I attended The Sixth Annual Austin Electricity Conference last month, which included panels on decentralization (which I moderated), electricity business models, future grid design, and Mexican electricity market restructuring.
My panel asked: Does decentralization made sense? We had discussions about proposed “distribution system operators,” grid cost parity for renewables, increased demand response, and the increasing fraction of transmission and distribution costs.
I questioned the timeliness of distribution system operators (DSO) in the absence of nodal transmission-level pricing applied to loads and load-serving entities. Various US protagonists have proposed, or are implementing, DSOs. In the long term, this might make sense, but in most jurisdictions currently, loads and load-serving entities are charged zonal average prices, thus putting the horse before the cart. Instead, I would propose that the better scheme is to go with the low-hanging fruit first: Price load at nodal prices, getting the economic efficiencies, and then discuss a DSO at a later point.