In California, proactive planning for distributed energy resources

Our power system is outdated – and so are the policies that continue to guide its development. But, California is making big strides in the right direction.

On November 17, California Public Utilities Commissioner Michael Picker issued draft guidance on the implementation of Distribution Resource Plans.

Distribution Resource Plans (commonly known as DRPs) are mandated under Assembly Bill 327, which Governor Jerry Brown signed into law late last year. This law requires investor owned utilities in California to do what every utility should be doing: proactively planning distribution grids for increased deployment of distributed energy resources.

The primary intent of AB 327 is to support California’s statewide energy and environmental goals, including its 2020 and 2050 greenhouse gas emission reduction targets. Through this legislation, utilities must identify optimal locations for the deployment of distributed energy resources (DER), such as distributed generation, advanced inverters, energy storage, and electric vehicles.

To realize mass deployment of DER, the DRPs will guide grid modernization to enable bi-directional power flows, allow greater consumer participation in providing grid services, and create functional markets that appropriately compensate distributed resource owners for the full value of services provided.

According to Commissioner Picker, AB 327’s unprecedented focus on distribution grid planning may lead to the “creation of a new industry model for full and interactive integration of distributed energy resources at a level previously unimagined”.

A new framework for grid planning

The Clean Coalition has long argued that traditional utility distribution system grid planning is inadequate – in terms of visibility and coordination with state policies – to support deployment of DER and other emerging technologies.

The DRP approach builds upon years of Clean Coalition work and incorporates recommendations from our filings (here and here) to significantly improve distribution grid planning.

The draft compliance guidelines require utilities to provide DRPs that include three new analytical frameworks to inform DER planning efforts:

  • Grid integration capacity: The DRPs must detail the ability of the existing grid to accommodate some amount of DER within the distribution network. Grid maps, with detail down to the circuit level, will be made publicly available.
  • Locational value: Utilities must quantify the net benefit, in a given location, DER can provide. All utilities must adopt a unified methodology to assess locational value of DER that considers a variety of criteria, including avoided transmission and distribution grid investments, gains in distribution system operational efficiency, and increased reliability.
  • Growth scenarios: Utilities will create three, ten-year scenarios that project high-growth deployment of DER through 2025, with details on expected siting at the distribution substation level and impacts on distribution planning.

Through the DRP requirements to analyze grid integration capacity, locational value, and growth scenarios, the CPUC is following our methodology to lay the foundation for a distribution grid that is “plug-and-play” for DER.

Putting planning into practice

As part of the DRP process, utilities must demonstrate the integration of locational benefits analysis into distribution planning and operations.

An analysis methodology to determine optimal locations for DER is required in the DRPs. Having drafted legislation and policy briefs that address distribution grid planning, distributed generation, and ratepayer benefits since mid-2011, the Clean Coalition has long advocated for DRPs and offered practical criteria for defining optimal locations for DER. Commissioner Picker’s draft guidance encapsulates many of our long-standing recommendations, such as the need to identify the “carrying capacity for DER” at locations on the grid and cross reference this information with grid locations where deferral or avoidance of costly distribution and transmission grid upgrades can be realized by targeted and coordinated development of specific DER capacities.

Building upon the optimal locations benefits analysis methodology, each utility must design a substation level project that will demonstrate distribution grid operations at high levels of DER. This substation level approach aligns with our Hunters Point Community Microgrid Project, being conducted in collaboration with Pacific Gas & Electric in San Francisco, California. Through this project, we have developed a scalable and replicable methodology for optimizing the deployment of DER within a substation – and have strongly argued for DER incorporation into distribution planning.

These demonstration projects, which must be ready to begin within one year of CPUC approval of the utility’s DRP, require customer and/or third party owned DER. The utility is responsible for defining the transaction method, such as standard tariffs or competitive contracts.

It is worth noting that any new or modified tariffs and contracts will be applicable only to the demonstration projects. The DRP process, as stated in Commissioner Picker’s draft guidance, is not the forum to adopt new tariffs. However, recommendations regarding the locational benefit component of DER may be ripe for inclusion in multiple proceedings, such as the NEM successor rulemaking. Furthermore, per the Clean Coalition’s recommendations, the market mechanisms used in the demonstration projects should inform any future modifications to existing utility tariffs and contracts, and the DRP filings will be coordinated with general rate cases.

