Next-Gen Flexibility is...The Mantra for Grid 3.0

For most veterans of the utility industry, discussions about the next generation distribution grid hearken back to the 1990s with the introduction of deregulation and wholesale markets.

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By Jill Feblowitz

For most veterans of the utility industry, discussions about the next generation distribution grid hearken back to the 1990s with the introduction of deregulation and wholesale markets. Today’s “future” represents an even greater departure. What’s new is the rapidly rising penetration of distributed energy resources (DER) and the presence of variable renewable generation. Then too, there is the prospect of evolving technologies (automated metering and control systems, information technology and communications, smart inverters, storage, etc.) available to support dynamic demand and supply. It is all about flexibility.

Electric utilities, regulators and third party developers and suppliers are working diligently to ask the right questions and define the future electric distribution utility. In areas where change is rapid, utilities are rushing to make operational changes. Regardless of how fast changes are coming, comprehensive planning for Grid 3.0 is a must. Flexibility is a guiding principal for that planning.

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FIGURE 1: Renewable Watch-Oahu

It was not surprising then, that it was standing room only at the 2017 DistribuTECH Mega Session titled “The Next Generation Distribution Grid: Grid 3.0.” Dora Nakafuji, director of renewable energy planning, Hawaiian Electric Co. (HECO); Stuart Nachmias, vice president, energy policy and regulatory affairs, Consolidated Edison (ConEd); Dr. Mani Vadari, president, Modern Grid Solutions; and, Dr. Ali Ipakchi, Sr. vice president smart grid and green power, OATI, gave their perspectives as part of the panel moderated by Anant Venkateshwaran, director, General Electric.

View From the Trenches—
Grid Flexibility

In 2015, HECO had more than 60,000 applications for solar installations. The high penetration of intermittent renewables has forced the utility to handle new grid behaviors, like voltage fluctuations. The good news is that the Department of Energy offers funding through the SunShot program that supplements utility investment in systems integration (SEAMS) to support solar plus storage (SHINES). In a presentation made to delight engineers, Nakafuji demonstrated how HECO has worked with vendor partners to deliver grid flexibility:

• Situational awareness. Visualization tools provide context with forecasts of wind speed and irradiance paired with geospatial, SCADA and sensor data. This helps engineers anticipate how DERs alter grid performance. This is especially important where there is no advanced metering infrastructure (AMI) or communications with inverters.

• Response at the edge. The grid responds closer to the customer when using mobile batteries and distribution sensing and control equipment at the transformer.

• Grid plus customer benefits. Analytics, visualization and control systems have enabled 1 MW of aggregated behind-the-meter customer storage (Figure 1). Storage is dispatched for grid support. In addition, customers have saved money by managing peaks.

View From the Planners—Resource Flexibility

While Hawaii is operationally focused, New York investor-owned utilities are planning for the next iteration of the grid as part of Reforming the Energy Vision (NYREV). Utilities are fundamentally changing the way they plan for infrastructure investment as they consider increasing DER penetration and customers’ choices on when to use energy.

ConEd is taking on resource flexibility with its Brooklyn-Queens Demand Management (BQDM) program. BQDM is using non-wire alternatives (NWA) to defer over $1 billion in substation investment for five years or more. The company is providing $200 million in utility and customer incentives. In a departure from traditional regulatory treatment, a utility/distribution service provider (DSP) can treat incentive payments as a regulatory asset. This enables the utility that invests in NWA to earn a rate of return and smooth the costs to customers, while also having the opportunity to earn incentives for achieving performance goals that benefit customers.

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FIGURE 2: End-to-End Operations Source: OATI

To meet afternoon and evening peak demand in BQDM, NWA resources are stacked differently each hour of the day, ConEd’s Nachmias explained. The resources include the more typical energy efficiency, demand response (DR) and conservation voltage optimization, however, newer technologies such as battery storage, utility-scale storage, thermostats, combined heat and power, and fuel cells also are being tapped. In addition, solar and thermal storage are expected to reduce demand.

ConEd opted to procure distributed resources for two time periods during 2017 and 2018 through a descending clock auction. Bidders proposed to meet calls for power with a variety of innovative solutions such as battery storage. What is interesting about this procurement, Nachmias said, is that bids came in lower than a ceiling price which was disclosed to the bidders (Table 1- next page). This experiment shows that there is value to the customer in peak savings as well as to the grid, he said.

In addition, the NWA already costs less than expected. So, what does a utility do with the unspent funds? ConEd has already petitioned its regulator to extend the program to gain further benefits for customers.

