EDITOR’S NOTE: Electric utilities the world over are reviewing their strategic options as they embrace efficiency and renewables and gear up to combat climate change. MIT has launched an international, multi-year study of the changes that are coming to the world of energy. Carlos Batlle, one of the leaders of the effort, will report on the project to attendees of the landmark conference, Empowering Customers & Cities, in Chicago November 4-6. At the request of The Energy Times, he provided this executive summary of the MIT project.
“The MIT Utility of the Future” study will comprehensively address the technology, policy, and business models shaping the evolution of the delivery of electricity services.
It will examine several possible scenarios of the future of the electricity sector in order to inform utilities, regulators, policy makers, and new market actors attempting to navigate a rapidly changing industry.
Our objective is to explore new and emerging technologies and combinations of these technologies, such as rooftop solar, distributed generation, and demand response implemented in the distribution sector, and on this basis, to look at how the distributed and the centralized power systems will be coordinated in the delivery of energy services.
Over the course of the multi-year study, we will seek to answer key questions such as:
- What key distributed energy technologies can disrupt the power sector?
- How might distributed energy resources – such as solar panels or plug-in vehicles in garages – impact power system operations, markets, and regulations?
- What business models may develop, and how will they successfully serve both upstream electricity market actors and energy consumers?
- What impact could these new business models have on incumbent utilities, and what opportunities may exist for other industry sectors to capitalize on these changes?
The study will devote special attention to develop an in-depth analysis of the way regulation needs to evolve to create a level playing field for both distributed and traditional energy resources, and specifically to allow for an efficient deployment of distributed resources. This will entail revisiting renewable support mechanisms, generation markets design, distribution remuneration, end-user tariffs design, retail market implementation matters, the role and interactions among network operators and system agents, and other related regulatory questions that might arise as the study develops.
The ultimate aim is to investigate what plausible visions of the future of the power sector are, including changes for incumbent utilities, new electricity service providers, regulators, policy makers, and consumers.
The Utility of the Future brings together a diverse consortium of leading international companies to address emerging issues in the electric power sector, and provides a neutral framework within which to evaluate the economic, regulatory, and technological impacts of the ongoing evolution of the power sector world-wide.
The study team from MIT and IIT-Comillas combines a breadth of skills in quantitative economic and engineering modeling, with a sophisticated understanding of the complex interactions in the electric power industry. The team includes faculty with decades of experience in advising governments, corporations, and institutions on regulation and market design. The consortium partners — industrial and other market participants — bring valuable real-world expertise and experience to the study.
Carlos Batlle is Visiting Scholar under the Massachusetts Institute of Technology's MIT Energy Initiative, where he teaches "Engineering, Economics and Regulation of the Electric Power Sector", together with Prof. Pérez-Arriaga.
He is Associate Professor at the Comillas Pontifical University's Institute for Research in Technology in Madrid and Electricity Advisor of the Florence School of Regulation, an institution under the aegis of the European University in Florence, and Director of FSR Summer School on Regulation of Energy Utilities.
He has worked and lectured extensively on the operation, planning and risk management modeling of electricity generation and networks and more specifically on electric power system regulation. He has also rendered consultant services for governments, international institutions, industrial associations and utilities in over 20 countries.