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California Invests In “By Location” Distributed Energy Resources

California is leading the nation with several pilot projects to reward more rooftop solar energy generators and other distributed energy resources in specific locations as an alternative to utilities’ needs to invest in upgrading their electricity generation networks. This use of Locational Net Benefit Analysis (LNBA) can foster the growth of hundreds of megawatts of rooftop solar and other distributed energy resources (DER) per year, reckons Sahm White, the economics and policy analysis director of the Clean Coalition, an Oakland-based clean energy non-profit.

Residential, commercial and industrial customers pay a high price for electricity transmission and distribution infrastructure already — close to five cents per kilowatt-hour — and if utilities spend money for new generation capabilities, the cost is inevitably headed toward higher bills. At the same time, the cost of DER, including local solar generation and storage is falling, which points to a logical alternative to utility spending on grid enhancements where new solar generation and other DER can provide for greater demand very locally.

The investor-owned utilities in the state have begun the pilot projects with requests for offers for localized distributed energy resources in January, and this year about 50 MW worth of projects should be requested, says White. “… we expect next year and every following year to see twice that much in RFOs,” he says.

The pilots are part of the utilities’ planning process that requires them to consider “Locational benefit analysis means the assessment of local costs and benefits, so the CPUC can target particular locations where incentive payments or some form of compensation can be offered to increase DER,” explains White. “One of those benefits can be avoiding distribution upgrade costs,” he says. “Rooftop solar generators can be eligible for the compensation in one of those areas,” he says.

The California Public Utilities Commission is expected to begin approving these pilot projects during December. “As the market and utilities get more familiar with this, we expect to see even more opportunities and cost reductions,” White says.

Every June, investor-owned utilities in California prepare a Grid Needs Assessment Report that describes the work to be addressed in their Distribution Resources Plan proposals. This report also followed CPUC Distribution Resources Plan requirements to evaluate existing and future electric distribution infrastructure and planning procedures in terms of incorporating DERs into the planning and operations of their electric distribution systems, according to the utility filing.

PG&E’s initial Grid Needs Assessment incorporates preliminary data available regarding the utility’s projected distribution grid needs over a five-year planning horizon. A full report will be provided in 2019. “As this is the first annual GNA submission, PG&E anticipates refinement and evolution of the methods and processes used in developing the Grid Needs Assessment to occur over time in response to stakeholder and Commission feedback,” the filing says. PG&E anticipates the reports will be used to develop inputs to the annual Integrated Resource Plan required by the CPUC.

Separate from load growth, PG&E has incorporated DER adoption into its distribution bank and feeder forecast assumptions in the grid needs report. This includes residential PV, retail non-residential PV, energy efficiency for different customer classes, electric vehicles, and load modifying demand response, the utility notes. “The starting point for developing these feeder level DER growth forecasts is the CEC’s California Energy Demand (CED) forecast that is completed at the system-wide level,” the filing adds.

The PG&E distribution service area stretches from Eureka in northern California to Bakersfield in the south, and from the Pacific Ocean in the west to the Sierra Nevada in the east. It provides service to 5.4 million electric customer accounts over 106,681 circuit miles of electric distribution lines. PG&E divided the distribution service area into four geographically defined Distribution Planning Regions: 1) Bay Area, 2) Central Coast, 3) Central Valley and 4) Northern.

Within these four regions, the San Francisco Bay Area DPR covers approximately 2,145 square miles in the center of PG&E’s service territory, including Alameda, Contra Costa, San Francisco, Napa, Marin, Solano, and Sonoma counties.

The Bay Area DPR serves approximately 1.3 million customers, of which 0.2% are agricultural, 7.4% are commercial, 2.3% are industrial, and 90.2% are residential. The total peak demand of circuits in the Bay Area is projected to be 4,453 MW in 2018. In 2022, it is forecast to be 4,445 MW, PG&E reports.

The summary for the Bay Area’s Grid Needs Assessment found that “Sixteen banks and 28 feeders in the Bay Area DPR have identified deficiencies. Over 70% of the (distribution) feeders with deficiencies (22 out of 28 feeders) primarily serve residential customers. That is, residential customer accounts make up more than 50% of the feeder service in 70% of the feeder deficiency cases,” the utility reports.

 

California Invests In “By Location” Distributed Energy Resources, by Charles W. Thurston, Clean Technica, November 14, 2018.

Blockchain Is Key to Local Clean Energy Future

In this era of Big Data and break-neck innovation, Distributed Ledger Technology, popularly known as blockchain, will be key to creating smart local systems with renewables, storage, and electric vehicles.

