Author Archives Laura Arnold

What Can Distributed Generation Do For the Grid?

Posted by Laura Arnold  /   September 29, 2020  /   Posted in solar, Uncategorized, wind  /   No Comments

Borenstein, Severin

What Can Distributed Generation Do For the Grid?

A thought experiment suggests how much rooftop solar could reduce transmission and distribution costs.

California and other locations are moving to renewable energy at high speed. But even in these forward-leaning areas, there is still an active debate about which renewables and where. Part of that debate centers on the role of distributed generation (DG), which almost exclusively means rooftop solar. (Batteries are storage, not generation, but I will get to them shortly.)

The benefits and costs of DG continue to be debated, a topic I have written about here a number of times. (If you are suffering from insomnia, try my blogs from 201320152015 again2016, and 2016 again.) Per kilowatt-hour (kWh), rooftop solar costs more than power generated from large-scale solar farms, but advocates argue there are advantages that such a simple comparison misses. Among the first they mention is the savings in transmission and distribution costs that result from generating electricity at the location where it is used, a topic that Lucas dug into in June 2018.  Lucas discussed some research that looks at specific circuits of a specific utility and studies what the savings might be. That research found that the grid benefits were substantial in a few locations, but were quite small for the grid overall.

Today I want to take a macro approach, looking at just how much the savings could be for the entire grid.

To begin with, building a grid is very expensive. The US has spent trillions of dollars on its own grid. But those are sunk costs; nothing we do now will recover any of that money.   So, those costs are not relevant when asking whether to build additional distributed versus grid-scale renewables going forward. Similarly, the country has sunk billions into rooftop solar that’s already installed, including some very expensive projects during the technology’s nascent stage, which is also irrelevant for policy going forward.  The critical question now is: how much of the expenditures that the country is likely to make on the grid in the future could be avoided by installing more distributed solar in the future?

One guide that I have heard referenced by two different leaders in the rooftop solar industry is the estimate that the US will have to spend $1.1 trillion over the next 25 years to maintain, expand, and modernize its grid. The source is this 2015 DOE report (page 3). That’s a daunting number, but 25 years is also a long time, and a lot of electricity. (National expenditures on many things are impressive over 25 years: if current trends hold, it looks like the US will spend about $0.9 trillion on cheese in the next 25 years.)

Let’s assume that the $1.1 trillion number, adjusted for inflation, applies today for the next 25 years. Next, let’s ask how much of that grid investment could be avoided if we were to install enough additional rooftop solar over the next couple decades to provide 10% of the kWh that otherwise would have been produced by grid generation. A very generous estimate is 10%. That would mean that moving a given additional proportion of total generation to rooftops would reduce the needed grid investment going forward by the same proportion. There are two fundamental reasons the savings would likely be much smaller:

  1. The grid exhibits significant economies of scale. If every customer were to consume twice as much electricity, it would not require twice as much investment in the grid. Conversely, if every customer were to consume half as much – or if half of all customers were to drastically cut their consumption from the grid – it would not cut in half the level of investment we need going forward.
  2. Nearly all customers with rooftop solar, even if they generate as much as they consume, still use the grid extensively, and every second of the day. A residential system without batteries (still the vast majority of new systems) will export a large share of the power it generates into the grid when the solar panels are generating more than their consumption, and the household will import substantial quantities from the grid when they are consuming more than their panels are producing. That will be a smaller factor for solar with batteries, but it won’t go away. Once the batteries are charged, customers will again be exporting into the grid. And on long stretches of cloudy/rainy/smoky days, they will be depending on imports from the grid. In fact, while a solar customer with some batteries will surely do less electricity exchange with the grid, it is not at all clear that they would want to make do with any less service capacity on their wire.

So, an assumption that replacing X% of customer energy demand from the grid with distributed solar generation would reduce the need for grid investment by X% greatly overstates the true savings. But let’s go with it anyway for a minute.  If that were true, how big would the savings be? The answer is 1.2 cents per grid-generated kWh that is displaced by rooftop solar.1 (Calculation details in that footnote.)

In other words, if rooftop solar PV otherwise had the same attributes as grid scale solar PV, but allowed grid investment to be reduced proportionally to its production, that would enhance its value by about 1.2¢/kWh. In reality, the number would be much smaller for the two reasons explained, almost certainly well under one cent per kWh.

