Grid Architecture for Energy Ladder Products and Services

Grid Architecture

Grid architecture describes the basic equipment functions, types, and sizes that provide utility infrastructure to end users. In the history of electric utility companies serving specific geographic territories, monopoly companies determined the basic infrastructure components used to deliver services to their customers. This includes all basic equipment components, like poles, wires, and transformers, plus the associated metering, and communications and control technologies. Each type of utility (electric, natural gas, water, wastewater, telecommunications, broadband, etc.) has its own grid architecture, but it is also important to understand that multiple utility infrastructures depend on one another for successful operations. For example, all utilities are increasintly dependent on communications systems, and water utilities are intertwined with energy utilities in multiple ways.^[1]

Utility infrastructure and regulations are now beginning adapting to many innovations in equipment and functions. Most notably, there are now all kinds of distributed energy supply- and demand-management resources, including multiple energy storage technologies, available at vastly different scales, and sensors and controls to better manage both supply and demand flexibility. These new distribution-scale technologies mean that new kinds of grid architecture are now available for introduction. [See especially U.S. Department of Energy, Office of Electricity, 2022 and 2019, in references below.]

In the past century, grid architecture for multiple utility services almost always included facilities serving large geographic territories. The technologies grew in capacity until the utilities were reliant on a variety of highly-centralized, large-scale components serving many thousands of customers. Primary examples include gigawatt-scale electric generators, serving customers that are interconnected via hundreds or thousands of miles of high-voltage electric transmission. At the distribution network level, customers were served by wires and transformers intended to provide services to each customer for 50 Ampere (50Amp, or 50A) service, and then growing to 100A or 200A service per residential customer. Commercial customer services for the smallest businesses were served at the same residential power and energy levels, but medium or large commercial customers were and are now most often served at higher levels. Distribution circuits were typically constructed at what are nominally 4kV, 8kV, or 13.2kV levels. Larger commercial, institutional, and industrial customers typically have been served at higher and higher voltages, known as subtransmission (such as 38kV, 69kV) and transmission (such as 138kV, 240kV, 345kV, or 500kV). [Need one or two best citations for learning more about the U.S. electrical infrastructure here.]

However, much more attention is now being paid to highly distributed resources (serving individual end users, small clusters of users, neighborhoods, small villages, and various kinds of campuses). These same technologies can also be deployed to serve remote communities, potentially including services for many of the world's estimated one-million populated islands.^[2] Some such facilities are already serving an estimated 1 billion electricity consumers, using remote, off-grid facilities which might never be interconnected with a wide-area grid, or might not be interconnected for many years. [cite Gogla annual report here]. The World Bank estimates that as many as 200,000 remote mini- and micro-grids are needed to serve customers who might never receive access to a wide area grid, or at a minimum for those that are not likely to have access in the coming decade.^[3]

These circumstances are leading to increasing concerns about what resources are needed to serve differently situated customers. A particular concern is to design utility rates so that all customers might appropriate contributions to the utility infrastructures needed to provide them with safe, reliable, and resilent utility services, in keeping with each customer’s individual infrastructure needs, their energy and power utilization, and their willingness and economic opportunities for making contributions to ensure continuation of services to themselves and their communities. Tension exists between rate designs and the possibilities for customers to "defect" from participating in the support of specific utility services.^[4]

The essence of the "energy ladder" concept is that customers who previously lacked them should be afforded the opportunity to obtain access to clean and modern energy technologies and services, in small and gradual ladder-like "steps." Each subsequent step up the energy ladder can lead to improved outcomes in terms of economic growth and prosperity. This concept is frequently discussed in conjunction with the United Nations Sustainable Development Goal #7 [SDG7]. That goal is intended to "ensure access to affordable, reliable, sustainable and modern energy for all." [See Appropedia on Sustainable Develoopment Goals].

The conceptual overview presents the "Energy Ladder" concept, seven at orders of magnitude ranging from "no service" to single-digit watts (in what is often called a "solar lantern"), and then upwards in scale to include consideration of the smallest mini and microgrids, up to the largest microgrids for major campuses or whole communities. Even larger wide area grids have been serving customers at greater orders of magnitude.

