The Tennessee Valley Partners Creating a Two-Way Grid

Episode ID S4E04
April 24, 2024

A decade ago, rampant predictions assumed solar and battery storage would render the century-old electric utility business model obsolete and trigger a “utility death spiral.” But the reality is just the opposite. In this episode of Power Plays, leaders of Middle Tennessee Electric and Tennessee Valley Authority explain how they are using DER to transform their regional grid.  


Jason Krupp: I think at the end of the day, really, most end-use customers are really interested in comfort, convenience, consistency, and affordability. I think the challenge is going to be for the utility industry, is to figure out how to deliver on these expectations in the face of the trends that we're facing. Things like faster electrification, incorporating the cleaner intermittent generation sources, extreme weather events, et cetera.

Teri Viswanath: That is Jason Krupp, the senior project manager for grid modernization at TVA. And I’m Teri Viswanath, the energy economist at CoBank and your co-host of Power Plays. U.S. utilities are re-envisioning the century-old business model of one-way electricity delivery, seeing a future that involves a two-way flow. Joining me for this conversation is my co-host Tamra Reyolds, a managing director here at CoBank. Hello Tamra.

Tamra Reynolds: Hey Teri.

A decade earlier, there were predictions of the end of the utility business as concerns of a “utility death spiral” ran rampant. That greater adoption of solar and battery storage would make the electric utility business model irrelevant. But the real story is turning out to be a bit more nuanced.

To understand just how nuanced we wanted to focus attention on the collaboration between Middle Tennessee Electric, a local power company (commonly referred to as an LPC or distribution co-op,) and its power supplier, TVA. Where DERs might have once been viewed as the industry’s Achilles heel, the intentional integration of member and distribution co-op resources are now seen as an important way to reinforce the Valley.  

Viswanath: That’s right. TVA is the largest public power provider in the United States — with their territory covering nearly all of Tennessee; large chunks of Alabama, Mississippi, and Kentucky; and bits of three other states. This organization works with 153 local power companies and serves about 9 million consumers. And they acknowledge “across every setting, new energy technologies and DER are augmenting and decentralizing our power supply system. Electric grids that were designed and built to accommodate one-way power flow must be reevaluated to accommodate two-way power flow on the system.”

Reynolds: The Regional Grid Transformation initiative (or RGT, as we will refer to it on this program) is a collaboration between TVA and a spectrum of LPCs, including Middle Tennessee Electric, to transform their regional grid into a more resilient, flexible and integrated system in response to changed customer expectations and operating conditions. But I want to let Middle Tennessee’s Chief Operating Officer, Brad Gibson, explain.

Brad Gibson: Middle Tennessee Electric is a cooperative that is based in Murfreesboro, Tennessee, that's in and around the greater Nashville region. We're experiencing a lot of growth.

We have approximately 340,000 meters across a four-county service territory, and we're adding between 8,000 and 9,000 meters every 12 months, a lot of good growth. Certainly, a changing dynamic for what's taking place here in terms of member expectations. That really drives Middle Tennessee Electric and their participation with TVA's Regional Grid Transformation, RGT.

Tennessee Valley Authority is our wholesale power provider. They're our longtime partner. The conversation that we had coined around the regional grid transformation is focused on really a strategic deployment of emerging grid technologies that are focused on modernizing the grid. The way the grid needs to operate in the future needs to look different in order to continue to focus on serving our members at the highest level.

Viswanath: Jason Krupp, the Senior Project manager for TVA’s grid modernization initiative gives us a bit more background on how this project kicked off.

Krupp: The initiative started back in 2021, and at that time, we had nine local power companies join us on this at the start of this. We refer to them a lot of times as the coalition of the willing. We started off with those nine, but we’re now up to about 17 local power companies that are working with us on this initiative and really helping us think through some of the big ideas on here and where we need to be focused for grid transformation in the Valley.

With the Regional Grid Transformation Initiative, its goal is forward-looking, understanding that the electrical industry is starting to change. How can TVA and local power companies start to work closer together in both of our planning efforts as well as our operational efforts? TVA and our local power companies are not vertically integrated, so we need to always work in partnership and understand what information we can and need to share back and forth between each other to make our electrical system in the Tennessee footprint really as reliable, resilient, and affordable as possible. Our role as TVA is really to help the LPCs come together. We are really a good convener for the Valley as well as bringing in other subject matter experts that are working across the industry to sit down so we can think through these issues and see how we can best work to resolve them for our particular footprint.

