ACEEE EE as a Grid Resource
- 1. icfi.com THE LOCATIONAL VALUE OF ENERGY EFFICIENCY ON THE DISTRIBUTION GRID Philip Mihlmester, ICF Steve Fine, ICF ACEEE Summer Study August, 2016
- 2. icfi.com 2 OUTLINE Energy Efficiency (EE) as a Distributed Energy Resource (DER) Why value of EE/DER matters, now and in the future Valuing DER up to now Valuing DER and EE today—Best Practices Case Study: pioneering new methods for a utility Benefits and next steps for DER portfolio development Conclusions and key lessons
- 3. icfi.com 3 Energy Efficiency as a Distributed Resource Energy efficiency grew up as a system-level resource – Cheaper than the long run avoided cost of generation Energy efficiency may also have a locational value (and cost) on the distribution system Other Distributed Energy Resources may include: – Energy Storage – Distributed Generation (e.g., distributed solar PV) – Microgrids – Demand Response – Combined Heat and Power (CHP) – Electric Vehicles – Etc. All DERs interact locationally and temporally to affect T&D operations
- 4. icfi.com 4 Number of low and high voltage violations are observed at 1:00 pm Low Voltage Violation (<95%) High Voltage Violation (>105%) Normal Voltage (95% - 105%) Source or Substation Rooftop Solar PV Arrays Legend 130% measured at 5pm. Source: ICF DEEP Analysis. DERS Can be Both a Threat and an Opportunity : Solar Example Residential solar grew by over 50% for the 4th consecutive year 14 states and D.C. hold policies now authorizing community solar programs Increasing solar penetration has ability to cause system violations or add potential system value Potential Benefits • Lower system costs • Increased resiliency • Savings for customers • Emissions reductions Operational Challenges • Variability in net load • Managing distribution voltage • Integration costs • Cost allocations
- 5. icfi.com 5 Distributed Solar Generation Profile vs. Customer Load DERS have a temporal value in addition to a locational value
- 6. icfi.com 6 Distributed Solar Generation Profile vs. Customer Load with Energy Efficiency DERS have a temporal value in addition to a locational value Energy efficiency affects these load shapes when interacting with other DERs Excess Export Premise with Energy Efficiency
- 7. icfi.com 7 7 Example: Storage Provides Down Reserves, but EE May Counteract These Down Reserves 7 SOURCE: H. Johal and K. Collison, “How Energy Storage Will Feed the Duck and Keep the Grid Stable,” ICF White Paper, July 2016
- 8. icfi.com 8 Valuing DER Up to Now EE traditionally valued as a system resource using the California Manual tests Beyond EE, early valuation methods based on “Value of Solar” Early VOS studies have not applied consistent methodologies, and have resulted in significant variation in results A consistent methodology is needed that reasonably values all DERs on a locational and temporal net value basis Sources: Farrell 2014 (MN), Perez, Norris, and Hoff 2012 (NJ and PA), Norris et al. 2015 (ME)
- 9. icfi.com 9 DER Value Framework Required BCA Categories from NY BCA Handbook Valuation Frameworks are evolving: – Moving from prescriptive to market based approaches – New valuation is dependent on quantifying the value that DER brings to the grid (LMP + D + E) – This requires greater grid modernization for higher situational awareness Traditional DER valuation methods attempt to reflect associated benefits – Distribution capacity – Voltage – Reliability – Resilience – Environment/Society Key Obstacles •Smart technologies deployment speed •Common data standards •Methodology framework
- 10. icfi.com 10 Benefits of Accurate DER Valuation Smarter Investments Better Rate Design Optimized Programs Adaptive Planning Greater Reliability and Resiliency Better Forecasts of Customer Adoption Rates
- 11. icfi.com 11 Deploying a Systematic, 5-Step Distribution Planning Framework is Far Superior to “WINGING IT” Scenario based distribution planning • Uncertainty of the types, amount and pace of DER make singular forecasts ineffective Hosting capacity • Must determine amount of DER a feeder can accommodate within three principal constraints: thermal, voltage/power quality and relay protection limits. Locational value of DER • Sourcing locational infrastructure or operational requirements from DER may result in positive or negative costs and benefits Integrated T&D planning • At high DER, net load characteristics have impacts on transmission system / bulk power system operation, requiring transmission- distribution interaction analysis Probabilistic- based engineering analysis • Issues from increased DER penetration – variability of loading, voltage — require probabilistic analysis. Results: Better Planning, Greater Cost Avoidance, Smarter Investments, New Revenue & Service Capture, New Regulator Requirements Response
- 12. icfi.com 12 DER Expansion May Require Considerable Investment, But Provide Earnings Opportunities for Utilities Electric Reliability Investments – Targeted feeder-substation upgrades to address DER penetration and reliability/safety – ICF conducted a locational benefits analysis looking at 3,200 feeders on the PG&E system – Assess the threshold at which DER penetration exceeds hosting capability – T&D scale energy storage solutions – Install Volt/Var Controls; Expand CVR Program FEEDER DEFICIENCY ASSESSMENT INFORMS FULL SYSTEM-WIDE LOCATIONAL BENEFIT ANALYSIS PG&E Example 9 9.5 10 10.5 11 11.5 12 12.5 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 MW Capacity Peak Net Load (incl. DER) Planned capacity upgrades including replacement of aging infrastructure DER portfolio sourced to address capacity needs (at a cost no greater than the avoided cost – this is the locational value of DER)
- 13. icfi.com 13 It’s Critical to Anticipate DER Portfolio Contributions At the Feeder and System Levels Seamless, full cycle support for utility analysis & management of DER on utility’s system Technology assessments & potential studies to designing, deploying & managing integrated portfolios Full spectrum of technology along with grid impacts & optimization to assess & develop tailored solutions Portfolio design & management, efficiency & capacity deferral
- 14. icfi.com 14 Integrated Analysis Components – Distribution System Model Residenti al Solar PV EE Energy Efficienc y ES Energy Storage Premises level DERs Utility Solar PV ES Energy Storage CHP On-site Generatio n System level DERs Phase 1: Premises level optimization of DER solutions Phase 2: System level optimization of DER solutions Phase 3: Grid impacts assessments Distribution System Source: H. Khan and H. Safiullah, “Integrated Distributed Energy Resource Analysis-Reaching Optimal Solutions,” ICF Webinar, July 26, 2016
- 15. icfi.com 15 Scenario Based Planning Can Lead to More Optimized DER Portfolios Considering Feeder Headroom and Hosting Capacity Shifting feeder headroom distribution to the right
- 16. icfi.com 16 Today: DER Sourcing Through the 3Ps As developing in CA & NY, each P sourcing method requires proper valuation of DER for a specific grid need and by time and location Pricing Programs Procurement •NEM 2.0 •Time/location varying rates •Tariff based standard offers for services like VVO •Energy Efficiency •Demand Response •DG/DS Incentive Programs •NWA •Request for Proposals/Offers •PPAs •Grid support services
- 17. icfi.com 17 Where is Energy Efficiency Economic? Energy efficiency has a system level value We need to calculate it’s locational (and temporal) value This locational value needs to consider locational penetration of other DERs Scenario based/adaptive planning can be helpful A “net value” approach should be used considering the cost of T&D investment Pricing, programs, and procurement can be control levers Positive Hosting Negative Hosting No Headroom Headroom EE + DG EE + DR
- 18. icfi.com 18 Overall Conclusions Locational net value is key – Must also factor in temporal value Aligning pricing, programs, and procurement to hosting capacity and locational value is essential Analysis needs to improve This is hard, but achievable Methodologies must be scalable Regulatory structures must keep pace