View From the Policy-makers—Market Flexibility

Regulatory and legislative activity in the power industry has increased substantially over the last couple of years. Notable examples are efforts in California, New York, Hawaii and Illinois that are undertaking fundamental regulatory reform, reshaping the role of utilities based on a DER future. That future attributes value to DER and distribution markets. The Advanced Energy Economy Institute, an organization aimed at raising awareness of the public benefits and opportunities of advanced energy, reports that storage is also a hot topic that is creating regulatory activity in 22 states, 3 ISOs and the District of Columbia.

What will Grid 3.0 look like? Modern Grid Solutions’ Vadari said his company posits the following in a DER world:

• Utility operations: Utilities will assume a mix of DER and other technologies on the grid. This will affect safety, switching and interconnection practices.

• Demand response: DR will be treated like generation and dispatched as a portfolio in ISO/RTO or distribution service operator (DSO) markets.

• Distributed energy resources: DER will be dispatched by the DSO as a portfolio, balancing nondispatchable renewables, distributed generation, storage and demand response.

• Consumers: Consumers of the future will provide new services to the grid, such as energy, capacity and frequency support. Utilities will offer new products and services to customers, including storage, PV maintenance and retail markets where consumers can trade/sell their electricity.

Enabling Infrastructure—Grid, Resource and Market Flexibility

Whether a utility has DER in its future or not, it will need an enabling infrastructure. Not every jurisdiction will integrate large amounts of renewables and other DER in the next several years, however, utilities and grid operators in those areas are still pursuing grid modernization. OATI’s Ipakchi said the bedrock technologies for reliability and grid efficiency are distribution automation, volt/VAR management and automated switching. AMI also is essential for customer service and grid operations, he added.

With a greater penetration of DERs, Ipakchi reiterated what HECO has found—operators require technologies that provide visibility and control over a grid where DERs are now invisible. In addition, they need secure infrastructure that can communicate with disparate Internet of Things equipment like smart thermostats, smart appliances, electric vehicles, storage and smart inverters chosen by the customer.

A more resilient grid, a topic that has gained a lot of attention since Hurricane Sandy, also will require systems that can interact with microgrid controllers at customer sites. In addition, utility scale renewables require more advanced grid technology.

When stacking resources, there is an even greater need for bringing together customer service (DR, energy efficiency) and operations (distribution management systems/SCADA). A DER management system (DERMS) is put forward as a layer to enable integration and add new functions. ConEd is already managing resources, as well as advancing its systems as the distributed system platform (DSP) provider, as utilities become the DSO as part of NYREV.

The infrastructure will, of course, be more complex if consumers and utilities are paid to deliver value to the grid in ISO or DSO markets or both (Figure 2). Technology must be in place to deliver price signals from the markets to the customers, enable bilateral bids into the market, support scheduling and settlement, and consider customer preferences and DER.

Year

Call Window

Ceiling Price
($/kW/Year)

Clearing Price

($/kW/Year)

2017

4 p.m. – 8 p.m.

250

214

2017

8 p.m. – 12 a.m.

1,250

984

2018

4 p.m. – 8 p.m.

775

449

2018

8 p.m. – 12 a.m.

1,000

987

• 10 DR providers received awards through the auction

• 6 new entrants to Con Edison DR program

• Mix of curtailment, battery providers and distributed generation

TABLE 1: BQDM DR Auction Results Source: Con Edison

Technologies must be cost effective, able to scale, and in some cases, perform in subseconds. This is a tall order. Still unanswered are the questions of how much this infrastructure will cost and who will pay for it.

Preparing for Grid 3.0

Utility practitioners Nakafuji (HECO) and Nachmias (ConEd) provided some advice to their utility peers on how to navigate toward Grid 3.0. They said:

• Focus on envisioning the most likely future scenarios and devote company resources to planning efforts that involve all parts of the organization.

• Look for ways to work with customers and third party providers to bring benefits to customers and opportunities for utilities comparable to traditional utility investments. Customers have more choice today and they are going to work with third party companies if they find a reason to do so. Utilities must find ways to work with all segments of the business.

• Keep employees coalesced on an easily consumable vision for Grid 3.0. Hawaii’s vision is “smarting the grid”—sustaining a diverse resource portfolio; managing through grid intelligence; awareness through education, training and new tools; resilient architecture/communications; and tangible technologies.

• Build confidence in new ways of operating the grid by providing the tools for engineering analysis of unusual events as well as monitoring and verification of initiatives. This includes supporting the education of the upcoming workforce in using cutting edge technologies such as micro-synchrophasors, smart inverters and battery storage control systems. UP

Jill Feblowitz is founder of Feblowitz Energy Consulting and an internationally recognized expert on innovation in the energy industry. With over 30 years of experience leading research and delivering consulting projects, Feblowitz provides advice to energy companies in the areas of energy markets, business models, operations, policy, regulation and technologies.

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