Viswanath: Let's break that down. Why this sort of collaboration is going to be necessary for our future grid.

Krupp: It's really necessary as more intermittent resources are starting to be brought onto the system, it just brings up more and more necessity for all utilities to be able to start to control the demand side of the equation. TVA and other generation utilities, we're going to continue to make sure we have reliable power that's out there and dispatchable.

To account for some of that intermittent part of that power, we're going to need to be working on both sides of the equation. Being able to have more visibility, coordination, and collaboration with the local power companies who control that demand side of the equation is really going to be necessary. Because at the end of the day, we want to make sure that we are providing the lowest cost option for our customers as well as being really there when they need us.

Reynolds: Brad, as understand it, and maybe you can give us a little more clarity, it sounds like TVA developed the big picture or the strategy of where you all were going, and then it was really up to the distribution entities or the local power companies, as you said, to come up with how you execute on that from a two-way grid standpoint. Can you talk a little bit more about the process and maybe what was involved and what all your role is relative to TVA's?

Gibson: TVA, from my perspective, was taking a strategic item and then in RGT thinking about how do you move that to tactical. How do we ensure alignment in the right direction and then think how to do that when we're not a vertically integrated utility? So for instance, TVA serves 153 different LPCs across the valley, co-ops and municipals. How do we do that when there's 153 folks doing things slightly different, at different paces, and maybe in different ways?

We want to leverage that creative approach to how we solve problems, but also make sure we align the results of those pieces, doing what we want to do to enable higher reliability for our members, better resiliency, ensuring that we keep a focus on providing great value for the kilowatt hours that we deliver.

How do we leverage that strength is really a focus, and we just don’t want that to become a weakness.  And I think RGT enables that conversation. I think also more directly technically related there, we begin to see that there's a necessary marriage of the traditional electric grid and a robust telecommunications network. When we think about the purpose and the mission, and the vision at Middle Tennessee Electric, we want to make sure those pieces are aligning, not just for the delivery of what we're doing at Middle Tennessee Electric but also that we're enabling what's necessary for the G&T side of the equation. We want to make sure those investments are appropriately leveraged to create value all the way through that value stream.

Viswanath: Tamra, this is the point in your discussion with Brad, where we see an important re-framing of the evolutionary moment we are living through, not as a “death spiral,” where segments are pitted against each other (that is, the roof-top installing electric customer with their local power company, and the local power company with their supplier) but a time that requires deep collaboration across the spectrum.  

Gibson: I think the goal of RGT is to ensure that those tensions are going to exist, but how do you make them healthy, right? There's a lot of healthy tension that can be there that uncovers opportunity. Taking things that might be quickly perceived as weakness and flipping those around and making sure we're creating opportunity, that happens through communications, making sure we're having direct conversations, that we're not afraid of having difficult conversations.

Ultimately, I think that works best, and it's critically important that we always go back to it's about the consumer. If it's about the member and we agree upon that, then our conversations will be challenging, but we know the end result is focused on delivering great value to the consumers that we serve. I think we have good alignment between Middle Tennessee Electric and TVA in that regard. Even as challenging as these conversations are, when we really back up, when we think about our purpose to improve the lives of the people we serve, it helps.

Reynolds: Yes. All comes back to mission, right? I love that.

Viswanath: From a power supplier’s perspective, how is communication (as Brad highlights) or engagement changing with their local power companies?  

Krupp: TVA, we are the balancing authority and the reliability coordinator for the region. From the past, we've always had a lot of coordination with other utilities around us. Historically, as we've provided power, it has really been all that one-way communication. We're just historically just ensuring that we had very good power reliability and quality being delivered to our local power companies. As we are expecting more distributed energy resources to come online, we are anticipating the potential for that two-way power flow.

We've got to have a lot more insights working with our customers of what sort of generation as well as load forecasts are looking like on their systems. We know and have a better sense of when we might start to experience some two-way power flow onto our system. How do we accommodate for that? How do we leverage it, really, to help make sure that we're using the least cost options available on the system? A lot of that is going to be a lot more communications between TVA and local power companies, sharing information of what we are seeing on the bulk electric system and what they are seeing on their individual distribution systems.

