If I were designing NEM 3, I would look at several things. 1) What do we want the grid to look like in the future. 2) What market structure will enable us to get there the fastest? 3) Will other parties be affected?
A simple answer to the first question is that we want to eliminate greenhouse gasses. This will leave us with a network of generation from solar, wind, hydro, and some others. In order to reduce outages, I think we should also try to bring the generation of power close to where it is used. In the past with huge power plants, it wasn't possible. But now, much of the generation can be put close to where it is used.
With some new technologies increasing rapidly or coming online, our infrastructure can be simplified. In some areas, and on most days we will be able to generate all of the electricity that we need using Behind the Meter (BTM) solar power. This will include residential, and commercial buildings, parking lots cover, and probably some other areas. This will generate enough energy, but it will all be during the day. Buildings are warmest during the day in the Summer. This coincides with when Solar Generation is the highest. We will need to use batteries to use this energy during evening and night hours. Electric Vehicles (EVs) have batteries and the sizes of the batteries keeps increasing. Some of them have bidirectional charging. Tesla doesn't yet, but I hope it does soon. This means that we can charge the cars during the day when the sun is out and use the energy in the evening and night when we don't have sunlight.
That's it. We will need to have access to solar power where we park. For some of us it is at home. For many it will be at businesses, retail malls or other parking lots. We won't need to move that energy from the desert to the cities. We won't need to move it from one state to another. We won't need to use fossil fuels. Across most of the South Western part of the country, that will take care of our energy needs almost all of the time.
But even in Southern California, sometimes the sun doesn't shine much for many days in a row. When that happens, it is almost always very windy. If we strategically install enough windmills we will almost always have enough energy.
Economic Considerations
With this grid design, we want to encourage almost everyone to install solar panels until we have enough. We can use market supply and demand to get us there. One of the biggest problems with our pricing structure is that we are paying lots of money to legacy generation and for infrastructure. Trying to decide who is going to pay for legacy generation grossly distorts the supply and demand curves. Infrastructure under this design is still useful, but not nearly as much as before. Instead of consumers paying directly for the infrastructure, the companies that are generating the electricity should pay for it. So, if a company near the Salton Sea is generating electricity and it is being used in Downtown Los Angeles, the company that is generating the electricity should pay to have it moved from the Salton Sea to LA. It is likely that a kilowatt generated in Los Angeles will be much less expensive than a kilowatt generated 200 miles away if the transmission is paid by the people who use it.
The obvious problem that we haven't addressed yet is the very unlikely case where we have no sun and no wind for a long time. This will be helped greatly through widespread use of smart electric meters. These are still evolving and they don't yet have all of the features that we need. But, they will be able to look at the price of electricity and decide how their home grid should function. During the day when the sun is shining and price of electricity is very low, the car and any other batteries should be charged. When the sun goes down in the evening, the batteries can be slowly discharged. Either to our own usage in the kitchen, the TV or the AC/heater or to the grid where others will be willing to pay a higher price. If we see a long weather event coming that might threaten our energy security, we can decide to program the smart meter to hoard the energy until the price of energy is really expensive. During this time, we might also decide to reduce our usage of electricity as it is becoming expensive. We could change the thermostat or shut off some of the other appliances in the house or business. It might also make sense at this time to import electricity from far away.
We have been acting as if it is unacceptable to run out of electricity at any time. So we are making huge investments in barely used energy infrastructure. Many of these investments are worth it. But some are probably not. We should use the market forces of supply and demand to determine which investments are worth it and to determine who should pay for them.
This proposal should reduce electricity prices to almost everyone, so subsidies won't be necessary.
There are several important parts to this proposal.
1) Dramatically increase BTM clean power generation. Primarily solar and wind.
2) Use car batteries as storage.
3) Cars will be charged during the day rather than at night.
4) Use competitive markets to determine price.
There will probably be a small charge to everyone in a city or town for the local infrastructure to transfer energy from you to your neighbors. Probably $10 to $20/month.
This plan will not be complete for a while. Probably 10 years. But, we need to aggressively move in that direction now to get there as quickly as possible. The NEM 3.0 proposal moves us in the wrong direction.