What blockchain means for the energy industry as a whole, and local energy providers such as Community Choice Agencies, is addressed in The Energy Web Chain: Accelerating the Energy Transition with an Open-Source, Decentralized Blockchain Platform, published this month by the Energy Web Foundation.

Recognizing blockchain’s potential to become the central nervous system for the distributed grid, Rocky Mountain Institute and Grid Singularity founded the nonprofit Energy Web Foundation (Foundation) to develop the Energy Web Chain, “an open-source, scalable blockchain platform specifically designed for the energy sector’s regulatory, operational, and market needs.”

Originally created to support Bitcoin cryptocurrency, blockchain is a Distributed Ledger Technology that replicates a transaction ledger (i.e., database) in a series of blocks across a network of computers; when a new transaction is added to one computer, blockchain confirms the new information using multiple validators and distributes it to all peer computers ensuring their ledgers are the same.

A blockchain can contain financial and other data; validate transactions in near real time; use cryptography and digital signatures to prove identity, authenticity, and user access rights; enforce write and read-only permissions; and protect the transaction record from tampering.

These capabilities enable smart contracts that use computer code to automatically perform a function or data modification within the blockchain for a wide range of transactions (e.g., financial, ownership transfer, data storage, and marketplace creation) — each of which is confirmed by multiple blockchain validators. As a result, blockchain can process energy transactions faster, more securely, and at less cost.

Set to launch in summer 2019, the Energy Web Chain (EWC) will offer “a foundational, shared, digital infrastructure” for the energy and blockchain industries. The EWC is being developed in collaboration with stakeholders from the clean energy, utility, grid operator, blockchain, and start up sectors. The Foundation aims to deliver a scalable industry-grade EWC platform by 2025 to support new Distributed Energy Resource (DER) markets and business models.

The Foundation will increase the number of collaborators from 70 to 200 by the launch date and is accepting protocol and upgrade recommendations from the general public in addition to its collaborator group, which currently includes PG&E and Sempra Energy, utility manager for Southern California Gas and San Diego Gas & Electric companies.

In The Energy Web Chain, the Foundation cites several examples of how the EWC can support decarbonization, decentralization, and digitization in alignment with Community Choice Agency goals.

Community Solar. Community Solar projects allow renters and multi-family building owners to obtain the benefits of solar power; however, soft costs such as permitting, legal fees, and interconnection often increase project complexity and cost. Blockchain smart contracts enable a community to manage ownership, governance, and profit division at less cost and with greater security. On the revenue side, blockchain offers two additional advantages for Community Solar: access to global investors and the ability of project participants to easily and affordably liquidate kWhs or project shares.

Decentralized Grid. The centralized grid structure does not have the capacity to effectively value aggregated distributed resources and the competitive generation and load management services they deliver. In the EWC, each DER device (whether a new appliance or a microgrid) has its own digital identity linked to its capacity and customer information. As these DER join the grid, they can act “on behalf of their owners — to use or not use electricity at certain times via detailed, close-to-real-time price signals.” This makes it possible for local DER aggregations can function as single grid participant or “clean energy portfolio” replacing the need to purchase electricity from centralized thermal power plants.

Contract and Market Diversity. Bilateral and multi-lateral smart contracts can bring wholesale markets to the local distribution grid without a costly back-office process. According to the Foundation, “Forward-looking capacity, real-time energy, and ancillary services markets can be localized, aggregated in a nested hierarchy, and better reflect the value of energy and services over time and place.” The Foundation predicts new utility business models and market entrants will emerge in response to blockchain benefits such as lower market management operating costs, improved DER cost profiles, and continuing advances in blockchain and digital technology.

Electric Vehicle Framework. The ability of blockchain to enable a physical asset to participate directly in energy markets is particularly suited to electric vehicle adoption. According to a recent McKinsey&Company article entitled “What Every Utility CEO Should Know about Blockchain,” blockchain has the potential to facilitate EV charging by providing charging station maps that match the driver’s preferences and real-time pricing information and allow him/her to pay with a secure blockchain wallet and smart contract technology. Additionally, the Foundation notes, “In electricity markets, electric vehicles could use this functionality to enter into direct legal agreements with counterparties, removing the need for a vehicle to re-enter a legal flexibility service agreement with a grid operator even if the human ownership of the car had changed.”

The September 2018 GreenTech Media article “For Utilities Exploring Blockchain, There’s Beauty in the Mundane” reports that PG&E and BMW are using blockchain to pilot a carbon credit program for electric vehicles (EV) using an emissions profile based on when the driver charges his/her EV. BMW telematic data is being used to cross-reference user charging behavior with the real-time energy mix data to incentivize drivers to charge when solar energy is plentiful.

