ORIGINAL REPORTING: A Better Way To Measure The Value Of DER

Time & place: How a new locational DER metric helps utilities defer grid investments; Central Hudson is using a simplified valuation scheme to deploy pilots and integrate DER into utility planning

Herman K. Trabish, October 18, 2016 (Utility Dive)

Editor’s note: Since this piece ran, both California and New York have moved closer to implementing regulations requiring a broader valuation of distributed energy resources.

Heated debates are emerging about the best method for valuing distributed energy resources (DER) that echo the still undecided fights over distribute solar. Utilities in New York and California, driven by regulatory imperatives, have taken bids from private sector DER providers that avoid or defer distribution system investment. That is one way to set value, but mandated competitive bidding is a poor vehicle to set simple, replicable standards for DER valuation. More comprehensive efforts at valuing DERs are emerging, but many rely on complex locational valuation schemes that also fail the simplicity and replication tests. There is, however, a new, simpler metric defined in a white paper from global energy consultant Nexant and the Smart Electric Power Alliance (SEPA) — “load carrying capacity factor” (LCCF).

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Unlike the initial efforts to calculate a value for distributed solar, the LCCF is not a DER value expressed in cents/kWh. Instead, LCCF is the numeric value of a DER that describes how effectively it can reduce the peak load at a specific location with a specific load profile. It is like a capacity factor or availability factor for DER, based on each DER’s unique operating characteristics. It quantifies the DER’s ability to address a specific distribution system need at a specific location at a specific time. The complexities of incorporating valuation into distribution planning, bulk power planning, and customer strategies remain to be resolved, the paper adds… click here for more

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