Distributed Generation: The Evolving Landscape

Tim RoughanNational Grid

May 13, 2015

Fran CummingsPeregrine Energy Group

2

Today’s Presentations

Distributed Generation: Technical and Market IssuesTim Roughan Director of Energy and Environmental PolicyNational Grid USA

KEY PRESENTERS

Distributed Generation: Economic & Policy Issues Fran Cummings Vice President, Strategic ConsultingPeregrine Energy Group

3

About the Presenter

Tim Roughan Director of Energy and Environmental PolicyNational Grid USA

Tim Roughan is the Director of Energy and Environmental Policy for the National Grid companies which serve 6.8 million electric and gas customers in NE and NY. His prior positions include Director of Product Management, Business Services Vice President, and the Director of Distributed Resources. He has been with the company or it’s predecessors for 31 years.

In his role, Tim works in the regulatory arena to promote balanced approaches to distributed generation issues, and integration of customer-side resources (i.e. DG, energy efficiency, demand response, etc.) with the transmission and distribution (T&D) system as it transforms into a smarter, more resilient system. He is a 1982 graduate of WPI

For information, contact him at Timothy.Roughan@nationalgrid.com

4

About the Presenter

Fran Cummings Vice President, Strategic ConsultingPeregrine Energy Group

Fran’s expertise includes distributed generation, renewable energy, energy efficiency, smart grid planning, and carbon markets. He brings more than 25 years of experience in the energy services field, including 10 years of service to the Commonwealth as Policy Director for the Massachusetts Renewable Energy Trust and for the Massachusetts Division of Energy Resources, and more than 15 years of experience as an energy consultant, including engagements for Massachusetts cities and public agencies as well as private sector clients.

Since joining Peregrine in 2009, Fran has led a contract team working with the City of Boston to facilitate the creation of Renew Boston, a innovative service delivery entity focused on coordinating and tracking energy efficiency and alternative energy activity for Boston’s residents and businesses

For information, contact him at fcummings@peregrinegroup.com.

5

About the Moderator

Jeffrey WintersASME

Jeffrey Winters is a Senior Editor at ASME's magazine, Mechanical Engineering, where he has focused on energy and related issues. He has written about a wide variety of science and technology topics since the early 1990s, with his work appearing in magazines such as Discover, The Sciences, Popular Science, and Psychology Today.

For more information, contact him at wintersj@asme.org.

6

About the ASME Energy Forum

The ASME Energy Forum is a multimedia series that explores the technical aspects and workings of a broad range of energy sources and related technologies.

From solar power and hydrokinetics, to fuel cell vehicles and wind farms, you'll get leading expert perspectives on how these energy sources and technologies work, the issues and challenges, and the economic implications for businesses.

Learn more about the ASME Energy Forum and upcoming webinar topics at: go.asme.org/energyforum.

7

About ASME

ASME is a not-for-profit membership organization that enables collaboration, knowledge sharing, career enrichment, and skills development across all engineering disciplines, toward a goal of helping the global engineering community develop solutions to benefit lives and livelihoods. Founded in 1880 by a small group of leading industrialists, ASME has grown through the decades to include more than 120,000 members in over 150 countries worldwide.

8

During the Webinar

• Please type all questions in the box at the bottom of your screen.

• We will answer as many questions as possible during the event.

• All questions will be answered via e-mail.

Tim Roughan

Director of Energy and Environmental PolicyNational Grid USA

Boston, Massachusetts

ASME Energy Forum WebinarMay 13, 2015

Distributed Generation: Technical & Market Issues

9

Contents

Part 1: Technical & Market Issues (Tim)• DG Types• DG & Utilities• Values• Challenges• NY PSC REV: Proposed Market StructurePart 2: Economic & Policy Issues (Fran)• Market penetration: How much DG is feasible?• New business models & regulatory frameworks

10

Contents

Part 1: Technical & Market Issues (Tim)• DG Types• DG & Utilities• Values• Challenges• NY PSC REV: Proposed Market StructurePart 2: Economic & Policy Issues (Fran)• Market penetration: How much DG is feasible?• New business models & regulatory frameworks

11

DG types

• Most prevalent is solar– Residential size is up to 5-6 kWs routinely– Commercial can be 25 kWs up to 1 MW– Solar Farms (solar only installation with no on-site

load) can be 100 kWs to 6 MWs– Many state subsidies

• Net metering• Renewable energy certificates (RECs) or solar RECs (SRECs)