Renewable Energy Certificates (REC). The EWC provides a digitized automated platform for REC transactions using the device identity and smart contracts to make REC transactions affordable, effective, and transparent while providing ownership privacy where needed.

As the broader EWC platform is being developed, energy companies are using blockchain in internal proof-of-concept applications such as tracking chain-of-custody for building materials and equipment; for example, PG&E is using blockchain to trace steel reels that carry overhead cables to determine how blockchain can improve and automate the supply chain for all grid materials, according to GreenTech Media.

Community Choice Energy. The Energy Web Chain initiative provides an opportunity for Community Choice Agencies to represent the needs and goals of local communities as collaborators in the platform development. To join the Energy Web Chain collaborator group and provide feedback and recommendations as the project counts down to its summer 2019 launch, contact the Foundation at https://energyweb.org/contact-us/

Chris Cone is Principal of Chris Cone Consulting specializing in distributed clean energy systems that engage private sector innovation, accountability, and competition to meet greenhouse gas targets; drive solutions that create jobs and grow local economies; and foster a sustainable clean energy economy.

FERC Proposes to Open up Wholesale Markets for Energy Storage and Aggregation

The Federal Energy Regulatory Commission just took its strongest step yet to initiate markets for energy storage across the nation.

The commission, which governs interstate power transmission and wholesale markets, proposed a rule Thursday that would require each regional transmission organization and independent system operator to create rules for energy storage to participate in wholesale markets. The new regulations would have to recognize “the physical and operational characteristics of electric storage resources,” which differ from traditional grid infrastructure in that they can act as both a load and a generator, and perform a multitude of functions if given the chance.

If approved, the proposed rule could greatly expand the role of energy storage in wholesale markets — and the size of the industry itself. So far, storage has been relegated to the few areas that passed enabling policies.

The PJM grid operator created a frequency regulation market and became the largest U.S. market for energy storage. It has seen 250.5 megawatts of cumulative deployments since 2013, according to GTM Research. The California ISO established a “non-generator” resource type that allowed storage to compete in the markets, and California became the second most prolific U.S. market for energy storage, with 73.2 megawatts deployed.

ISOs and RTOs serve about 70 percent of the country, so if FERC requires all ISOs and RTOs to adopt similar policies, the geographically cloistered storage industry could quickly go nationwide.

“This isn’t just clarifying existing rules; it’s redefining the rules to acknowledge the fact that energy storage cannot adequately participate right now and changing the rules to accommodate it,” said Daniel Finn-Foley, senior analyst for energy storage at GTM Research. “It’s a really big deal.”

The proposed rule also directs grid operators to adjust their rules so that distributed energy resource (DER) aggregators can compete in wholesale markets “under the participation model that best accommodates the physical and operational characteristics of its distributed energy resource aggregation.” This could expand the market potential for a host of distributed resources, like demand response, energy efficiency, storage and renewables. The numerous companies with business strategies that hinge on aggregation will have a greatly expanded geographical scope.

To be clear, this rule is by no means finalized. This announcement followed a request for information back in April. After publication of the proposal in the federal register, stakeholders will have 60 days to submit comments. At that point the commissioners will re-evaluate the rule in light of the new information submitted. They could pass it as-is, or pass a revised version, or keep deliberating.

Adding to the variables, President-elect Donald Trump will have an opportunity to appoint two new commissioners after taking office January 20, so the new blood could influence the direction of the final wording. Keen observers of the storage industry will want to keep their eyes on this process for the next few months — and beyond.

“This will create at least a basic level of access for storage to all of the market products of each RTO and ISO,” said Jason Burwen, policy and advocacy director at the Energy Storage Association, a storage industry group. But, he added, “Implementation matters. Each RTO and ISO will make decisions about how it wants to go about this.”

The FERC proposal could accelerate the integration of storage into the grid far beyond the status quo trajectory, but ultimately the more local decisions will govern the details of how storage actually participates in the markets.

To learn more about this and other pressing storage industry developments, join Greentech Media for the U.S. Energy Storage Summit Dec. 7-8 in San Francisco. Now in its second year, the Summit will bring together utilities, financiers, regulators, technology innovators and storage practitioners for two full days of data-intensive presentations, analyst-led panel sessions with industry leaders and extensive, high-level networking. Learn more here.

FERC Proposes to Open up Wholesale Markets for Energy Storage and Aggregation, by Julian Spector, Greentech Media, November 18, 2016.