There’s an inherent conflict of interest between regulatory pushes for more distributed energy resources (DERs) and a utility’s ability to make money with traditional rate-making approaches. That’s because traditional incentives reward investments in utility assets, not necessarily the efforts that must be made to integrate DERs.
New York and California regulators are ahead of the curve in looking for ways to bridge that gap. Here are a few ways regulators in these states are helping utilities shift from being power providers to being distribution operators.
Platform for change
One of the utility business model shifts outlined in the New York Public Service Commission’s Reforming the Energy Vision (REV) docket will find utilities operating energy marketplaces, explains green-technology attorney Joshua Sturtevant. “The utilities have agreed to act together in a new capacity, as a Distributed System Platform (DSP) that will serve as a neutral gatekeeper between the providers and buyers of energy,” he explained in a blog. “The DSP’s function will be to coordinate grid-wide DER activities as a market administrator, almost as a ‘mini’ distribution-level independent system operator (ISO).”
National Grid is now in the thick of adopting this role. The utility has partnered with Opus One Solutions to test a DSP with several buildings on the Buffalo Niagara Medical Campus (BNMC), a sprawling alliance of 13 institutions engaged in health care, medical education, life sciences research and more within a 120-acre footprint near downtown Buffalo. BNMC’s annual electricity demand was 153 gigawatt-hours, and its peak demand was 30 megawatts in 2015, notes a 2016 National Grid implementation-plan filing. Each facility on campus has its own set of DERs.
There are 24 diesel gensets and multiple building energy management systems that will facilitate load-shedding schemes, the National Grid plan notes. Last year, BNMC also was evaluating 19 megawatts of natural gas generation, 1 megawatt of photovoltaic solar and 150 kW/600 kWh battery energy storage systems.
In this pilot, National Grid will use a local, small-scale, but centralized distribution system platform to communicate with network-connected points of control that are associated with BNMC’s DERs. The platform will leverage those DERs for grid support. According to its website, National Grid also hopes to “develop a platform that can accurately forecast and measure the value of energy at the distribution level.” The platform will leverage local customer-owned DERs to fulfill system needs, creating the first distribution-level marketplace for energy.
Look, Ma! No Wires
GTM Research defines non-wires alternatives (NWAs) as “non-traditional measures that defer, mitigate or potentially eliminate the need for traditional utility transmission and distribution (T&D) investments.” Demand management and battery energy storage are two such measures.
New York utilities have uncovered 75 NWAs that could help them gain some 600 megawatts of capacity without construction investments.
ComEd’s Brooklyn Queens Demand Management (BQDM) project is one non-wires winner. Facing as much as 69 megawatts of overloading by 2018, the utility decided to invest in a coordinated array of solutions. They include an aggressive energy efficiency effort that targets commercial and residential accounts as well as public housing authorities, demand management programs, fuel cells for backup power and neighborhood-scale solar power.
ComEd’s regulatory filings indicate BQDM is expected to deliver 41 megawatts of load reductions via customer-side solutions as well as 11 megawatts of load relief through non-traditional utility-side technology that includes a distributed energy storage system and conservation voltage optimization.
All told, the program will defer nearly $1 billion in infrastructure investments.
A little ray of sunshine
Last year, Pacific Gas & Electric teamed up with SolarCity to install smart inverters and battery storage systems for up to 150 residential rooftop solar customers as well as up to 20 commercial accounts. This pilot aimed to prove how smart inverters and behind-the-meter storage could be coordinated by the utility to enhance grid stability, manage power quality issues and optimize solar generation.
The project leverages SolarCity’s Grid Services product suite, which aggregates and controls distributed DERs to provide things like volt/VAR support, dynamic capacity and peak shaving. The demonstration was scheduled to continue through year-end.