Distributed Energy ResourcesDistributed Energy Resources

The Energy Challenge of the 21st Century

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Vision Of The FutureVision Of The Future

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Changing Policy EnvironmentChanging Policy Environment Energy Efficiency – our First priority

Renewable / Sustainable Resource incentives

Climate Change initiatives

The Smart Grid challenge

The bottom line - new priorities for public utilities Distribution utilities as enablers

Need to align utility ratemaking policy with energy policy priorities

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Provide painless hook-up to grid

Provide distribution system energy storage and standby/back-up services

Provide smart meter data and pricing information

Provide investment capital for renewable energy and other DER in New Hampshire based on monetizing of utility system and other benefits

Provide technical, program/project management and financial resources in the early stages of the energy transformation

Distribution Utility as DER EnablerDistribution Utility as DER Enabler

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Policy AlignmentPolicy Alignment

When distribution utility revenues are directly linked to sales – energy conservation and DER imposes financial penalties Solution – revenue decoupling OR more rate

cases

Distribution utility resources are allocated based on opportunities Return on investments Incentives for performance

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The SB451 ModelThe SB451 Model

DER regulatory framework set in SB451 Cost Recovery & Return on utility ownership

investment and contributions to customer owned DER DER is an alternative investment that can displace traditional

utility distribution investments

Requires PUC approval based on a finding of “public interest” Economic cost/benefit Environmental impact Economic development

System reliability & security

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What Are Distributed Energy Resources?What Are Distributed Energy Resources?

1.) Distributed Generation Solar Small scale wind Biomass Clean cogeneration

2.) Non-Generation Energy efficiency Demand response Energy storage

Located on or near customer premises. Connected to the local distribution grid. Displaces bulk, central station energy supply.

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What Are The benefits Of DER?What Are The benefits Of DER?

DER increases overall energy efficiency and energy diversity by eliminating or displacing energy deliveries from the bulk power system.

Lower regional dependence on fossil fuels.

Stabilize and reduce future energy costs.

Keep energy and investment dollars in-state.

Reduce greenhouse gases and other emissions.

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Benefit Screening ModelBenefit Screening ModelDistr.

Line Losses

Trans. EnergyGen.

CapacityEnergy Divers.

Environ. Econ Dev

DER Investment displaces energy and peak demand

Delays need for investment to meet peak

Reduces line losses

Reduces transmission charges

Displaces fossil-fueled generation

Reduces need for additional generation

Increases fuel diversity

Reduces emissions

Dollars kept locally rather than exported

Value of Benefits$500 to $1,500 investment per peak KW

0-20% of energy produced

Up to $4 per KW per month

Average ISO ECP - up to 10cts/kWh

FCM prices @ $4.50 per KW per mo.

RPS ACP values: 5.7 to 15.0 cts/kWh

Incr. RGGI savings

Multiplier on retained $

Customer Owned Project with Utility Investment Recovered in Rates

Project ownerCompensated for benefit

Compensated for benefit

Compensated for benefit

Retains energy savings

Compensated for benefit

Compensated for project RECs

No direct benefit

No direct benefit

UtilityAvoided cost monetized

Avoided cost monetized

Avoided cost monetized

No benefitUtility aggregates and monetizes

Utility aggregates and monetizes

No direct benefit

No direct benefit

Other customersRates < or = avoided costs

Rates < or = avoided costs

Rates < or = avoided costs

Market price moderation

Rates < or = avoided costs

Default Service customers pay for RECs.

Free benefit to society

Free benefit to society

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Where are we?Where are we? Unitil has hired a consultant and is working towards

an initial DER filing

The initial filing will provide a detailed roadmap for the SB451 process including the ratemaking mechanism and an evaluative screening tool

Several specific projects will be included in the initial filing – the list is still being finalized

In 2009 we will continue prospecting for customer projects and programs that can meet the screening requirements and provide cost effective solutions to NH’s future energy needs