ORIGINAL REPORTING: New Power System Approaches To Customer-Owned Generation

Rethinking California distribution system operations and grid services markets for a high-DER future; California wants a cost-effective, reliable and equitable power system with well-compensated distributed resources to balance the bulk power system and meet local needs.

Herman K. Trabish, June 7, 2022 (Utility Dive)

Editor’s note: Integrating customer-owned resources into the power system requires settling the complex question of whether utilities or customers and their representatives will control them.

To prepare California for a “high DER future” that could overstress the state’s distribution system, a series of regulatory workshops opened May 3. Distribution system reform is needed as California moves from “firm dispatchable one-way generation to variable two-way generation” that will accelerate the impacts of distributed energy resources, a white paper introducing the California Public Utilities Commission stakeholder-led workshops reported. The paper offered potential distribution system operator, or DSO, models that could meet coming needs.

“By DSO or another name, a different model of the distribution utility is needed, because in the future every electricity user can have DER and participate in an open access distribution network,” Lorenzo Kristov, consultant for electric system policy, structure, and market design to climate and energy policy advocates, The Climate Center, told Utility Dive. But “right now, the need for a DSO is more concrete than the DSO concept,” he added.

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The workshops will develop “alternative roles and responsibilities of the distribution utility,” said Gridworks Executive Director Matthew Tisdale, who is leading the series of CPUC workshops. But those roles and responsibilities “are enormously financially and politically complicated” and “probably the most fundamental, contentious, and difficult issue in energy policy.”

Two insights about California’s distribution system work emerged from the May 3 workshop, though neither identified the state’s eventual DSO model. First, it was clear there is strong contention between some power system incumbents and community representatives on critical proceeding points, including who can participate and how to define a DSO. And second, it appears major regulatory reforms that could impact utilities’ earnings, like performance-based regulation, are part of the discussion.

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Though rooftop solar is currently threatened by a Commerce Department inquiry and California’s net metering reconsideration, the state’s DER growth will accelerate, workshop participants agreed. Customer demand, the state’s zero emissions by 2045 goal, evolving technology, and falling prices will be key drivers, the white paper added. California installed distributed solar photovoltaic capacity is expected to increase from 2022’s 14,048 MW to 24,721 MW in 2030, according to California Energy Commission spokesperson Michael Ward’s review of the commission’s 2021 Integrated Energy Policy Report. Distributed energy storage capacity is projected to increase from 2022’s 740 MW to 2,587 MW in 2030, he added.

California’s estimated 839,000 zero-emission vehicles at the end of 2021 are projected to reach 5.7 million light-duty passenger and medium- and heavy-duty vehicles by 2030, Ward added, citing CEC data. And an estimated 1.5 million households had smart thermostats in 2018, according to the commission’s 2019 Residential Appliance Saturation Study, though they were too few to count in its 2009 study. Gov. Gavin Newsom’s, D, Executive Order N-79-20 targeting 100% zero-emission new passenger vehicle sales by 2035 is expected to drive exponential growth, the CPUC white paper said. Assembly Bill 327, a 2013 provision that protects customer-owned resources, programs supporting battery storage and heat pumps, and utility and private sector policy-led rebates and initiatives, will all add to accelerating DER growth, it added… click here for more

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