Peak demand is the highest rate of electricity use. Fortunately, it only occurs a few times a year – usually on the hottest days of the year or on the very coldest days of the year, depending on your geography. Our power systems are prepared for these peaks (otherwise we risk potential blackouts), but as urban populations increase, and we add more variable renewable energy resources to our grid, we see more need to accommodate increases in peak demand. Traditionally, utilities would forecast demand in their service territories and resort to upgrading or building new peaking power plants to supply the anticipated increase in electricity demand. This solution tends to be land-intensive and has resulted in significant increases in greenhouse gas emissions.
Today, with advancements in technology and the push to drastically reduce greenhouse gas emissions by 2030, utilities are leaving behind the century old mindset of supply follows demand and are looking to the grid edge to defer or replace investments in peaking power plants. Utility stakeholders from across North America recently gathered in Vancouver, British Columbia, for GridFWD 2018 to discuss advanced solutions for getting the most from the grid edge in the Pacific Northwest, Enbala CEO Bud Vos was a keynote panelist at GridFWD, opening up the event with a message that resonated throughout the two-day conference: “The grid is inverting — we are beginning to create more value at the bottom of the system — the grid edge — than at the generation level, so we must focus on the customer and the benefits we are providing to them.”
To create value at the grid edge at scale requires reimagining the whole system, from redesigning cost structure policy to re-evaluating resources and big data, as well as developing standard protocols and cybersecurity best practices.
What's In it for Me?
Today’s energy space has a vast array of generation and demand options. It’s important that the policy landscape allows utilities to leverage the pace of innovation, and that utilities are able to consider all possible options to meet their needs. “Regulators should act as surrogates for competition,” said Travis Kavulla, Commissioner and Co-Chair of Montana PSC.
The historical model of selling electricity based on metered use and recouping costs of capital investments from all generation and distribution assets is no longer feasible when we look to the grid edge. Utility commissions are in the process of updating this regulated cost structure to include performance-based regulations (PBR) to accommodate more sophisticated energy consumers interested in greener supply and reliability, while providing utilities with the means to take advantage of cloud technologies and investments in resiliency and cybersecurity. The biggest challenges to PBR, as explained by Jackie Ashley, Senior Regulatory Analyst for the BC Utilities Commission, and Elaine Prause, Senior Regulatory Affairs Advisor for the Oregon PUC, involve under-reporting of negative outcomes, over-reporting of beneficial outcomes, and finding new ways of having open and honest conversations with stakeholders that enable accurate information flow. Overcoming these challenges will help regulators determine how to best build performance objectives and outcomes. Jackie Ashley believes the UK PBR model is a good place to start.
The Inauguration of DERs
Expanding on Bud's theme of creating more value at the grid edge, Ryan Fedie, Engineering Manager at Bonneville Power Administration, suggested, “We should not ask what our grid can do for our buildings, but what our buildings can do for our grid”. Using the various organs and circulatory systems of a building as grid resources provides immense possibilities when we look to mitigate peak demand. By aggregating various end-points within a building and optimizing them to respond to grid events, we will be able to limit the use and investments for peaking power plants, while improving the use and efficiency of existing resources. George Pohndorf, Senior Manager of Energy Services at SnoPUD, sees this as the area where battery storage plays a significant role.
Chief Resiliency Officer from the City of Vancouver Katie McPherson explained, “As our populations grow and the systems that support them become more complex, the consequences can be more severe.” As the population grows, so do the number of buildings and DERs on the grid. With more DERs come more endpoints, and with more endpoints come more data and more threats, vulnerabilities and cyber attacks. Darcy Immerman, Senior VP of Resiliency at AECOM, believes that the best resiliency practices involve robust preventative risk mitigation followed by prioritization of infrastructure when in recovery. This will be a moving target involving critical times, procedures and essential services that will require immediate attention. DER vendors and the industry as a whole will need to prepare for FERC’s approved NERC Critical Infrastructure Protection (CIP) standards to incorporate DERs in future versions.
Making it Count - Scale and Flexibility
During the keynote panel Bud made the observation, “Technology change is exponential, but human thinking is linear.” He posed the question, “How do we make grid modernization change exponentially to align with the changes in technology?”
This was echoed by Yeye Zhang, Head of West Region Energy Partnerships for Nest, who noted that her team consistently sees numerous utilities doing the exact same pilot projects. A solution, she believes, is forums like GridFWD that give utilities the opportunity to share experiences and learn best practices in order to scale and make significant strides at the grid edge.
As we undergo an energy transition to cleaner, variable generation, we need to shift our thinking. DERs enable a fundamental and foundational shift to more sustainable and reliable power systems by addressing more than just peak demand. Utilities and regulators are challenged to think with the pace of technology— exponentially, rather than linearly — and value the flexibility technology provides.