– Federal tax credit through 2016 of 30%

– E.g., MA went from 5 MWs to 600 MWs of solar in 5 years with state subsidy programs (2010 – 2014)

12

Growth in DG Capacity in Massachusetts

13Source & caveats: https://sites.google.com/site/massdgic/home/interconnection

DG types

• Wind– Difficult to site, not a lot being constructed– Similar subsidies (net metering, RECs, federal tax credits)

• Combined heat and power (CHP)– Some states have rebates from energy efficiency

programs (MA, RI, NY to name a few)• Also some areas (MA) offer an alternate energy credit (AEC)

payment

• Anaerobic Digesters– More interest recently as municipalities/States require

recycling of organic wastes from large institutions initially, then to smaller customers

14

The Delivery of Electricity is Changing

Historical electricity delivery Evolving electricity delivery with DG

Coal/gas fired power station

Energy volume drives energy

company revenue

Small range of conventional technologies

Large centralised generation

Static infrastructure

Transmission and distribution lines

$$$

Price and reliability are main determinants of

customer choice

Energy flows to users

Hydro-electric power

Nuclear power station

Energy flows to users

CO2 emission reduction and wider energy

services drives energy company revenue

Customers focus on economic and environmental value, using a wider range of products and services

Electricity flows to users, and surplus

from distributed generation flows

back to grid

Micro windSmart metering

Micro Biomass

Smart network technology rolled out

Micro CHP

CCS plant (coal/gas)

Solar water

heating

Nuclear power station

CO2 transport and storage

Hydro-electric power

Heat Pumps

Large scale CHP and biomass

$$$

Onshore and

offshore wind

Technology choice proliferates

Efficient Boilers

Industrial and

commercial

Residential

Industrial and

commercial

Intermittency management

Storage+

Storage+

Residential

DG and Utilities

DG and Utilities

• Basic customer service– Interconnecting customers in a timely manner and at minimal

costs• Streamlined interconnection process

– FERC Small Generation Interconnection Process• For FERC jurisdictional projects – selling to a 3rd party

– Many state processes mirror FERC process• For state jurisdictional projects - selling to the host utility through net

metering or as a qualifying facility (QF) under PURPA

• Challenge is when new programs are introduced it overwhelms existing capacity of utility to process in a timely manner– Takes time to find and train qualified employees for this work– Also, as the programs are more successful, the saturation of DG

in localized areas makes subsequent studies more complicated

16

DG values

• Customers – If designed for back-up service (can operate in an

outage), then reliability• Resiliency: microgrid technology, islanding

– Reduce their carbon footprint• Caution is mis-sized CHP – not enough thermal load on-

site can result in higher greenhouse gas emissions versus comprehensive electric and thermal energy efficiency projects – need to aim at 60+% annualized efficiency

– Being Green

17

DG Values

• Utility– If customer is willing, utility could sign contract to

‘buy’ capacity or voltage support from DG in an area of need

• Could avoid or defer a local distribution system upgrade, also known as a non-wires alternative (NWA)

• Understand that only locations where expected load growth exceeds relatively new (< 20 years old) utility equipment is this possible

– Replacement of aging infrastructure not suitable for NWA

18

Near Term DG Challenges

• Timely interconnection• Need smarter grid to manage system with heavy

saturation of DG– Could require curtailment of output at low load, high

generation times• Afternoons in late spring for solar, overnight in the winter for

wind, etc.

• How to implement storage– Will the price really come down?– Currently adding storage can double the cost of a PV

installation– Where to site, how to operate, etc.

19

Other Challenges

• Size of subsidy that all other (non-DG) customers have to pay to support DG programs– What is ‘fair’?

• Clear need for complete overhaul of existing utility delivery service rates when large amounts of DG are installed or projected– Were not designed with DG in mind– Should there be a flat fee to connect

• For CATV, internet, and cell service, most plans have a flat monthly fee whether used 1 second or 24/7 for the whole month

• Should they go to a similar pricing mechanism? 20

NY PSC REV: Proposed Market Structure

• Enable participation by companies and customers providing solar, storage, peak demand reduction, home energy management, etc.

