This report provides an overview of key methodological issues associated with integrating distributed energy resources (DER), such as distributed generation (DG), energy efficiency (EE), demand response (DR), flexible load / advanced DR, and energy storage technologies, into electric company resource planning.
Background
Electric company resource planning is evolving rapidly today in response to dramatic changes occurring in the electric sector, such as increased DER deployment, changes in the cost and performance of power generation technologies, and the advent of the "smart grid" and two-way power flow across electric sector transmission and distribution networks. Today, electric company planners are trying to better understand and account for a variety of key issues associated with incorporating DER into resource planning, including:
- Growing deployment of "behind-the-meter" DG resources, such as rooftop solar photovoltaic (PV) systems;
- Public policies and changes in the market that are incentivizing greater deployment of demand-side management (DSM) programs and strategies, such as EE and DR;
- Emergence of new types of grid-connected and customer-sided electricity storage systems; and,
- Uncertainty about future electricity loads and deployment of distributed generation, energy storage technologies, and energy efficiency programs.
The potential for higher DER penetrations, driven in the near term by distributed PV, has important implications for resource planning. This report examines current practices and emerging issues associated with integrating DER into resource planning in three states that already have, or are anticipating, higher DER penetrations: California, Hawaii, and New York.
Objectives
This study examines four key questions: (1) how will DER affect resource planning; (2) what methodological questions are raised when considering how to incorporate DER into resource planning; (3) how are these questions being addressed in California, Hawaii, and New York; and, (4) what are key existing research gaps?
Approach
The research in this report is based primarily on a literature review focusing on materials available in regulatory proceedings and expert knowledge of the authors.
Results
The study identifies and addresses six key issues related to methodologies that can be used to incorporate DER into resource planning: (1) whether to treat DER as a load modifier or resource; (2) how to forecast DER adoption; (3) how to assess the system reliability value of DER; (4) how to target DER for use as a local or system resource; (5) how to determine how much DER can be integrated into different parts of the electric system; and, (6) how to determine potential operational impacts of DER. The second and fourth questions are relevant for all electric utilities, whereas the other four questions are more relevant to utilities facing higher levels of DER penetration.
These key methodological questions can be answered, and many of the electricity resource planning tools being used to address them today are adapted versions of tools that have been used in the electric industry for decades. However, these tools either were developed with expectations of much lower DER penetrations, where accuracy was not as critical, or they were designed for other purposes. As a result, the approaches, methods, and tools used to incorporate DER into resource planning today are still in flux, even in the three case study states with relatively high DER penetration.
The study results suggest electric utilities should consider being proactive in integrating DER into resource planning. Hawaii's experience with integrating distributed PV illustrates the potentially disruptive nature of DER if it is not considered proactively as part of the resource planning process.
Applications, Value, and Use
The principal audience for this report includes electric utility planners, regulators, and industry analysts.
This report will be useful for electric company planners seeking to understand different approaches that can be used to incorporate DER into resource planning, key DER-related methodological questions, how these questions are being addressed in the three case study regions, and current gaps in analytical tools.
The relevance of different DER planning tools will vary by location, driven by different policies, rate designs, and customer preferences. However, DER adoption forecasting and targeting are relevant for all utilities, regardless of expected DER penetrations. As a next step, the report recommends electric utilities and regulators focus on developing and improving adoption and avoided cost modeling capacity.