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What we mean by “smart electric power”: SEPA goes beyond the meter

By Tanuj Deora

August is always an exciting — and somewhat hectic — time at SEPA, as we juggle summer vacations with preparations for connecting with the more than 15,000 attendees expected at Solar Power International (SPI) in September. This year’s SPI in Las Vegas offers a new challenge as it will be the first under our new name, the Smart Electric Power Alliance, and our expanded mission to facilitate the utility industry’s smart transition to a clean energy future through education, research, and collaboration.

DSC_5745Attendees at SPI in Anaheim in 2015.

A big part of our planning for this year’s event is focused on how we will explain to solar industry colleagues and thought partners who will be gathering in Las Vegas why we have made these changes, and what exactly we mean by “smart.”

The motivation for the expansion of our mission and work starts with the incredible success the solar industry has had in North America over the past decade, growing from a niche industry to one of the fundamental drivers for change in the electric power sector. The industry’s achievements can be measured, first, in the more than 6 gigawatts (GW) of solar installed in 2015 and the thousands of jobs it has created across the country. Equally important is the broader power industry’s recognition that solar energy is an important asset, not a threat, to energy portfolios, and will be a key power generation source going forward.

Chart the growth of the U.S. solar market with SEPA’s 2015 Solar Market Snapshot here.

Given that momentum, SEPA realized the scope of our work also needed to evolve. With photovoltaic (PV) solar now being a “least-cost” resource in several markets, and on a clear path to achieving economic competitiveness in a majority of markets in the near future, the drivers for the industry will increasingly come from grid integration, both technical and market.

At present, some studies suggest that the grid, as is, could integrate solar at levels of 2-5 percent of our energy supply without major problems. But to reach higher levels of integration — 10-20 percent or more — we need to think about solar PV not in isolation but as part of a portfolio of energy, capacity, and grid support resources. These distributed energy resources (DERs) — such as storage and demand response — also share solar’s market integration challenges and offer potential solutions to solar’s technical integration challenges.

Indeed, optimal deployment for demand response, energy storage, efficiency measures, and solar energy will likely be in various combinations, whether as components of a microgrid, as utility-scale power assets, in the form of a “virtual power plants” or in other to-be-determined configurations. These applications will also require a number of enabling technologies, such as advanced metering and system management software.

Taken together, all these technologies — often labeled as “smart” technologies — not only allow the grid to run more efficiently and with less environmental impact, but also in ways that allow more direct involvement with and by customers. But for the transition itself to be truly “smart,” and deliver on the promise of these advanced technologies, the utility industry must go beyond simply understanding them. The need for this new approach is true whether the role of the utility is limited to integrating power generation and energy conservation assets, or proactively installing or even owning these assets.

Read SEPA’s position statement on utilities’ role in DER deployment and integration here.

Regardless of their market rules, business models, regulatory frameworks, or individual strategies, utilities across the country should take three core actions; they must

 Better understand and proactively engage with consumers
• Enhance their existing planning processes to bring the sophistication of bulk power system planning and operations to the distribution system.
• Make a strategic, organizationwide commitment to integrating distributed energy technologies, with reforms to regulatory approaches, standard operating practices, and organizational culture.

The impact of these actions will affect industry strategy, planning, marketing, and operations on both the wholesale, bulk power system and more regional distribution systems; and market reforms and investments in technology will be needed at both levels. However, the challenges of optimizing the deployment and integration of DERs at the distribution level are causing the most urbulence and angst in the power industry right now.

SEPA defines DERs as physical or virtual assets that are deployed across the distribution system, typically close to where power is actually used, and that can be configured individually or in aggregate to provide value to the grid, individual customers, or both.

Still time to register for SEPA’s SPI workshop on Integrating DERs to the Grid here.

While holding great promise for the future of the power sector, deployment and integration of DERs present a series of challenges for utilities, ranging from consumer engagement to system planning and utility strategy. Traditionally, utilities’ ability to directly monitor customers’ electricity demand — what the industry calls “visibility” — stops at the meter; that is, the point of interconnection to the distribution system. But better visibility will be needed so utilities can balance the power system in the most efficient ways possible.

Moreover, distributed technologies may be able to generate additional value for the distribution system as a whole if utilities are able to leverage them to smooth out the variability of intermittent renewables, such as wind and solar, making them, in effect, dispatchable. To realize this optimized electricity system, utilities will need to think “beyond the meter.”

A soon-to-be-released SEPA report, “Beyond the Meter: The Potential for a New Customer Grid Dynamic,” explores the potential of this approach to revolutionize how utilities will continue to provide safe, reliable, affordable and clean power for consumers. Specifically, it takes a deeper look at the three areas of utility change already mentioned here, looking at the best practices some utilities are already developing to fully leverage the customer and grid benefits of the new dynamic.

1. Evaluating DERs as Grid Assets: A more sophisticated approach to grid planning and operations tools will be needed to account for potential system benefits of DERs on a temporal and locational basis.

2. Integrating Customer Insights: Similarly, market segmentation of customers’ electricity usage profiles, their propensity to adopt new technologies, and the behavioral drivers for safer change must become more granular to evaluate economic and achievable potentials.

3. Rewiring Standard Operating Practices: Planning processes must be opened up to more effectively connect critical functional areas within utilities — system planning, resource planning, marketing, and regulatory affairs — to incorporate more robust and holistic deployment strategies.

This report is the first in a series of Beyond the Meter papers through which SEPA aims to close the gap between the conceptual frameworks discussed here and the practical methodologies still needed to quantify DERs’ value for consumers and the electric grid. As always, we recognize that the outlines of possible solutions will be shaped by local market conditions and the active collaboration of all energy stakeholders — a dynamic that, in and of itself, should provide fertile ground for the needed innovation in technology, policies and practices.

The Beyond the Meter series is only one part of the smart electric power story SEPA sees unfolding across all facets of our industry. From the 51st State initiative to our stakeholder facilitation and portfolio management best practices to new areas of research, such as DER integration on the bulk power system, we will remain an active, but always unbiased player in the story through all our research, educational and industry consulting services.

We are looking forward to continuing this discussion with our members and the entire power industry at Solar Power International and beyond as we journey together toward creating a smarter, cleaner, more efficient, more resilient and more affordable power system.

Tanuj Deora is SEPA’s Executive Vice President and Chief Strategy Officer. He can be reached at [email protected]

Visit SEPA at SPI at Booth 1959.