As we have talked about, understanding we need to be a lot more coordinated, so what sort of efforts do we need to be developing today, and starting to do the guiding pathway to say, in terms of data sharing, do we have the communication links between our two organizations? Do we know what sort of planning processes and scenarios are needed? It was really taking that long arc view to say, "What are the areas where we need to be working together?" From that, that's where we came together with the five key capability areas around integrated planning, enhanced transmission and distribution operations, regional guidelines, exceptional end-user experience, and grid transformation-enabling capabilities.

Reynolds: Brad builds and expands on the areas that Jason just mapped out…

Gibson: Fundamentally, we have to start with consumer experience. I really think that helps encompass all these different areas because it really goes back to their expectations of reliability. How do we continue to focus on affordability and value, and solutions that more naturally integrate into a person's life or a business's priorities. I think when we start there, then these other pieces really fold very nicely into the way we think about what the grid can do and how it may need to operate in the future.

Again, I'm going to reference back to one item, particularly that Middle Tennessee Electric thinks is critical to that, is our deployment of fiber through our broadband subsidiary, United Communications. This infrastructure, it not only solves the unserved and underserved broadband piece, but it becomes the foundation for our distribution automation and it furthers our efforts for smart grid. I think those pieces begin to fit very nicely into that tactical roadmap that comes out of TVA's regional grid transformation.

Other areas we're going to look at in the coming years that fit in there are certainly looking at advanced distribution management systems, ADMS. We're early testers and fiber-connected meters, and we'll be pulling solutions around distributed energy resources as well. We just did our first-ever DC fast charger under a program here. We're looking at level two charging and how that compliments the grid and how these advances with what we want to do under RGT, again, how do we use that to roll up to support what it is our G&T TVA is looking to accomplish to keep their rates low and their reliability high?

Reynolds: I love the notion that the consumer experience or their expectations are maybe ground zero for how you think about all the other pieces in the roadmap. We noted that a lot of distribution operations, generically speaking but also personally, are evolving with what the consumer is expecting and what they want to see from their utility. What's the big picture and then maybe some specific examples of how consumers might benefit from this collaboration with TVA and with other LPCs?

Gibson: I think one thing is we have to get better, Middle Tennessee Electric, potentially the industry in general, at listening to what our members are asking for, and again, residential to large C&I, all across that spectrum, their worlds are changing. We need to expect of that change, if we're listening, well, will equate to understanding how we need to evolve. Thinking about how we leverage data into solutions. How do we help people be better consumers of what we sell by giving information back to them that allows and enables them to make decisions in your real time about their energy consumption?

How do we create choices for our members? We used to talk a lot about rates in the industry, and we're trying to move away from talking about rates. We've listened to our members, that's not what they care about. They care about their bill, and ultimately what they care about is the value of what they get for the energy that's delivered. How do we create energy plans that evolve around a person's lifestyle and ultimately give them choices?

Then allow our folks to service experts in that space to educate them on, "Hey, I think this will fit what you're asking us for very well. We've got options. If it doesn't work, call us back. We'll find a different option that fits your lifestyle." I think a lot of it starts with listening and then evolving what we've traditionally talked about into products and services that better-fit people's needs today.

Viswanath: In terms of the working groups of the distribution companies, tell us a little bit about the tactical or execution plans on how that two-way grid is going to work in the region.

Krupp: We were able to work with our partners across the board, really deep into their organizations from the financial side, to the IT side, to the operations side, to the planning side, really sitting with them and having conversations of, "What sort of projects do you have on the books right now? Where are you at in terms of your modernization journey?" so we could get a holistic look across those five capability areas.

From there, we started to work with them to say, "Okay, well, if you are already starting to deploy fiber to this part of your system, are you now starting to think about bringing in that information into a centralized repository so that you can start doing data analytics, start sharing that with TVA and other entities that they might want to do that with?" It was really a nice deep dive into their organization and starting to understand where they were headed, and then starting to make suggestions to them of where they could go that would help us align with that 20-year strategic roadmap.

Viswanath: It's interesting because you mentioned 153 different distribution companies, right? That becomes interesting and certainly challenging, I would imagine.

