Regulators are strongly suspicious and uncertain about
significant changes in the current market rules and regulatory
framework, even if it could result in driving forward the
development of Smart Grid technologies. Therefore. Clear
motivations and incentives are needed for reform. Why?
There are several reasons for such approach. First of all,
current market mechanisms and regulations seem to work well,
providing an acceptable level of power system functionality,
reliability and maintaining social stability, while guaranteeing
the interests of the markets biggest actors. Secondly, as some
experts mentioned in private conversations, stakeholders are afraid
of significant changes since the risks of its implementation are
huge, whereas final results and cost-benefit ratios are unclear.
Finally, some decision-makers are simply not aware of alternative
solutions due to their lack of expertise and lack of communication
with the scientific and expert community. But, whatever the reason,
no noticeable motivations and incentives are shown by the
Government bodies for true large-scale market and regulatory
reforms that could support intellectualization of the Russian
energy sector.*Despite support for energy efficiency from the
Office of the President and Russian Government in the form of
enabling legislationxiv and the State program for energy
efficiencyxv, one of the biggest impediments for energy efficiency
policy in Russia is insufficiently developed rules and guidance for
implementation of the existing laws and regulations.
In particular, we focus on the energy service performance
contracts (ESPCs). However, currently, mechanisms for internal
pricing, record keeping and rules for sharing economic benefits are
not developed and included in the provisions of power services
between the service provider and the customer. At the same time,
this is one of the key questions concerning the practical use of
energy conservation in the Russian economy. The absence of reliable
standards for conducting energy savings performance contracts makes
it more risky for the customer, as well as, for the service
provider.
A major impediment to consumer participation in the development
and implementation of the Smart Grid in Russia is the residential
consumers lack of understanding of energy markets and its rules and
possibilities. Residential consumers are alienated from the
electricity market, and because of that, do not understand the
potential offered by dynamic pricing possibilities and the benefits
of managing their own energy consumption, etc. In other words,
their motivation to adopt Smart Grid technology is extremely low.
Also, a consequence of this poor understanding is a general opinion
among residential consumers that electricity costs are too high,
even if they are underpaying the true cost according to the
assessment of electric utilities. In part, this is a heritage of
the Soviet and PostSoviet era subsidization policy, which made
residential consumers think about electric power as something cheap
and affordable, whereas treating rising electricity prices as
corporate or government unfair tricks to get more money from
citizens.*The Administration must come up with a compelling value
proposition for consumers to understand the large benefits of smart
grid technology. Increased consumer assumption and understanding of
smart grid technologies are the only way to compel technological
innovation and adoption of grid modernization. American consumers
need to be shown that smart grid technologies can lead to more
reliable service and reduction in consumer losses, increased bill
savings, transportation cost savings, and the most important aspect
of information and control management of electricity. Last, the
ability of consumers to sell excess generated electricity back to
public utility companies is highly beneficial.
U.S. policy-makers need to make clear of the objectives to all
stakeholders. Defining the key value areas of reliability,
economics, efficiency, security, environmental impacts, and safety
of the smart grid modernization will vastly affect stakeholder
interest in the program. Currently these value areas are not always
aligned and can be a challenge to optimize around them.
Policy-makers will also have a difficult time prioritizing these
values as viewpoints differ from region, state, and service
provider level. For instance, is improving the cost-efficiency of
smart grid implementation more important than improving the
positive environmental effects? Would certain stakeholders have
more say on the criteria of market models for the project?
*The U.S. needs to define the smart grid performance goals at
all three levels of government: federal, state, and local
municipalities. Currently, there are no national-level fundamental
smart grid goals and valuation metrics Some goals are better to be
applied to the national level as their achievement is common to all
smart grid visions, but caution needs to be exercised to make sure
that goals and efforts dependent on road-mapping efforts should be
left to the regional, state, and service-provider levels.
There needs to be increased efforts to defer inconsistency in
coordination among federal, state, and local regulators. Redundant
legislation and regulations between federal and state levels need
to be minimized or altogether eliminated. On the retail level,
states are self-regulated by their public utility commissions, each
with conflicting perspectives on smart grid modernization and how
the markets coordinate between wholesale and retail markets.
Already at the state level, regulatory oversight in support of
retail markets and integration with wholesale markets is limited
due to having 50 individual public utilities companies coming to
consensus.
*
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