To put this calculation in context, 2019 non-partisan estimates put the midpoint unsubsidized levelized cost for residential rooftop solar at 20¢/kWh, for commercial/industrial rooftop solar at 11¢/kWh, and for grid-scale solar at 4¢/kWh. That’s a big gap. Savings on transmission and distribution isn’t going to fill more than a tiny fraction of it.

Of course, savings on transmission and distribution aren’t the only consideration in comparing rooftop to grid-scale renewables. One that has grown in importance and attention since I last discussed the topic is resiliency, at least when the system includes batteries. Still, it is worth pointing out that, just as with a gasoline generator, the benefits of that resiliency flow primarily to the customer with the solar, which is not a compelling argument for preference in public policy.

None of this is to say that rooftop solar can’t ever be a winner for society. In some areas, grid scale renewables are not feasible due to a lack of land availability (an advantage of rooftop real estate) or barriers to building transmission or distribution. As a result, in specific locations, distributed generation can be more cost-effective. But we aren’t building rooftop solar in the specific locations with those constraints! We are building them anywhere that any home or business owner benefits privately, even if grid scale renewables would be much more cost-effective for society.

Anyone who is paying attention understands that the planet is warming and we need to stop burning fossil fuels. But to do that in a politically sustainable and equitable way, we also need to find alternatives that are cost-effective for society as a whole. We got into this mess through individual choices that don’t account for the impact on others in society. I believe that we can only get out of it with solutions that do account for those impacts.

Despite my anxiety about national politics, I’m still mostly tweeting energy news/research/blogs @BorensteinS

Keep up with Energy Institute blogs, research, and events on Twitter @energyathaas

Suggested citation: Borenstein, Severin. “What Can Distributed Generation Do For the Grid?” Energy Institute Blog, UC Berkeley, September 28, 2020, https://energyathaas.wordpress.com/2020/09/28/what-can-distributed-generation-do-for-the-grid/

1 I assume that there is no growth in demand over 25 years (which biases upward the savings per kWh), so I divide the $1.1 trillion investment by the 2015 consumption of 3.900 trillion kWh times 25, which yields $0.0113/kWh in 2015 dollars.  Inflating that figure to 2020 dollars using the all-urban CPI gives $0.0123/kWh.

Flashpoint: Climate action win-win for future of Indiana, GOP and planet

Posted by Laura Arnold  /   September 21, 2020  /   Posted in Uncategorized  /   No Comments

Drake Abramson

Flashpoint: Climate action win-win for future of Indiana, GOP and planet

Drake Abramson | Chair, Indiana Federation of College Republicans

Across the country, young Republican leaders like myself recognize that failing to take action to curb carbon emission could hurt both the future of the planet and the Republican Party. We’ve spoken out that being a Republican shouldn’t mean having to choose between being a conservative and supporting climate-smart policies — and we’re not alone in this belief. A poll released in July by Citizens for Responsible Energy Solutions and American Conservation Coalition found 67 percent of millennial Republican voters believe the party should do more on climate change.

Thankfully, Sen. Mike Braun won’t need any convincing and is already leading the charge on an issue that’s a win-win for Republicans and the planet.

Just last year, the newly elected senator teamed up with Delaware Sen. Chris Coons to form the first bipartisan Climate Solutions Caucus. Recognizing that for too long, Washington has been paralyzed by partisanship, Sen. Braun formed this caucus to enable productive, bipartisan conversations about protecting our environment, securing America’s energy future and protecting American manufacturing jobs.

That’s why it was not surprising — but nevertheless, heartening — to see him continue to build on this legacy by recently introducing the Growing Climate Change Solution Act, a bill to make it easier for farmers, ranchers and foresters to sell credits on the voluntary carbon credit market that they can earn by reducing greenhouse gas emissions or sequestering carbon on their land.

It’s been estimated that a typical production farm could sequester about a ton of carbon dioxide per acre and current conditions on the voluntary market support about $15 per ton of carbon dioxide sequestered or avoided. It is solutions like these that will help support a thriving agricultural sector while reducing carbon emissions and mitigating the impact of climate change.

