THE ELECTRICITY SYSTEM VALUE CHAIN

The report introduces the electricity system value chain, a non-linear framework designed to map the flow of energy, information, and money across the grid. It breaks the system into three fundamental layers—organizational, electrical, and communications—and defines essential functions (input, process, output) within each. By applying this framework, stakeholders can identify the specific technical and regulatory connections required to realize and monetize system values, such as frequency regulation or renewable energy integration. The document provides step-by-step examples of applying the framework to solar PV and battery systems in both behind-the-meter and distribution-scale environments.

• The current electricity grid is limited by historic paradigms where energy flowed in one direction, real-time communications were unavailable, and utilities had limited visibility and control, which hinders the capture of value from emerging technologies.
• To capture the full potential of a technology, compensation must be aligned with the specific value the marketplace seeks. For example, when PJM implemented Order 745 to compensate demand response (DR) resources at wholesale rates, DR capacity in auctions increased from 2,500 MW to nearly 11,000 MW.
• The electricity system value chain consists of three fundamental layers: the electrical layer (physical assets), the communications layer (data assets and activities), and the organizational layer (where operational decisions are made).
• Each of the three layers in the value chain operates through three essential function groups: Input, Process, and Output. In the communications layer, these are 'SENSE', 'COMPUTE', and 'EXECUTE'; in the organizational layer, they are 'ANALYZE', 'DECIDE', and 'ACT'; and in the electrical layer, they are 'MAKE', 'MODIFY', and 'USE'.
• The framework serves two primary user groups: technology and service providers use it to identify the connections needed for their products to provide value and find pathways to compensation, while system designers use it to determine the assets and connections required to enable and compensate for specific system values.
• Applying the value chain to a solar PV and battery system reveals that providing complex values like frequency regulation requires significantly more sensing, analysis, and control functions—such as a Battery Management System and coordination with a Distribution Management System (OASIS)—than simply increasing renewable energy consumption.

APA

Crofton, K., Wanless, E., & Wetzel, D. (2015). THE ELECTRICITY SYSTEM VALUE CHAIN. RMI. https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_2015-04_eLab-ElectricitySystemValueChain-final.pdf

Chicago

Crofton, Karen, Eric Wanless, and Daniel Wetzel. THE ELECTRICITY SYSTEM VALUE CHAIN. RMI, 2015. https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_2015-04_eLab-ElectricitySystemValueChain-final.pdf.

Wikipedia

{{cite report |last1=Crofton |first1=Karen |last2=Wanless |first2=Eric |last3=Wetzel |first3=Daniel |title=THE ELECTRICITY SYSTEM VALUE CHAIN |publisher=RMI |date=March 2015 |url=https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_2015-04_eLab-ElectricitySystemValueChain-final.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{crofton2015electricity, author = {Crofton, Karen and Wanless, Eric and Wetzel, Daniel}, title = {{THE ELECTRICITY SYSTEM VALUE CHAIN}}, institution = {RMI}, year = {2015}, month = mar, url = {https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_2015-04_eLab-ElectricitySystemValueChain-final.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }