DERs Boost Grid Efficiency

This article was originally published on utilitydive.com on 9/23/19.

The power system’s growing need for flexible load and customers’ rising demand for backup power are driving new partnerships between utilities and providers of customer-sited resources across the Northeast.

Vermont’s Green Mountain Power (GMP) is leading this transition toward distributed energy resources (DER) as grid assets. But others are right behind. And instead of the usual market battle, DER providers and utilities are becoming enthusiastic collaborators.

The objective is “a home-, business- and community-based energy system,” GMP CEO Mary Powell told Utility Dive.

“We envision a future in which the distribution system is primary [and] the distribution utility is the symphony conductor of many different DER devices, with battery storage leading,” she said. “And the devices are an almost living, breathing system that inhale when costs go down and exhale as prices go up.”

New bring-your-own-device (BYOD) programs, which target peak demand reductions, are just the beginning, stakeholders told Utility Dive. Synergies among utilities, DER providers and customers can deliver a range of cost-effective advanced grid services. The key, they said, is standardized pay-for-performance and shared savings provisions to protect ratepayers.

Bring your own where?

There are BYOD programs or proposals in Vermont, New Hampshire, Massachusetts, Connecticut, Rhode Island, Maine and New York. But four states are leading.

Vermont

GMP’s DER programs have attracted over 2,700 customers, Powell said. The utility now has 11 MW of DER assets, including customer-owned batteries, EV chargers, water heaters and heat pumps. Battery programs have generated over $800,000 of net value in grid services since 2018 while maintaining customer access to the batteries for backup power.

In a new BYOD proposal, private sector providers will aggregate customer-owned devices and “be compensated for reducing kWs over the peak hour each month and each year,” she said. 

“[I]t is an incentive to the utility to forecast the peak accurately and dispatch the signal to aggregators effectively.” Chris Rauscher – Director for Policy and Storage Market Strategy, Sunrun

The amount of compensation to DER providers and their customers depends on whether DER is used to avoid annual transmission system peak charges or monthly system peak costs, and may be higher in more congested locations. “The key is matching compensation to the value the DER delivers,” Powell said.

GMP’s primary value has been reducing the New England Independent System Operator’s (ISO-NE) annual peak usage charges, she said, which created a $750,000 value within one hour of a hot summer day last year. DER also produced revenue for GMP in the ISO-NE capacity and ancillary services markets.

Shared savings give “aggregators an incentive to maximize the use of customers’ batteries,” Sunrun Director for Policy and Storage Market Strategy Chris Rauscher told Utility Dive. “And it is an incentive to the utility to forecast the peak accurately and dispatch the signal to aggregators effectively.”

To produce savings, utilities and aggregators must work together “to make sure the storage and other DER devices are inhaling and exhaling at the right times,” Powell said.

Massachusetts and New Hampshire

Massachusetts’ BYOD programs are “a phase change” in DER use by utilities, Rauscher said. Regulators “shifted the traditional energy efficiency mindset of reducing volumetric sales to the forward-looking mindset of energy optimization that reduces peak costs and peak emissions.”

Eversource’s BYOD program will help the utility “maximize the value of customer-sited assets on our system,” its Manager of Energy Efficiency Planning and Regulation Michael Goldman told Utility Dive.

The program “is designed to integrate every asset type possible, but only for a certain number of hours per year,” Goldman said. 

Aggregators are compensated by utilities and share the returns with DER owners and Eversource is “the aggregator of aggregators, managing its peak load issues without owning or operating assets.”

Eversource will first focus on using behind-the-meter assets to reduce ISO-NE transmission charges, he said, which could lead to reduced expenditures for new capacity.

“This combination of aggregated customer- and utility-owned resources may also act as a non-wires alternative to new utility infrastructure.” Michael Goldman – Manager of Energy Efficiency Planning and Regulation, Eversource

The program includes battery storage, smart thermostats, EV chargers and traditional direct-control demand response, that the utility envisions as being “dispatched through a software platform with a single point of control” to manage peak demand, Goldman said. Eversource’s summer 2018 demonstration project indicated there may be a learning curve. It used batteries, manual curtailment and building energy management for DR, and “reduced load as expected,” according to a March analysis by Energy and Resource Solutions and DNV-GL. But 97% of the demand reduction came from manual curtailment.

Eversource also provides services across Connecticut and New Hampshire, and is planning to deploy a hybrid pilot to address a high number of outages in the transmission-constrained load pocket of Westmoreland, New Hampshire, by pairing behind-the-meter devices with front-of-the-meter storage.

In an outage, DER owners will “reduce their own load, magnifying the impact of the utility-owned front-of-the-meter storage,” said Goldman. “This combination of aggregated customer- and utility-owned resources may also act as a non-wires alternative (NWA) to new utility infrastructure.”

Programs like BYOD that provide access to DER can “achieve operational objectives with economic and environmental benefits if there is enough aggregated DER,” Goldman said.

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