Sen. Braun should be applauded for his efforts and now, more than ever, his commitment to climate action is needed in the face of the public health crisis. Indiana’s clean energy economy has experienced significant setbacks over the past several months as business closures and layoffs related to the COVID-19 pandemic have taken their toll. Despite some gains in June, in Indiana, more than 12,000 clean energy workers have lost their jobs since March, mirroring a national trend that has seen our country’s clean energy workforce of 3.3 million workers reduced by more than half a million, a 15% decline since the onset of the pandemic.

America’s clean energy workers make up 40% of the energy workforce in our country. As Congress considers new strategies for rebuilding a post-pandemic economy, we can’t afford to leave Indiana’s clean energy workers out of the conversation. Sen. Braun recognizes that climate action is a win-win for the future of Indiana, the Republican Party and our planet — hopefully his colleagues in the Senate will join him.

 

 

Join Rep. Bacon and Sen. Stoops for Solar Policy Talk Fri., Sept 25

Posted by Laura Arnold  /   September 21, 2020  /   Posted in 2021 Indiana General Assembly, Indiana Utility Regulatory Commission (IURC), Net Metering, solar, Uncategorized, Vectren  /   No Comments

bacon

Rep. Ron Bacon (R-Chandler) is solar homeowner and Vectren net metering customer.

Stoops

Sen. Mark Stoops (D-Bloomington) is a member of the 21st Century Energy Development Task Force.

Indiana Energy Policy Q&A Webinar

with Rep. Ron Bacon (R-Chandler) 

and Sen. Mark Stoops (D-Bloomington)

FRIDAY, SEPTEMBER 25, 2020 AT 12 PM – 1 PM EDT On-line

Hosted by Solar United Neighbors and Indiana Distributed Energy Alliance

Join Solar United Neighbors, IndianaDG, and two veteran Indiana legislators to discuss the state of solar in Indiana. We'll learn about Vectren’s case to end net metering, the 21st Century Energy Policy Development Task Force that will submit a report with energy policy recommendations to the General Assembly in December, and how you can make your voice heard.
Rep. Ron Bacon (R-Chandler) and Sen. Mark Stoops (D-Bloomington) will join us for a live Q&A, so get your questions ready!

Click here to register!:

https://us02web.zoom.us/.../reg.../WN_cRn8oVSIRmeGIWli9lChqg

DER Scores Big Win in US Wholesale Market with FERC Order 2222

Posted by Laura Arnold  /   September 18, 2020  /   Posted in Federal Energy Regulatory Commission (FERC)  /   No Comments

FERC logo

Distributed Energy Scores Big Win in US Wholesale Markets with FERC Order 2222

September 18, 2020 By 

The Federal Energy Regulatory Commission (FERC) on Thursday issued Order 2222, its much anticipated ruling that paves the way for aggregated distributed energy resources (DERs) to compete alongside traditional power plants and other grid resources in wholesale markets.

Order 2222

FERC Order 2222 marked a victory for distributed energy resources competing against large power plants

The landmark ruling was heralded in a commission news release as important to “help usher in the electric grid of the future” by removing “the barriers preventing distributed energy resources from competing on a level playing field in the organized capacity, energy and ancillary services markets run by regional grid operators.”

Previous FERC rulings have opened wholesale markets to distributed energy resources in general, but Order 2222 will now enable these resources to be bundled together into a single bidding entity, opening new possibilities and competitive opportunities.

What’s included in FERC Order 2222

FERC’s expansive ruling opens the door to a wide array of technologies to participate. Aggregate resources can be located on a utility’s distribution system (or a subsystem) or on-site behind a customer’s meter.

Bundled technologies can include energy storage, on-site renewables, energy efficiency, distributed and backup generators, electric vehicles and their charging equipment, and other energy systems common in microgrids. There is no practical limitation on the number of distributed technologies that can be networked together in this manner, and combinations of generation and load modulation can be deployed simultaneously into one unified market offering.

Most notably, this new rule allows several distributed resources to aggregate to satisfy minimum size and performance requirements that they might not be able to attain individually, meaning aggregation can open access to any and all DERs located in competitive markets.

