Getting solar on the grid: Geography, policy and the economic value of DERs

By K Kaufmann

I started my first day at Solar Power International — Sept. 14 — literally in the middle of an intensive bit of networking between two engineers who had been drafted into new solar programs at their respective utilities, both of which are in Southeastern states.

David DeLoach of the Tennessee Valley Authority and Brian Evans of Gulf Power, the two men I was sitting between, quickly connected over their current situations, working on some of their companies’ first solar projects. They had both come to the day-long Grid and Distributed Energy Resources workshop sponsored by the Solar Electric Power Association (SEPA), looking to tap into the expertise of industry leaders who already had integrated significant amounts of solar on to their grids.

“Our engineers are saying, ‘Give us time to learn this stuff,’” said Evans, who signed on as Renewable Development Lead at Gulf Power about four months ago. “We’re crawling right now.”

Geography and policy seem to be key factors in how U.S. utilities are responding to the challenges of integrating solar and other distributed energy resources (DERs) — such as storage and demand response — into their energy portfolios, said Andy Colman at consulting firm Black & Veatch. His presentation at the workshop previewed a study his firm had done with SEPA, surveying a small group of utilities on how they are approaching DER planning.

A chart presenting an overview of the findings mapped out a continuum of strategies, with clear differences between eastern and western, and red and blue states, he reported. While none of the five utilities surveyed were identified by name, Colman said those in red states were less likely to have policy mandates — such as renewable energy targets — that would drive increasing numbers of solar interconnections.

Interconnections and related reliability concerns were in turn major operational drivers for utilities’ development of DER planning strategies and tools, he said.

A separate SEPA study — encompassing hundreds of utilities nationwide — found a small but growing number of companies looking at how advanced inverters could be used to help with both solar integration and grid stabilization.  Fourteen utilities already have advanced inverter programs under way, while another 58 are studying the technology’s potential, said Ryan Edge, a SEPA research analyst.

But utilities must figure out more than the nuts and bolts of solar and DER integration, said Dora Nakafuji of Hawaiian Electric Company, which is on the front lines of innovation for integrating high penetrations of solar onto its system. It’s the “economics of making energy useful,” she said.

In the next presentation, Doug Staker of DemandEnergy, a company incorporating data analytics into energy storage systems, laid out three quick strategy hits for Nakafuji’s challenge.

Distribution utilities must be transformed into true distributed system operators managing the grid, he said. Utilities also have to get more creative and aggressive in designing rate structures that accurately reflect the value of the energy services they offer.

“Let’s forget demand charges,” he said, arguing that such charges have little relation to the instantaneous demand peaks they are supposed to capture. New rate designs should aim to capture the value of energy based on where and when it is produced — that is, it’s locational value for the grid and it’s time-based value relative to demand peaks.

The shift to renewables also has to be faster, Staker said. Right now, solar only makes up about 2 percent of the nation’s power generation resources, he said.

The technological driver for all these changes, he said, is storage that will allow power — whether generated by solar or traditional baseload fossil fuels — to be “time-shifted” to respond to peak demand.

Michael Coddington of the National Renewable Energy Laboratory also pointed to the combination of rate redesign and storage as the long-term vehicles for DER planning and integration. Rate redesign may mean higher electric bills — and complaints — for some utility customers, he said.

But on the plus side, “people will adopt storage to get by when prices are high,” he said. “We will see unique ways of deploying storage.”

Pascal Storck of Vaisala, a Finnish company providing solar and wind forecasting technology and services, offered a more chilling view of future drivers of DER integration during the workshop’s closing segment.

Looking forward to possible scenarios for grid transformation in five years, Storck predicted that climate change and the likelihood of more extreme weather events would spur “massive decarbonization” of both the power and transportation sectors. Rapid changes in both areas would be driven by technologies — such as as the Internet of Things — that can provide flexibility, predictability and visibility on the grid, he said.

But, he warned, the greening of the U.S. power sector and the lessons of DER integration must be translated into a value proposition for emerging economies where economic growth will remain heavily dependent on fossil fuels, even as more renewables come online.

“No matter how green we get, we have to stop coal from going to China,” Storck said. “We have to export green technology to emerging economies to save the world.”

K Kaufmann is SEPA’s Communications Manager. She can be reached at [email protected].