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April 17, 2019
Report Co-Authored by The Brattle Group and Edison Electric Institute Discusses a Modeling Approach for Understanding Changes in the Electric Utility Industry

A new report authored by Brattle Principal Bruce Tsuchida and Lawrence Jones of the Edison Electric Institute (EEI) introduces a modeling approach that can help industry planners understand the feedback and interdependencies caused by the complex changes happening in the electric utility industry, and develop effective strategies against these ongoing changes.

A wide variety of new energy supply and energy use management technologies, mostly distributed energy resources (DERs) such as solar photovoltaics (PVs), electric vehicles (EVs), and energy storage (ES), are making their way into the electric utility industry. These DERs can either provide system benefits or create new system needs based upon where they are located. DER adoption is typically driven by policy-induced customer decisions that may not align with system needs. These dynamics make understanding the feedback and interdependencies critical for industry planners.

The System Dynamics modeling approach helps address the impact of DER growth and adoption in ways that other analysis techniques, such as the traditional scenario-based analysis, cannot. For example:

  • System Dynamics is designed to aid in understanding nonlinear complex systems and also provides the ability to visualize business process impacts.
  • Visualization of an influence diagram of how numerous factors in a complex process relate to one another helps keep track of how those factors could play out in multiple different circumstances under various stimuli.
  • The System Dynamics modeling approach’s ease of testing capability allows the user to compare a number of alternative assumptions and strategies in real time, while being simple and easy to understand without trivializing the underlying assumptions and interdependent processes.

This modeling approach is also well-suited for industry developments other than the emergence of DERs, which involve third-party decisions, rapid changes in technology, and strong feedbacks reflecting the interdependencies between sectors that have their own distinct economics and decision makers.

The report, “System Dynamics Modeling: An Approach to Planning and Developing Strategy in the Changing Electricity Industry,” was prepared with the support of Brattle Principal Emeritus Philip Q. Hanser, Brattle Principal Frank Graves, Brattle Associate Nicole Irwin, and former Brattle Consultant Kevin Arritt.