What happens next

The basis for FERC Order 2222 stems from the commission’s court-affirmed jurisdiction under Order 841 to regulate regional markets and any necessary participation criteria. FERC has now asserted that it wants aggregated resources to participate, so each regional grid operator must revise their tariffs and participation rules to accommodate this dynamic class of resource.

The order will officially take effect 90 days after publishing, and grid operators must then make compliance filings to the commission within 270 days of the order going into effect. Compliance plans are therefore due in about a year. They must  propose a pathway for participation that is customized to each market’s needs and outlines their timely implementation of the order.

Bundled technologies can include energy storage, on-site renewables, energy efficiency, distributed and backup generators, electric vehicles and their charging equipment, and other energy systems common in microgrids.

In announcing the final ruling, FERC made clear that aggregate resources will be able to “register their resources under one or more participation models that accommodate(s) the physical and operational characteristics of those resources,” restructuring capacity, energy and ancillary services markets run by regional grid operators.

Under these auspices, FERC has laid out minimum requirements for each market to conform to when setting up their participation models. They include:

  • Adhering to minimum size requirement no larger than 100 kW
  • Addressing technical considerations like locational value and distribution factors
  • Incorporating advanced metering, telemetry, and data requirements, among other provisions

Order 2222 upholds previous determinations that allow resources connected to the distribution grid to serve both retail and wholesale markets, but also directs grid operators to include “narrowly designed restrictions” necessary to prevent double counting of services.

This order does not supersede previous rulings that allow local utilities to prevent customers from bidding local demand response into regional markets, and it will still allow some of the smallest utilities (<4 million MWh) to opt their customers out all together.

Local utilities will also still maintain jurisdiction over interconnection of distributed resources to the electric grid, whether or not the resource intends to participate in retail activities. These types of local utility considerations will help prevent legal challenges that bogged down previous proceedings on demand response and energy storage.

Celebration abounds

The long-anticipated decision elicited positive reviews from industry leaders and recognition of FERC Chair Neil Chatterjee and Commissioner Richard Glick for their leadership.

“Today is another landmark day for competition and innovation in the power sector,” said Energy Storage Association CEO Kelly Speakes-Bachman in a statement, adding that the order “removes regulatory barriers to aggregation of distributed resources in wholesale electricity markets, and is the next step forward for energy storage and other distributed energy resources.”

Others noted that with so many nascent types of DERs emerging on the grid, that for many of them policy and regulation is ahead of technology, an uncommon situation.

“The draft rule is a big win. It provides an overarching framework for DERs to participate in wholesale markets,” said Ravi Manghani, Wood Mackenzie’s head of solar. “Policy is leading technology for the first time, at least as it pertains to emerging DERs like vehicle-to-grid.”

A multi-billion dollar opportunity awaits

The different regional wholesale markets oversee hundreds of millions of dollars in energy transactions every day, and FERC’s ruling will open the door for DERs to access those competitive opportunities.

Previous FERC orders allowing for grid-tied energy storage systems to access limited market opportunities (like frequency response) caused a bit of a battery gold rush in early mover markets like the PJM Interconnection. New wholesale revenue opportunities combined with declining costs and increasing retail value could spur new deployments and accelerate the already burgeoning DER sector.

While the specifics of each market’s implementation plans are still months away, FERC Order 2222 is a major win for the DER industry and will have a significant impact on how distributed resources are designed, operated, and compensated for years to come.

The FERC order is available here.

Matt Roberts is the director of strategic growth & government affairs at Microgrid Knowledge.

IndianaDG et al. Move to Dismiss Proposed Vectren EDG Tariff

Posted by Laura Arnold  /   September 17, 2020  /   Posted in Indiana Utility Regulatory Commission (IURC), Net Metering, Office of Utility Consumer Counselor (OUCC), Uncategorized, Vectren  /   No Comments

Today (9/17/2020) Indiana Distributed Energy Alliance (IndianaDG) joins with the Office of Utility Consumer Counselor (OUCC) and others asking that the Indiana Utility Regulatory Commission (IURC) dismiss Vectren's proposed EDG tariff to replace net metering. Please find below selected excerpts from the Joint Motion filed late this afternoon.

Motion-1

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Mation-2

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Motion-3

Download the entire document filed HERE:

45378 OUCC Joint Movants Motion for Summ Judgment_09172020

Copyright 2013 IndianaDG