Corina Rivera-Linares, Senior Analyst, TransmissionHub
February 11, 2014 | 2 Comments
WASHINGTON, D.C. -- The Electric Power Research Institute (EPRI) said on Feb. 10 that it has begun work on a three-phase initiative involving central and distributed energy resources (DER) to provide stakeholders with information and tools that will be integral to four identified areas of collaboration, which include interconnection rules and communications technologies and standards.
A paper released on Feb. 10 titled, “The integrated grid: Realizing the full value of central and distributed energy resources,” is the first phase in a larger EPRI project aimed at charting the transformation to the integrated grid, EPRI said, adding that also under consideration will be new business practices based on technologies, systems and the potential for customers to become more active participants in the power system.
Such information can support prudent, cost-effective investment in grid modernization, and the integration of distributed energy resources (DER) to enable energy efficiency, more responsive demand and the management of such variable generation as wind and solar.
Along with reinforcing and modernizing the grid, it will be essential to update interconnection rules and wholesale market and retail rate structures so that they adequately value capacity and energy. EPRI added that secure communications systems will be needed to connect DER and system operators, noting that as distributed resources penetrate the power system more fully, a failure to plan for those needs could lead to higher costs and lower reliability.
Noting that local circumstances vary, EPRI said that Germany’s experience, for instance, illustrates consequences for price, power quality and reliability when the drive to achieve a high penetration of distributed wind and photovoltaic (PV) results in outcomes that were not fully anticipated. Consequently, German policymakers and utilities are changing interconnection rules, grid expansion plans, DER connectivity requirements, wind and PV incentives, and operations to integrate distributed resources.
In the United States, Hawaii has experienced a rapid deployment of distributed PV technology that is challenging the power system’s reliability. In those and other jurisdictions, policymakers are considering how best to recover the costs of an integrated grid from all consumers that benefit from its value, EPRI said.
In discussing the three-phase initiative, EPRI noted that the concept paper released on Feb. 10 aligns stakeholders on the main issues while outlining real examples to support open fact-based discussion. Various stakeholders from the energy sector, including utilities, regulatory agencies, equipment suppliers, non-governmental organizations and other interested parties, provided input and review.
Phases II & III
Of Phase II, EPRI said that six-month project will develop a framework for assessing the costs and benefits of the combinations of technology that lead to a more integrated grid, including recommended guidelines, analytical tools and procedures for demonstrating technologies and assessing their unique costs and benefits. Such a framework, EPRI added, is required to ensure consistency in the comparison of options and to build a comprehensive set of data and information that will inform the Phase III demonstration program. Phase II output will also support policy and regulatory discussions that may enable integrated grid solutions.
Phase III, EPRI added, entails conducting global demonstrations and modeling using the analytics and procedures developed in Phase II to provide comprehensive data and information that stakeholders will need for the system-wide implementation of integrated grid technologies in the most cost-effective manner.
Taken together, the second and third phases will help identify the technology combinations that will lead to cost-effective and prudent investment to modernize the grid while supporting the technical basis for DER interconnection requirements.
Furthermore, EPRI added, interface requirements that help define the technical basis for the relationship between DER owners, distribution system operators (DSOs) and transmission system operators (TSOs) or independent system operators (ISOs) will be developed.
The information developed, aggregated and analyzed in the second and third phases will help identify planning and operational requirements for DER in the power system while supporting the robust evaluation of the capacity and energy contribution from central and distributed resources, EPRI said.
“The development of a consistent framework supported by data from a global technology demonstration and modeling program will support cost effective, prudent investments to modernize the grid and the effective, large-scale integration of DER into the power system,” EPRI said. “The development of a large collaborative of stakeholders will help the industry move in a consistent direction to achieve an integrated grid.”
EPRI also noted that several requirements are recognized when defining an integrated grid. It must enhance electrical infrastructure, must be universally applicable and should remain robust under a range of foreseeable conditions.
Consumers and investors of all sizes, EPRI added, are installing DER with technical and economic attributes that differ radically from the central energy resources that have traditionally dominated the power system.
So far, rapidly expanding deployments of DER are connected to the grid but not integrated into grid operations, which is a pattern that is unlikely to be sustainable.