Krupp: It is, because at the end of the day, every local power company, really in the country, they are at their own starting point. That's what we have in the Valley. All 153 have their own starting point. They all have their own local needs and issues that they want to make sure that they are addressing as best as they can. This is not a cookie-cutter-type roadmap for any of the local power companies. One of the goals for doing this with local power companies is to be able to create these and share these with the other local power companies so that they can start to see maybe a journey for themselves.

We have recently completed with our local power companies a capability progression model. This is a core ongoing activity within Regional Grid Transformation where TVA and local power companies, we collaborate together to say, "What are some of the key advanced grid capabilities we would like to see for the Valley?" We've worked together to identify really is around 17 different capability areas,

These documents really with the 17 of them, can really help guide the LPCs to say, "This is where we would like to see the Valley move in terms of modernization and the types of capabilities we would like to see all the LPCs have." Now, we were very intentional in naming the capabilities and building it out the way we did, because we were not trying to dictate in any way, shape, or form that anyone had to use a particular technology or a particular vendor. We were trying to be very high level in terms of not getting specific about technology, but at the same time, we try to be very specific in terms of what that might look like to be able to provide bright dividing lines between a maturity level one and a maturity level four per se. We feel like with these capability progression models, it really gives everyone a guiding North Star on where to start heading.

Viswanath: We have 17 different categories, but these categories fall in common segments or areas grid situational awareness being one particular area. If you could give us an example, so if we had this gold standard, what does a gold standard look like?

Krupp: As an example, we'll take grid situational awareness. What we would like to be able to see is for all of the LPCs, here are four examples from that particular capability, is visibility. Can a utility, can the local power company, do they have remote visibility to say 75% to 95% of their substations and to at least a quarter of some of their downstream devices? Another area there on that is a reliability metric reporting. Are they able to create the EIA-required reliability metrics on a semi-automated cadence so that it's not completely manual?

On their alarm philosophy, do they have some formal alarm philosophy that has been established and alarm reporting? Are they displaying those in a re-engineered way to reduce abnormal conditions and confusion for their operators? That gives an example of at a standard level, what we'd love to be able to see across the LPCs is can they meet those types of capabilities?

Again, as you might've noticed, it was completely agnostic to which type of vendor or control system they might want to use. It's more about, "Can you identify and have this visibility to the portion of your territory? From there, it just gets a little bit more mature, if you will, moving from three-quarters of your station to all of your substations and most of your downstream devices, et cetera.

Viswanath: As we think about the end customer, we're seeing a lot of movement on that front, whether it's going to be a level two charger, so new demand, or maybe it's going to be rooftop solar. There are a number of these downstream devices that can really change the operating profile for your local power companies. As we think about this idea, and we think about the end consumer, I know that was part of the discussion, is the consumer being brought along on this journey?

Krupp: I think LPCs and their end-use customers, they're going to want and benefit from more visibility, a better understanding of the electric system, and continued and improved reliability. Because I think at the end of the day, really, most end-use customers are really interested in comfort, convenience, consistency, and affordability. I think the challenge is going to be for the utility industry, is to figure out how to deliver on these expectations in the face of the trends that we're facing. Things like faster electrification, incorporating the cleaner intermittent generation sources, extreme weather events, et cetera.

Viswanath: Jason, what have we missed in this conversation?

Krupp: I don't feel like we missed a lot, but I would just close with that and reiterate what we've talked about is understanding and appreciating that each local power company is on their own path, but that we are aligning and planning, our operational capabilities to really support this changing world.

Because at the end of the day, we, TVA and local power companies, we want to ensure we've got this really robust, resilient, and reliable electrical system for the customers. This, I think, is just a very exciting time in the utility industry. You hear things like it took 80 plus years to build where we're at today, and we're going to need to basically redesign and rebuild the electric system in the next 10 to 15. Just a lot is going on, and it's very exciting.

Reynolds: It is indeed. I hope all of you have enjoyed this conversation and will join us next month on Power Plays.

Viswanath: Thanks for joining us and we’ll see you next month. Bye for now.

Disclaimer: The information provided in this podcast is not intended to be investment, tax, or legal advice and should not be relied upon by listeners for such purposes. The information contained in this podcast has been compiled from what CoBank regards as reliable sources. However, CoBank does not make any representation or warranty regarding the content, and disclaims any responsibility for the information, materials, third-party opinions, and data included in this podcast. In no event will CoBank be liable for any decision made or actions taken by any person or persons relying on the information contained in this podcast.

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