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As Massachusetts faces an energy-affordability crisis, one of the state’s biggest utilities is trying a new approach to satisfy growing power demand without blowing out its grid budget and further spiking residents’ bills.
Late last year, National Grid launched a marketplace in Massachusetts that, put simply, lets the utility shop for the best customer-owned solar and batteries, smart EV chargers and appliances, and other distributed energy resources to reduce strain on the grid in specific locations.
The idea is that National Grid can strategically deploy this existing, scattered energy equipment during periods of high demand — for example, drawing power from a home battery, dialing down a business’s air conditioning, or deferring EV charging.
This relief on the grid lets the utility defer or even fully avoid upgrading the wires, transformers, and other infrastructure that deliver power to households. Such costly upgrades are the single biggest driver of rising electricity bills in the U.S.
That’s why National Grid calls it a “non-wires alternative” program — it’s finding things that can defer and reduce the costs of those grid investments.
Unlike the non-wires alternative projects that utilities have been doing for at least the past decade, this one is designed to move much more quickly and cast a much wider net for resources that can stand in for grid upgrades.
“The 2010s version is, you’ve got big players, a single project for the entire need. It’s an old-school utility procurement,” said Josh Tom, National Grid’s director of energy transition solutions. “It’s a closed system, not accessible to everyone. And it can take a long time.”
These slow, burdensome, and costly approaches have yielded only a handful of successful projects over the years. National Grid’s new program, by contrast, is built around a marketplace platform into which companies can bid resources ranging from big batteries to lots of smart thermostats.
From there, National Grid can assess how they could be combined to solve particular grid challenges at different sites on the utility’s distribution network. That should allow it to move much more quickly to find, test, and potentially pay for resources that meet its grid needs, said Nick Watson, National Grid’s director of flexible resource engineering. “We see it as more of a dynamic process,” he said.
The utility’s bidding opportunity will be open through mid-February and target providing grid relief during the summer and winter seasons from 2026 to 2030, Watson said. “We’ll assess those bids, figure out the procurements that meet our needs, using tools we’re trying out for the first time.” Contracts with winning bidders will follow, and tests of the resources are expected to begin this spring, ahead of eligible assets being dispatched in the summer, he said.
The company running National Grid’s new marketplace is the U.K.-based startup Piclo. It does similar work in its home country with National Grid Electricity Distribution, a subsidiary of the same firm that owns National Grid in Massachusetts.
Piclo is a major provider of flexibility-marketplace services in the U.K., a country that analysts say is far ahead of the U.S. on this front, and the company has expanded to mainland Europe and Australia in recent years. It’s also making inroads in the U.S. via its partnerships with Connecticut utilities and with National Grid, which has already used Piclo’s marketplace as part of its “dynamic load management” programs in New York for several years.
“We’ve done this for years in the U.K. and beyond,” said James Johnston, Piclo’s CEO. “But in a lot of the U.S., this hasn’t happened before.”
The potential could be huge, Johnston said. In September, Piclo announced that it had registered across the U.S. a combined 1 gigawatt of distributed energy resources — a term that includes batteries, EV fleets, grid-responsive appliances, and commercial and industrial buildings that can dial down energy use on demand. Companies registering with Piclo include major residential solar and battery installer Sunrun, demand-response provider Enel X, and energy-efficiency startup Budderfly.
Owners and managers of these distributed energy resources can share data on Piclo’s platform about how much power their devices can inject into the grid, store for later use, or put off consuming, Johnston said. The platform will connect those offers to entities — utilities, grid operators, and large customers like data centers that are looking for ways to mitigate their impact on the system — interested in tapping them to solve energy or grid challenges.
Unlike companies that aggregate distributed energy resources and manage them as virtual power plants, “we don’t take a position in the market,” Johnston said. “We’re that party that partners trust to share data with. We’re that matchmaker — we share the right data sets, end to end, across that entire journey. And we’re the adjudicator — whether you’re matched or not, whether you win a contract or not.”
Piclo has proved its bona fides in the U.K., where it has more than 60,000 registered distributed energy resources and has procured more than 2.6 gigawatts of flexible capacity to date.
For National Grid, Piclo’s marketplace opens up a world of possibilities, Tom said.
“They’re helping us communicate our needs to the market,” he said. “Their open marketplace is a new procurement approach.”
The current program round is looking to secure about 25 megawatts of flexibility, he said. That’s less than half the 52 megawatts secured by the largest non-wires alternative program in the country — the Brooklyn-Queens Demand Management program, launched in 2014 by utility Con Edison to relieve a congested New York City substation.