As Stanton and Nordman (2017) explain:

There is an opportunity for all utilities to create value for their stakeholders by enabling and implementing well-designed energy ladders, representing sequences of products and services that lead to increasing well-being for customers that are presently unserved or underserved.

Seyyed Ali Sadat and Joshua M. Pearce. 2024. "The threat of economic grid defection in the U.S. with solar photovoltaic, battery and generator hybrid systems," Solar Energy, v282, 112910, ISSN 0038-092X, https://doi.org/10.1016/j.solener.2024.112910.

Abstract: Solar photovoltaic (PV) costs have dropped rapidly making PV the fastest growing and least expensive electricity source. Grid-tied PV systems owned by prosumers currently dominate the market primarily due to historical net metering. As utility rate structures shift away from net metering, increase unavoidable costs or restrict grid access, solar prosumers have an increasingly economic path to grid defection. These trends coupled with increasing grid electricity costs and decreases in both PV and battery costs, have made economic grid defection and utility death spirals salient issues. To evaluate the economics and realistic potential of grid defection, this study evaluates eighteen case studies across the U.S. to assess the profitability of grid defection across different irradiation zones using hybrid PV-diesel generator-battery systems. The results show that grid defection is already economically advantageous in some solar-rich locations that have high electric rates. Rate structures and policy, however, can be used to encourage solar-prosumers to remain on the grid rather than grid defect. Utilities that have rate structures that discourage on-grid PV systems, however, may unintentionally incentivize grid defection. If consumers feel that inflation will be high for a long period of time they may use off-grid PV systems as economic hedges. Overall, the results of this study and the clear trends in economic and technical development indicate that regulators must consider mass economic grid defection of PV-diesel generator-battery systems as a near-term possibility and design rate structures to encourage solar producers to remain on the grid to prevent utility death spirals.

RMI report from 2014. https://rmi.org/blog_2014_05_06_from_grid_defected_to_grid_connected/

Jim Lazar article from 2023. https://energycentral.com/c/um/big-batteries-electric-vehicles-will-accelerate-grid-defection-solar-customers Note from Hawaii: "overall average is a 30% reduction in sales/customer." Second Lazar article: https://energycentral.com/c/um/california-will-follow-hawaii-and-see-shift-solar-most-will-now-go-commercial

Quoting Lazar in EBT: "utilities were adaptable when supermarkets were remodeled UP from 30,000 square feet to 100,000 square feet, and needed upgraded services. I expect they will need to apply tariffs equitably when services are downgraded." "Bottom line: 1) There will be continuing load defection in all areas with average or higher rates and average or higher insolation; this is mostly economic load defection. 2) There will be actual grid defection among utilities that impose high fixed charges on customers; this is mostly uneconomic grid defection, driven by attempts by utilities to impose monopoly pricing power where they no longer have an economic monopoly. 3) In smarter jurisdictions, the cost to remain connected to the grid will not exceed the cost to remain connected to the grid (final line transformer and service drop ONLY), and we will be able to have a much more economical power system, with interdependence and diversity reducing costs. Those who invest (in efficiency, solar, and storage) will benefit more than those who remain grid dependent." (EBT, Oct 20, 2024).

Defection can be device by device (and, think appliance by appliance with “fuel switching” - called “load” defection), circuit by circuit (where “critical loads are served by solar plus batteries, for example), and/or building by building.

Quick reading list about LOAD DEFECTION:

• https://rmi.org/insight/economics-load-defection/
• https://www.energycentral.com/energy-management/post/self-generation-leads-load-defection-D6WPj6PtfCTmHYt
• https://www.sciencedirect.com/science/article/abs/pii/S0306261920300064
• https://www.cesa.org/event/resilient-power-project-webinar-load-defection-how-solar-storage-will-change-the-world/
• https://rmi.org/insight/the-economics-of-load-defection-how-grid-connected-solar-plus-battery-systems-will-compete-with-traditional-electric-service-why-it-matters-and-possible-paths-forward-executive-summary/
• https://www.researchgate.net/publication/358933314_Retail_Load_Defection_Impacts_on_a_Major_Electric_Utility's_Exposure_to_Weather_Risk
• https://www.utilitydive.com/news/mckinsey-cheaper-batteries-present-imminent-threat-of-load-defection-for-u/446193/

Quick reading list about GRID DEFECTION:

• https://blog.cdnrg.com/blog/grid-defection-isnt-a-reason-to-fight-distributed-energyits-a-reason-to-emb
• https://www.appropedia.org/Economic_viability_of_SME_Grid_Defection_Literature_Review
• https://www.vox.com/2016/2/5/10919082/solar-storage-economics
• https://microgridnews.com/homer-software-plays-key-analytical-role-in-economics-of-load-defection-report/
• https://www.academia.edu/124058724/The_threat_of_economic_grid_defection_in_the_U_S_with_solar_photovoltaic_battery_and_generator_hybrid_systems
• https://energychangemakers.com/grid-defection-going-off-grid/
• https://www.eurekalert.org/news-releases/1056520
• https://www.sciencedirect.com/science/article/pii/S2589004223004923
• https://www.aei.org/articles/economics-of-grid-defection-ii/
• https://www.energycentral.com/renewables/post/can-utilities-stop-grid-defection-when-local-solar-low-cost-leader-LUf2fKsSUF9Wao0
• https://www.renewableenergyworld.com/energy-business/widespread-customer-defection-from-electric-grid-possible-by-2025/
• https://www.cell.com/iscience/pdf/S2589-0042(23)00492-3.pdf
• https://www.swellenergy.com/blog/vermont-s-grid-gets-smart-and-encourages-people-to-get-off-of-it/
• https://www.ncsl.org/energy/modernizing-the-electric-grid
• Updating infrastructure regulations for the internet of energy

• UTILITY ROLES AND RESPONSIBILITIES:
  • COMPETING VISIONS OF THE UTILITY OF THE FUTURE: Safti, Fox-Penner, SEPA project, etc. Safti: ""
  • Utilities should charge customers, by rate classes, for the services necessary to serve them, but utilities must not charge customers for resources unnecessary to serve them. Customers at each "step" on the energy ladder should make some reasonable contribution to the utility infrastructure as a whole, but those contributions must be commensurate with the demands that customers are placing on the infrastructure necessary to serve them.
    • Regulators and customers should insist that utilities are implementing state-of-the-art, integrated systems planning, which will minimize the need for constructing infrastructure in excess of customer needs.
    • Rates should be based at least in part on customer-affordability and ability to pay.
  • Like all competitive businesses, utilities will have to manage the churn of customers switching back and forth between grid-connected and off-grid uses.
• CONSUMER/CUSTOMER/RATEPAYER ROLES AND RESPONSIBILITIES
  • Customers must be allowed to shift the modes of operation of individual loads, individual circuits, individual buildings, and autonomous nano-, mini-, and micro-grids, between grid integrated and non grid integrated. When operating in grid-integrated modes, the customers should pay a fair share of "rental" fees for utilizing the grid services.
  • Based on cost-causation principles, customers should pay reasonable fees for using grid resources, but should not have to pay for grid resources that are not necessary for serving them. In particular, this means that customers on the lower steps in the energy ladder should not be charged for services necessary only for higher-voltage and longer-distance infrastructure. Standardizing the infrastructure needs for each step in the energy ladder, up to the appropriate standard for robust distribution system infrastructure (e.g. 4, 8, or 12kV distribution wires and transformers) is necessary to ensure that those customers with no need for service from centralized utility generation and transmission resources should not be charged fees associated with those resources.
• THIRD PARTY ROLES:
  • Exchanges in the grid should be based on costs and grid benefits. All those interacting with the grid should be required to act as "good grid citizens." This means operating safely, and not causing any damage for equipment interconnected with each customer and their neighbors who share the same utility infrastructure.
  • All third parties must adhere to basic sound principles of consumer fairness and consumer protections.
  • Rates for the lowest several steps on the energy ladder should be based in large part on affordability and and the customers' ability to pay.

• At every scale in the energy ladder (individual loads, individual circuits, individual buildings, and autonomous nano-, mini-, and micro-grids):
  • Technological standards should ensure the safe operation of resources, operating both in stand-alone (Island) mode and when operating in parallel with wider-area infrastructures.
  • Each scale should be capable of operating as a good grid citizen based on best-available practices in coordinating both local and wider area grid resources to minimize operating costs by using relevant data and intelligent systems utilizing algorithms to ensure safe, reliable, and resilent operations at least system costs.