Also, electricity consumers and producers, even those that rely heavily on DERs, derive significant value from their grid connection. Indeed, EPRI added, in nearly all settings, the full value of DER requires grid connection to provide reliability, virtual storage and access to upstream markets.
DER and the grid are not competitors but complements, provided that grid technologies and practices develop with the expansion of DERs.
“We estimate that the cost of providing grid services for customers with distributed energy systems is about $51/month on average in the typical current configuration of the grid in the United States; in residential PV systems, for example, providing that same service completely independent of the grid would be four to eight times more expensive,” EPRI added.
Among other things, EPRI said that increased adoption of distributed resources requires interconnection rules, communications technologies and standards, advanced distribution and reliability technologies, integration with grid planning and enabling policy and regulation.
EPRI CEO: ‘It’s going to be an evolution’
“I do think we’re all eager to begin to separate fact from fiction,” as it pertains to distributed generation and the associated costs, technologies, reliabilities and impacts to the respective parties, David Boyd, commissioner of the Minnesota Public Utilities Commission (PUC) said during the Feb. 10 NARUC panel, “Value of the integrated grid.”
Citing the EPRI initiative, he noted that the process needs to be a transparent and open stakeholder process “so that we can get to some level of agreement on the key points … raised,” he said.
Finding out what the facts are will not be particularly easy and that is one of the great challenges before the industry, he said.
“[T]he foundation of the conversation has to be sound policy and a firm regulatory framework,” Boyd said. “That’s important to us. We have to make sure that we’re mindful of the benefit to consumers, educating the consumers and protecting the consumers as this process goes along. Transparency is, obviously, number one. If we can’t agree on the input data, we’ll never agree on the outcomes.”
Varying rate structures are important as well, he said, adding that those who do not employ time-of-use rates or time-varying rates are likely going to have to talk about that as part of a conversation to make optimum use of the kinds of technologies that are available. “[W]e need to try to make sure align the goals of the utilities with those of the ratepayers,” he said. “The change is coming. … Consumers want this technology. It’s going to come. So, our challenge is to make sure we do all of these things in a consistent, productive manner, trying to be sure that we balance the interests of many, many parties.”
Robert Kenney, chairman of the Missouri Public Service Commission, said during the panel, “[O]ur primary goal is to ensure safe, adequate, reliable service at just and reasonable rates and [in an] environmentally responsible fashion.” He noted that environmental sustainability and affordable energy services are keystones of the issues that NARUC’s Committee on Energy Resources and the Environment (ERE), of which he serves as chair.
Consistent “with ERE’s mission, it’s critical that whatever research is being brought to bear on any grid issue, including distributed energy resources, is objective, credible and fact-based,” he said, adding, “[M]y charge to EPRI as it undertakes this study, is to ensure that the analysis is objective, fact-based and advocacy-free.”
This is a highly charged issue with passionate positions on both sides, he noted, adding, “[I]t is my hope that EPRI’s research that will be brought to bear on this topic will add an objective analysis that regulators can use in crafting public policy.” There is no question that the manner in which electricity is generated, transmitted and distributed is changing, so there is a need for this research, he noted.
“From advanced metering to phasor measurement units, new technologies are altering and enhancing the manner in which we consume” power, he said.
Those new technologies provide vast opportunities and present some significant challenges, he said, adding, “[I]t’s incumbent upon EPRI to ensure that the research is, again, objective, balanced and fact-based.”
In response to a question from the audience about the challenge that seems to exist in electricity regulation and whether there is movement towards micro-managing the effort to figure out what the electricity system is going to look like in the future, Michael Howard, president and CEO of EPRI, said he would not say it is micro-managing, but trying to get the “facts right so that we can make more rational and informed decisions.”
The system is going to evolve, he said, adding, “It’s not going to be a revolution, it’s going to be an evolution,” where the system is more interactive and has more participation by consumers and others.
“[I]t’s a marathon [and] it’s not going to happen overnight, but it’s getting the fact-based information so that we can then make more informed decisions – that’s what’s critically important,” he said.
In a Feb. 10 statement, Howard said, “If we are going to realize the full value of these resources, while at the same time continue to provide affordable and reliable electricity, we need to integrate them into every aspect of grid planning, operations and policy.”
This article was originally published on TransmissionHub and was republished with permission.
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