TODAY’S STUDY: Planning The New Energy Future
Beyond the Meter; Planning The Distributed Energy Future Volume Ii: A Case Study Of Integrated Der Planning By Sacramento Municipal Utility District
Dan Wilson, Daisy Chung, Karlynn S. Cory, Vazken Kassakhian, May 2017 (Black & Veatch and the Smart Electric Power Alliance)
This global white paper is a sequel to the previous white paper “Planning the Distributed Energy Future, Volume I” published in February 2016 by Black & Veatch and the Smart Electric Power Alliance (SEPA). The previous white paper described how electric utilities are beginning to proactively plan for a future in which distributed energy resources (DERs) will play a much larger role in balancing supply and demand on the electric grid. The current paper focuses on a case study of how a particular utility, the Sacramento Municipal Utility District (SMUD) in California, is conducting the type of proactive DER planning that was described in the previous white paper.
Like many other utilities, SMUD is seeing increasing adoption of customer-owned and third party-owned DERs in its territory, which is putting pressure on its traditional business model. SMUD estimates that its customers and third parties (on behalf of its customers) are spending or financing around $150 million to $200 million per year on DERs currently. This amount is more than the utility spends on centralized renewables to meet California’s 50 percent Renewable Portfolio Standard (RPS). Such DER growth creates risks of stranding past investments in utility infrastructure and changing the amount and type of SMUD’s future asset investments. However, it also creates opportunities for utilities to improve customer engagement, maximize the net benefits of DERs, and offer new products and services that can lead to new revenue streams.
In order to address both the risks and opportunities presented by DERs, SMUD decided to conduct a study to understand the impact of DERs across its system in a more holistic manner than it had previously. This study integrated previous work from across the utility organization with new methods developed in conjunction with Black & Veatch. This integrated DER planning study (abbreviated as “iDER”) followed the same five-step proactive DER planning process that was described in the previous white paper, shown in Figure 1.1. Technologies included in the analysis were combined heat and power (CHP), distributed solar photovoltaics (PV), energy efficiency (EE), dispatchable and nondispatchable demand response (DR), distributed energy storage (ES), and electric vehicles (EV).
Key recommendations for future analysis and next steps for SMUD, which may also serve as good examples for other utilities interested in iDER planning, include:
• Incorporate iDER analysis into regular utility planning processes like the Integrated Resource Plan (IRP).
• Clearly assign timetables and key responsibilities for each iDER analysis step, and form a core multidisciplinary analysis team.
• Develop a robust DER customer database to track adoption, and research customer tradeoffs between multiple DER technologies as well as DER payback periods.
• Model the entire distribution system, rather than a subset of feeders, and include more types of grid impacts and advanced device functionality, specifically more advanced smart inverter functions.
• Test the mutual relationship between rate structures and customer DER adoption through sensitivity cases or multiple study iterations.
• Ensure consistent assumptions and data are used across all portions of the iDER process (e.g., financing assumptions, DER targets, and analysis periods).
Additional Planned Actions:
• Use DER adoption forecasts for program targeting and development of new products and services.
• Identify economic thresholds for future grid defection by SMUD customers.
• Demonstrate locational value of DERs in real-world settings, such as deferral of distribution upgrades or ability to provide targeted ancillary services.
• Explore new rate structures and targeted incentives to guide DER deployment, so customers install them in the right places, and operate them at the right times, to provide grid benefits.
• Reconsider previous expectations about necessity of new distribution, transmission, and bulk generation infrastructure.
• Implement better software tools for DER planning and operations, e.g. automated DER adoption forecasting and automated data transfer between modeling tools.
• Deploy a customer engagement portal to assist consumers in considering DER options.
• Expand use of actual DER adoption data to train forecast models.
Broader Utility Implications Proactive DER planning of the type conducted by SMUD has broader implications for the electric utility industry. Utilities should consider several key issues when they undertake a DER planning process:
• Locational costs and benefits of DERs, and potential cost savings for physical infrastructure
• The software tools and IT investments required for proactive DER planning and operations
• Utility organizational structures for DER planning, and investments in human resources
• DER market structure establishment
• The potential positive impact on the utility-customer relationship • The utility’s role in the grid of the future, and which business model(s) it will pursue
SMUD, Black & Veatch, and SEPA encourage utilities to start early in implementing an integrated and proactive DER planning process to better understand the complex set of risks and opportunities arising in a world of rapidly increasing DER penetration. Though DER growth is unevenly distributed from one utility service territory to another, the pace of change within the utility industry as a whole is only accelerating. Utility leaders who recognize this, and position their organizations to benefit from the transition to a high-DER grid, are likely to reap significant rewards from their early efforts to plan for the distributed energy future.