THE ELECTRICITY SYSTEM VALUE CHAIN

The report introduces the 'electricity system value chain' framework, designed to help technology providers and system designers identify and capture value within the complex, non-linear network of the modern electricity grid. It moves beyond linear value chains to a system-based approach that integrates electrical, communications, and organizational layers to align compensation with the actual value provided by emerging technologies, such as distributed energy resources.

• The current electricity grid is limited by historic paradigms where energy flowed in one direction, real-time communication was unavailable, and utilities had limited visibility and control, resulting in a system where monetary transactions are not always aligned with the energy values exchanged.
• The electricity system value chain is composed of three fundamental, interconnected layers: the Electrical Layer (physical assets for making, modifying, and using electricity), the Communications Layer (assets that create and manipulate data), and the Organizational Layer (where operational decisions are made).
• Each of the three fundamental layers operates through three essential function groups: Input, Process, and Output. In the electrical layer, these are 'MAKE MODIFY USE'; in the communications layer, they are 'SENSE COMPUTE EXECUTE'; and in the organizational layer, they are 'ANALYZE DECIDE ACT'.
• The framework serves two primary user groups: technology and service providers, who use it to identify necessary components for their products to provide value and find pathways to compensation; and system designers, who use it to determine the assets and connections required to capture specific system values and inform compensation methods.
• A case study on PJM demonstrates that aligning compensation with the actual value of a resource can significantly increase adoption; after implementing Order 745 rules to compensate demand response (DR) at wholesale prices, the capacity auction cleared with nearly 11,000 MW of DR, up from a previous limit of 2,500 MW.
• The report outlines a step-by-step application process for the value chain: defining the system boundary (e.g., behind-the-meter or distribution-scale), selecting a specific system value, identifying the necessary decisions, determining the required information, and mapping the sensing, computing, and execution steps needed to realize that value.

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} }