• • off-grid systems
    • https://www.energy.gov/energysaver/grid-or-stand-alone-renewable-energy-systems
  • movable/transportable systems
    • Systems for boats, cars, trucks, bicycles, scooters, recreation vehicles.
      • https://www.sesame.solar
      • https://www.pv-magazine.com/tag/vehicle-integrated-photovoltaics/
      • Vehicle to Home (V2H) and Vehicle to Grid (V2G) systems.
        • https://www.energy.gov/sites/default/files/2018/06/f52/elt193_pratt_2018_o.pdf
  • plug-and-play systems for both off-grid and "plug-in" systems.
    • Australia. Understanding the challenges of multiple regulatory processes for photovoltaic (PV) solar power projects. https://repository.nwu.ac.za/bitstream/handle/10394/35108/Shomang%20BB%2022034722.pdf
    • Free Electrons -- support for entrepreneurs and start-ups. https://freeelectrons.org/
    • https://www.energy.gov/search/site?keywords=plug-and-play+solar&sort_by=search_api_relevance
    • Household energy in Germany 2024 update: https://www.kfw.de/PDF/Download-Center/Konzernthemen/Research/PDF-Dokumente-Fokus-Volkswirtschaft/Fokus-englische-Dateien/Fokus-2024-EN/Focus-No.-457-April-2024-Household-PV.pdf
    • IEEE. Empower a Billion Lives https://ieeexplore.ieee.org/stamp/stamp.jsp?arnumber=10266798
    • IEEE Offgrid amd Hybrid Charging for EVs. G. Rituraj, G. R. C. Mouli and P. Bauer, "A Comprehensive Review on Off-Grid and Hybrid Charging Systems for Electric Vehicles," in IEEE Open Journal of the Industrial Electronics Society, vol. 3, pp. 203-222, 2022, doi: 10.1109/OJIES.2022.3167948.
    • Mundada, A.S., Y. Nilsiam, and J. M. Pearce, 2016, "A review of technical requirements for plug-and-play solar photovoltaic microinverter systems in the United States," Solar Energy, V135, pp. 455-470.
    • Munro, Paul G., and Shanil Samarakoon (2022): Off-Grid Electrical Urbanism: Emerging Solar Energy Geographies in Ordinary Cities, Journal of Urban Technology, DOI: 10.1080/10630732.2022.2068939
    • Off-grid policies. https://research.tue.nl/en/publications/off-grid-energy-policy-an-analysis-and-new-priorities
    • Seme, S., L. Strojanšek, E. Simonič, and K. Sredenšek. "Balcony solar photovoltaic plug-and-play systems." 22nd International Conference on Renewable Energies and Power Quality (ICREPQ’24), Bilbao (Spain), 26th to 28th June 2024. ISBN: 978-84-09-60656-6. https://www.icrepq.com/icrepq24/422-24-seme.pdf
    • Sorge, Petra, 2024, "Berlin Pioneers New Market for Urban Solar Power." Bloomberg [Electronic article, available at https://www.bloomberg.com/news/articles/2024-05-04/berlin-pioneers-new-market-for-urban-solar-power]
    • Stevens, Kelly A., Sara Iman, and Kristopher O. Davis. (2022). "The cost of utility discretion on residential solar requirements," Renewable and Sustainable Energy Reviews, V159, 112231, ISSN 1364-0321. https://doi.org/10.1016/j.rser.2022.112231. Abstract: This paper reviews state and utility interconnection rules for residential solar to determine what safety equipment is required by state and utilities. This study finds that most states allow utilities’ discretion on equipment requirements for residential solar arrays. Oftentimes, utilities with discretion will require technically unnecessary equipment, such as an external disconnect switch, that increases the cost of the solar array to the customer. With this information, this paper calculates the costs of external disconnect switch requirements using estimated residential solar capacity and customer counts in each state. Based on a review of over 200 utility policies that cover more than 70% of U.S. electricity customers, most utilities require or strongly recommend an external disconnect switch. Revising these policies would have avoided $413 million in extra, unnecessary costs for home PV systems in the U.S. thus far. Based on future projections of residential solar growth to 2050, eliminating these regulations would save $3.7 billion for customer-generators across the country.
  • Upward compatibility in steps forward (that is, "up") the energy ladder
  • Downward/backwards compatibility in steps "down" the energy ladder

• • See how far along the eMerge Alliance is in developing standards at each voltage level. https://www.emergealliance.org/standards/our-standards/emerge-technical-standards-hierarchy/

• https://isolaralliance.org/uploads/docs/540dc1da191598c88320bf07b42e8d.pdf,
• https://www.mercycorps.org/sites/default/files/2020-11/Mercy-Corps-Energy-Access-Approach-2020.pdf,
• https://gaia-impactfund.com/wp-content/uploads/2017/09/GAIA-2023_EN_final-web-2.pdf,
• https://www.aecfafrica.org/wp-content/uploads/2022/09/AECF-Annual-Report-2021-Final-5.9.2022.pdf

• Energy storage.
  • Afreh, Paul, Lizhen Gao, Beni Jared Passi, and Chukwubuike Chiemelie Onwuagbu. “Future Energy Storage: Technologies, Management Systems, and Pathways for Sustainable Integration.” Academia Green Energy 2, no. 2 (2025). doi:10.20935/AcadEnergy7640.
• FERC Order 2222 and the role for aggregators in both wholesale and retail markets.
  • Virtual power plants
  • Laws, Nicholas D., Michael E. Webber, and Dongmei Chen, 2024, "Valuing distributed energy resources for non-wires alternatives," Electric Power Systems Research 234, 110521, ISSN 0378-7796, https://doi.org/10.1016/j.epsr.2024.110521.
• Integrating household, neighborhood, village, and community food/energy/water systems
  • food and biowaste conversion to valuable products, certified for greenhouse gas reductions

• RATEMAKING:
  • In fairness, all customers should pay reasonable utility charges to make sure that the grid architecture needed to serve them is adequately maintained and will remain functional. But, customers should also have a reasonable expectation that their energy providers are serving them with, and charging them for, only those grid architecture elements necessary to serve their needs (as determined by customer class based on the nature of each customer's grid integration and reliance on grid services).
  • Check Ontario rates for its "Global Adjustment Charge" levied on all electric customers. Cite: Electricity Act, 1998, Ontario Regulation 429/04, Adjustments under Section 24.33 of the Act, July 1, 2023, available at https://www.ontario.ca/laws/regulation/040429#BK2.
• UTILITY INCENTIVES/DISINCENTIVES:
  • To the extent that utility companies are not fully engaged in continuous improvement, towards optimizing their own grid architecture, then shareholders (not consumers) should bear the costs associated with building (or overbuilding) less cost efficient resources.
    • The potential alternative to such continuous improvement threatens load defections and/or grid defections, where increasing numbers of consumers will decide to serve themselves without making financial contributions to any grid architecture needed to take maximum advantage of the equipment necessary to serve themselves (and their neighbors). [Example of grid defection in Ann Arbor, Michigan new off-grid housing project.
  • NSPM@nationalenergyscreeningproject.org -- share details about modeling for grid edge backwards.