But National Grid is seeking to solve grid problems at 23 locations, each with a distinct set of needs, Tom said. Some sites require only a small amount of overload relief on a substation or circuit during a handful of hours in the summer or winter. Others may require non-wires alternatives that can be dispatched more frequently or that expand over time as new customers increase peak demands on a specific part of the grid.
One key benefit of working with Piclo’s marketplace is that it helps National Grid mix and match the capabilities of a number of different bidders, rather than forcing a single bidder to meet them all, Tom said. “What we’re really trying to do in this approach is open up the possibility for portfolios of bids that work alongside each other to meet the need in a couple of ways,” he said.
“Let’s say you have a 3-megawatt need for a summer season, a four-hour window or eight-hour window on certain days,” he said. “We want to open the possibility, even if you don’t have 3 megawatts, to bid in your 1 megawatt,” which the company will combine with megawatts from other providers to make up the difference. “That opens opportunities for those who can’t enter the market otherwise.”
Portfolios can be built across time as well as across scale, he added. “Let’s say it’s a four-hour window. If you can only provide 3 megawatts for the first two hours, someone else could provide the megawatt for hours three and four — and we have a complete portfolio.”
Once National Grid selects the distributed energy resources it wants to procure from the Piclo marketplace, the utility will have to run them through a gauntlet of tests to ensure they’re reliable enough to relieve grid stresses.
“There are a bunch of test dispatch requirements before we run a real event or renumerate a party for services provided,” Tom said. This spring and summer will be dedicated to running those tests and to fine-tuning the “contractual structures with the right characteristics to ensure we’re comfortable in the future.”
Regulator support has been critical in setting this up, he added. Massachusetts’ three major investor-owned utilities are required to develop grid-modernization plans under a 2022 energy and climate law that sets the state on a course to net-zero carbon emissions by 2050. In approving those plans, the state let utilities create grid services compensation funds that can pay for non-wires alternative programs, he explained.
Launching Piclo’s marketplace isn’t National Grid’s only attempt at a non-wires alternative program in Massachusetts. The utility is also expanding a 7-year-old program called ConnectionSolutions, which regulators required all the state’s investor-owned utilities to deploy. This program is designed not to relieve local grid constraints but rather to reduce overall peak demands on power plants and transmission grids. In that role, it has delivered hundreds of megawatts of grid relief during summer heat waves and become a national model for virtual power plants.
Now, National Grid wants to see if the program can also help defer or avoid upgrades at specific grid substations and circuits. The expanded version, ConnectedSolutions+, offers customers incremental incentives to install and sign up resources in areas with local grid needs.
What distinguishes ConnectedSolutions+ from National Grid’s work with Piclo is that the latter program targets not just customers with smart thermostats, EV chargers, grid-responsive appliances, and battery storage but also larger grid-connected energy assets like community solar arrays and batteries, Tom noted. Massachusetts has a lot of community solar that’s been challenging to connect to the grid, and the state has been working for years to find a way to use those solar and battery systems to relieve grid stresses.
Importantly, National Grid’s first round of non-wires alternatives is targeting spots that aren’t in dire need of grid upgrades, Tom said. “We’re not putting at risk the safety and reliability of the network by doing this.”
Another key target for National Grid is for “bridge-to-wires” needs, Watson said — spots where new customers that use a lot of power want to plug into the grid and “you can’t build the infrastructure quickly enough” to accommodate them, he said. Distributed energy resources can bridge the grid overloads until the necessary upgrades take place.
One big question that utilities must grapple with is when a non-wires alternative makes financial sense. After all, a utility must pay the customers handing over the reins to their distributed energy resources. Utilities also can’t avoid upgrading their grids forever — and changing circumstances can wreak havoc on the assumptions that inform how much a non-wires alternative is worth.
Utilities must account for a ton of variables to determine the value of deferring grid investments versus biting the bullet and investing in must-have upgrades or expansions, Watson said. “We’ve been developing methodologies to help us do that over the course of this year,” he said. “It depends on what the use case is.”
Although non-wires alternatives are catching on, they face an uphill battle. Regulated utilities in the U.S. earn guaranteed profits on every dollar they invest in their grid infrastructure — an inherent disincentive for them to seek out alternatives to grid investment, even if they could save customers money over time.
But from Watson’s perspective, utilities will have to find better ways to manage their grids in the long run, as power demand grows, distributed solar and batteries proliferate, and electric vehicles and buildings add both new strains and new sources of flexibility to the system.
“Traditionally, it isn’t the business model of the investor-owned utility to leverage flexibility,” he said. But to meet state goals around electrification and emissions reductions, “we’re going to have to change the way we manage our network. We can’t just continue to build out the network in the traditional ways we have in the past.”
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