Distributed Energy Resource Optimization: Page 5 of 5

ENGAGING THE PROCESS

The ICA and the LNBA are not a panacea. They will face trials and require continuous refinement. However, it is important to acknowledge that the magnitude of this rule-making effort is unprecedented. The boldness of California Assembly Bill 327 is commendable, regardless of any shortcomings in the distribution planning tools. Furthermore, the tools cannot and will not meet their objectives without the involvement of DER industry stakeholders. Both the ICA and the LNBA are still in development; all proceedings surrounding these tools are open forums. Interested parties not only can access Demo A and Demo B right now, but also are welcome to share ideas on how to refine these tools to elevate DER installations.

Industry advocacy is especially important if the LNBA is to realize its full potential as a tool for improving the economic viability of DER interconnections. Heavner at CALSSA notes, “The LNBA may create opportunities to get direct compensation for targeting solar and storage development in locations where it will defer specific upgrades, but whether the value is worth the trouble remains to be seen.” He cautions, “I am not hopeful that the LNBA, as it has been developed so far, will open a lot of new doors.”

This sobering assessment of the LNBA development process underscores the need for stakeholder involvement. The full 30% federal investment tax credit is in place only through 2019; the tax credit steps down to 26% in 2020 and 21% in 2021 before dropping to 10% in 2022. The LNBA could be a vital tool for replacing these dwindling tax credits, but only if solar industry stakeholders put their shoulders to the wheel. The path from planning tool to industry compensation engine will be long and arduous. The DER industry will get there more quickly if more people are involved and calling for this change. Things will move slowly, but new compensation mechanisms are essential to make sure that DER industry growth remains strong.

Regulatory and government leadership, both in California and elsewhere, is also key to ensure that hosting capacity programs are developed and used to support DER development. Says Stanfield, “The ICA and LNBA are likely to serve as a model for other high-penetration markets in the near term; for many emerging DER markets, there will likely be more of a gradual evolution toward adopting these approaches to proactively integrating DERs on the grid.” To help guide state regulators along the way, the Interstate Renewable Energy Council released “Optimizing the Grid: A Regulator’s Guide to Hosting Capacity Analyses for Distributed Energy Resources” (see Resources) in December 2017. Efforts such as these to normalize and standardize hosting capacity analysis are key to grid modernization and achieving high DER penetration levels.

One state program similar in scope to California’s distribution resources planning is New York’s Reforming the Energy Vision (REV). REV partners utility operators such as Avangrid, which serves over 3.1 million customers in upstate New York, with companies such as Smarter Grid Solutions, which provides software platforms that integrate and control high levels of DER penetration. One such collaboration is the Flexible Interconnection Capacity Solution demonstration project. DER customers who opt to participate in this project can avoid massive utility upgrades by allowing Avangrid to curtail DER production when power levels approach predefined critical set points.

Most utility upgrades are designed to manage specific worst-case power flow scenarios that are possible in theory but extremely rare in reality. In effect, the Flexible Interconnection Capacity Solution allows DER to generate normally during most operating conditions and curtail production only during those unusual time frames when grid conditions are approaching worst-case limits. Therefore, the actual cost impact of DER curtailment on the customers’ bottom line is minimal and quantifiable in advance.

Like many DER industry stakeholders, Heavner is ready to see the CPUC take the next steps: “CALSSA has been part of the working group developing the ICA for several years and is helping to lead the charge on integrating it into Rule 21. We are excited that it’s about to get real.” The functionality and financial benefit of both the ICA and the LNBA are largely as yet to be determined. It is certain, however, that these tools represent the future of DER interconnection in California and will play a key role in how the solar industry develops for years to come.

CONTACT:

Tim McDuffie, PE / CalCom Solar / Visalia, CA / calcomsolar.com

RESOURCES

Integration Capacity Analysis Working Group, “Final ICA WG Report,” drpwg.org, March 2017

Interstate Renewable Energy Council, “Optimizing the Grid: A Regulator’s Guide to Hosting Capacity Analyses for Distributed Energy Resources,” irecusa.org, December 2017

Locational Net Benefit Working Group, “LNBA Working Group Final Report,” drpwg.org, March 2017

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