Comments on the draft guidance are due December 12, 2014, and a final ruling is expected by January 2015. Utilities’ first DRPs are due by July 1, 2015, and moving forward, DRPs will be filed on a biennial cycle for at least 10 years.

Guiding distribution grid planning processes

In the wake of Hurricane Sandy, New York’s leaders came to realize the inadequacy of the state’s power system to meet 21st century challenges. Climate change is increasing the frequency and intensity of extreme weather events, threatening more severe and prolonged power outages. Further, to meet the needs of its growing population, New York must add new generating capacity, which will continue to contribute to climate change if using fossil fuels. Finally, electricity bills in New York continue to rise ever higher – caused mainly by rising wholesale electricity costs.

In response to these challenges, the state launched an initiative known as Reforming the Energy Vision (“REV”). New York’s Public Service Commission (“PSC”) is leading REV with the goal of overhauling the state’s power system and regulatory landscape to promote greater deployment of distributed energy resources, like local renewables, energy storage, and demand response.

3D Electric powerlines over sunrise

This fall, the Clean Coalition submitted comments on a PSC proposal to develop the REV market in New York. The comments focused on how to best guide the distribution grid planning process in New York, which will be performed through the creation of Distributed System Implementation Plans (“DSIPs”). New York must proactively prepare for increased deployment of distributed energy resources to streamline their smooth integration into the grid.

In our comments, the Clean Coalition leveraged its experience leading implementation of California’s Distribution Resources Plans. The Distribution Resources Plans are similar to the DSIPs that REV will employ, and lessons learned in California are directly relevant to New York. Most importantly, the Clean Coalition stressed the need to begin modeling the distribution grid to determine the optimal locations for deploying distributed energy resources that will provide the highest value to ratepayers.

To prove the efficacy of our distribution grid planning process, the Clean Coalition recommends that utilities promptly design and implement pilot projects that model one substation area, identify optimal locations for distributed energy resources, and subsequently deploy the resources accordingly. These pilots stem from our groundbreaking work, which is being conducted in collaboration with Pacific Gas and Electric (“PG&E”), in the Bayview and Hunters Point areas of San Francisco. Known as the Hunters Point Community Microgrid Project, this effort will prove that local renewables can fulfill at least 25% of total electric energy need for the 20,000 customers served by the Hunters Point substation while maintaining or improving power quality, reliability, and resilience.

While the Hunters Point Community Microgrid Project is our flagship effort, we are working with a number of other utilities to stage additional Community Microgrid Projects. In particular, the Clean Coalition is working with PSEG Long Island to strengthen a vulnerable portion of the region’s grid by deploying significant amounts of local renewables coupled with grid solutions like energy storage. These pilot projects are informing states’ distribution grid planning processes and will have a significant impact on the future utilization of distributed energy resources.

In the coming months, we will continue our involvement in the New York REV process –sharing our expertise in distributed grid planning with the PSC and others. The Clean Coalition recently joined the Clean Energy Organizations Collaborative, which serves as a forum for aligned stakeholders in REV and other proceedings and includes national and state-based environmental groups, clean energy companies, renewable energy industry trade associations, energy efficiency providers, academic centers, and groups focused on consumer issues. Through our engagement, the Clean Coalition aims to guide New York towards a cleaner, more affordable, and more resilient power system.

Building pathways for local renewable energy

Friends,

Over the past three months, the Clean Coalition team has made significant strides accelerating the transition towards renewable energy and a modern grid. Our groundbreaking Hunters Point Community Microgrid Project, being conducted in collaboration with Pacific Gas & Electric, is proving the technical and economic viability of local renewable energy. Through this project, we have established a methodology that enables any utility to plan their grid for an optimized portfolio of distributed energy resources — using existing grid modeling tools. We are leveraging this knowledge to strengthen implementation of the Distribution Resource Plans mandated by California’s Assembly Bill 327.

The Clean Coalition is engaged in a number of exciting developments outside of California. In New York, we are staging to bring a Community Microgrid to PSEG Long Island’s territory as part of their “Utility 2.0″ effort. And in sunny Arizona, we are supporting Tucson Electric Power’s recently proposed pilot program to spur deployment of wholesale-interconnected local solar. Additional details on these activities — and many others — are available here.

As always, thank you for your support of the Clean Coalition and our work making clean local energy accessible now.

Sincerely,
Craig Lewis
Founder and Executive Director