the study.
A bottom-up energy planning approach builds “local supply resources that best meet the needs of the people, communities, businesses and public functions who depend on electricity service,” says the study.
As a next step, the energy office plans to publish public comments it’s received on the draft feasibility study and post them alongside a final version of the paper in January.
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