• Agu, O.S.; Tabil, L.G.; Mupondwa, E. (2023). Actualization and Adoption of Renewable Energy Usage in Remote Communities in Canada by 2050: A Review. Energies 2023, 16, 3601. https://doi.org/10.3390/en16083601
• BRILHO. 2024. Transforming off -grid energy access in Mozambique: the BRILHO program contribution. https://brilhomoz.com/post/brilho-programme-transforms-mozambiques-energy-market-and-supports-3-million-mozambicans-with-access-to-off-grid-electrification-and-improved-cooking-solutions. https://brilhomoz.com/about-us. [Note: Brilho, in Portuguese (the official language of Mozambique), translates to brilliant, or glow, or shine.]
• Arpit Chaturvedi and Matt Holstein, 2025. Microgrid Flex 2.0: Battery as anchor resource. Schneider Electric. https://creative.endeavorb2b.com/ClientMarketing/energy/2025/998-24324500_Microgrid_LMA-White%20Paper_A4_QA3.pdf
• Farrell, John, 2024, Upcharge: Hidden Costs of Electric Utility Monopoly Power, Institute for Local Self-Reliance, https://ilsr.org/articles/report-upcharge-electric-utility-monopoly/
• Hitchens, Kathy, 2024, "Uganda Integrated Energy Minigrid Project Wins Prestigious Award" [Electronic article], Microgrid Knowledge, June 28, 2024, https://www.microgridknowledge.com/remote-microgrids/article/55091977/uganda-integrated-energy-minigrid-project-wins-prestigious-award
• Hayibo, Koami Soulemane, Uzair Jamil, and Joshua M. Pearce. 2025. "Additional value of non-electricity generating services (co-benefits) provided by non-conventional dual use solar photovoltaic systems: A PRISMA review," Renewable and Sustainable Energy Reviews, v222, ISSN 1364-0321. https://doi.org/10.1016/j.rser.2025.116021.
• Stuart Bruce (Ed.), 2014, Legal Aspects of Sustainable Energy for All -- Legal Resources Database, https://www.academia.edu/7927457
• Search for "Energy Ladder" in (1) SSRN (formerly the Social Science Research Network) https://papers.ssrn.com/. and (2) in key terms used to index research at Academia.edu.
• Lucie Klarsfeld McGrath, Joana Furquim and Jeanne Charbit. (2025). Comparing Four Last-Mile Distribution Models: Best Practices and Common Pitfalls in Reaching Rural Customers. University of Michigan, William Davidson Institute, NextBillion Guest Article. https://nextbillion.net/comparing-four-last-mile-distribution-models-best-practices-common-pitfalls-reaching-rural-customers/
• E. Rettig, I. Fischhendler, and F. Schlecht, "The meaning of energy islands: Towards a theoretical framework," Renewable and Sustainable Energy Reviews, Volume 187, 2023, 113732, ISSN 1364-0321, https://doi.org/10.1016/j.rser.2023.113732.
• Tom Stanton and Eric Nordman, "Regulating ‘Energy Ladder’ Products and Services -- Delivering Vital Energy Services Using Off-Grid, Mini-Grid, and Micro-Grid Power Systems." The ICER Chronicle 7 (2017), https://www.academia.edu/34590249/The_ICER_Chronicle_Regulating_Energy_Ladder_Products_and_Services
• Pacific Northwest National Laboratory (PNNL), Grid Architecture -- focusing on structure for deep insight about the grid [Web page, retrieved September 2023), https://www.pnnl.gov/grid-architecture. See also: https://gridarchitecture.pnnl.gov/media/The%20Need%20for%20Grid%20Architecture.pdf <review>
• Rahman, Md Motakabbir, and Joshua M. Pearce, 2024, "Modular Open Source Solar Photovoltaic-Powered DC Nanogrids with Efficient Energy Management System," Solar Energy and Sustainable Development 13(1):22-42, DOI: 10.51646/jsesd.v13i1.169. Open-source: https://www.researchgate.net/publication/378620526
• Sarfi, R.J., J.R. Shafer, and L.A. Gemoets, "New energy delivery models for communities: how utilities can transform their delivery models to meet the needs of their stakeholders, short and long term," International Journal of Energy Production and Management, V3, n2 (2018) 132–143. ISSN: 2056-3280 (online). DOI: 10.2495/EQ-V3-N2-132-143 https://www.academia.edu/59540452/
• U.S. Department of Energy, Office of Electricity, 2022, A System in Transition -- The Influence of Next Generation Technologies, Report for Advanced Grid R&D Division by E9 Insights and Plugged in Strategies, https://www.smartgrid.gov/files/documents/A_system_in_transition_5.13.22.pdf
• U.S. Department of Energy, Office of Electricity, 2019, Applying Grid Architecture to Grid Transformation [Web page, retrieved September 2023], https://www.energy.gov/oe/articles/applying-grid-architecture-grid-transformation
• U.S. Department of Energy, Grid Modernization Initiative, 2017, Grid Architecture [Presentation slides], available at: https://www.energy.gov/sites/prod/files/2017/06/f34/System%20Operations,%20Power%20Flow,%20and%20Control%20Posters.pdf
• World Bank, 2022, Off-Grid Solar Market Trends Report 2022 -- State of the Sector. https://openknowledge.worldbank.org/entities/publication/68035134-9106-52d4-a2a4-3db90cf46947
• World Bank, 2022, Off-Grid Solar Market Trends Report 2022 -- Outlook. https://openknowledge.worldbank.org/entities/publication/97ae6fbe-3373-5f10-8d3d-a82be5481eca