• Integrate new electricity resources into the grid to ensure reliability and efficiency

• Plan and re-construct the distribution network• Customers get paid as electricity producers do today• PSC is considering the appropriate role for utilities in

facilitating new options for consumers• See

http://www3.dps.ny.gov/W/PSCWeb.nsf/All/26BE8A93967E604785257CC40066B91A?OpenDocument

21

Fran Cummings

Vice President, Strategic ConsultingPeregrine Energy GroupBoston, Massachusetts

ASME Energy Forum WebinarMay 13, 2015

Distributed Generation: Economic & Policy Issues

22

Part 2: Economic & Policy Issues -- Contents

• Market penetration: How much DG is feasible?– Impacts on utilities, carbon emissions

• Need for new business models & regulatory frameworks– Debates about rates & subsidies: who should pay for

what• How get more DG & be fair for ratepayers as well as DG

owners?– Is there a win/win (old EPRI project)? – Rate pressure from option to cut free?

– List a few new big new ideas 23

Market penetration: How much DG is feasible?

• Challenge: impacts on utility revenues & profits, or on ratepayers (“death spiral”?)– Will we still need wires? What about “load

defection”?• Scenarios of high/maximum DG market penetration

– One goal: big impacts on carbon emissions– Approach to a scenario exercise:

• Assume DOE’s solar growth scenario for “SunShot”– Break out DG from utility-scale & CSP solar

• Assume CHP meets 2020 goal of +40 GW & then grows at ~ 2GW/year

24

A Massachusetts Solar Growth Scenario

25See: http://www.mass.gov/eea/energy-utilities-clean-tech/nms-taskforce/

DOE Sunshot Scenario of Solar Growth

26Source: http://energy.gov/eere/sunshot/sunshot-initiative

DOE Sunshot Scenario of Solar Growth

27

Scenario exercise:DG reaches 40% of US generating capacity

28

40%

Source: F. Cummings calcs based on EIA reference case, Sunshot, other assumptions.

DG reaches 28% of US generation; central fossil 11%

29

28%

11%

Debates about rates & subsidies: who should pay for what?

– How get more DG while being fair for ratepayers as well as DG owners

• Is there a win/win? – 2008 EPRI MA/CA study quantifying win/win (overall B>C)– recent April 30, 2015 MA solar study with overall benefits > costs:

» http://www.mass.gov/eea/docs/doer/renewables/final-net-metering-and-solar-task-force-report.pdf

• Can the benefits be shared so in general no one loses?• Rate pressure from option to cut free?

– RMI: The Economics of Grid Defection (www.rmi.org/electricity_grid_defection)

– Compare multiple perspectives:• Discos, low-income & bus. ratepayer advocates, enviros, etc.

– So, can regulators just make small changes in existing rates? 30

New paradigms for business models & regulatory frameworks

1. Visions of DG + utility wires co-existing in future grid– Microgrids with disco ownership of wires– Disco ownership of DG

2. Three models outlined in RMI paper “New Business Models for the Distribution Edge” (http://www.rmi.org/elab)

– Integrated Distributed Resource Manager (DER Dispatcher)– Distributed Resource Finance Aggregator (DER FinanceCo)– Independent Distribution Network Operator (DNO)

3. NY REV: IDO with competitive suppliers of DG, NWA– ISO-type model at distribution level, could be disco

31

New storage product just announced:http://www.teslamotors.com/powerwall

32

Conclusion: collaborations needed for innovation

• Technical pilots– Electronics/smartgrid to increase DG threshold– Solar integration– Storage and protocols to meet multiple goals & provide

optimum revenue– Adding EVs to mix– “Transactive” energy

• Equity & municipal concerns– neighborhood/district systems

• Examples of collaboration on pilots with DG features:– Pecan Street in Austin TX– National Grid in Worcester MA

33

34

Questions?

Plan to join us!ASME 2015 Power & Energy Conference

June 28 – July 2, 2015; San Diego Convention Center, San Diego, CA

Four of ASME's energy conferences come together to create an event of major impact for the Power and Energy sectors. Fossil and nuclear power generation, solar, wind, fuel cell applications and much more will be discussed in each of the four concurrent conferences

within this larger event:

For more information visit: https://www.asme.org/events/power-energyor contact Brandy Smith: smithb@asme.org

Register by June 14th to take advantage of our Advanced Rates!

36

Continue the conversation…

Continue the conversation about Distributed Generation by participating in an ASME Group on ASME.org.

Thank you for attending!

Join us for the next webinar in JULY 30, 2015 on the topic of

ELECTRIC GRID.

go.asme.org/energyforumLearn more:

37