Published on February 5, 2014
Evolution of Distributed Power Systems Paul De Martini March 22, 2013 © 2012, Newport Consulting Group
EEI Future Scenarios Base Case: The transformation takes place, but the pace is slower, since utilities have neither policy incentives nor strong market demand. Economic Growth Base Case Rapid Deployment Policy Influence Policy Driven Market Driven Market Driven: Progress is limited to areas the market can pull forward without incentives, mandates or subsidies. Conditions are chaotic, with policies, regulations and standards varying widely by region. Policy Driven: Federal and state legislation and regulation creates powerful incentives and mandates. Utilities find themselves pinched as policymakers push changes without providing the money to pay for them. Rapid Development: Most disruptive and unpredictable scenario. The confusion of an Internet-style frenzy is counterbalanced somewhat by standards and guidelines from policymakers and regulators. Utilities have the most opportunities in this scenario…but also the most risks. Source: EEI Smart Technology Scenario Workshops
5 Forces Driving Transformation Signposts point to different experiences and pace of change across US Rapid Deployment Policy Driven Market Driven Base Case
Policy is Spurring DER Adoption Combined with accelerating improvements in DER technology price & performance are creating opportunities for electric system efficiencies 2011 US State Renewable Policy Source: EIA 2010 US State EE Policy Source: ACEEE Over 80% of US population under the equivalent of EU’s 20/20/20 Plan 4
Policy is Spurring DG Adoption 43 states with net metering tariffs + 17 states with distributed generation mandates + White House goal of 122 GWs of CHP by 2020 2012 US State Net Metering Policy Source: DoE EERE Sources: SEPA, DoE, USCHP, McKinsey 322 GWs Solar + CHP 100,000 Distribution circuits (20% of US total) = 3.2 MWs/circuit
DG is not just for Asia, Europe & California Solar PV is already more concentrated in Northeast and will expand into Texas and across the sunbelt over this decade as costs decline and retail rates rise More than 1.2 million solar PV panels installed by the top 20 corporate solar users in US Source: SEPA
Energy Storage Adoption “The future U.S. grid energy storage market value is forecasted to reach between two and four gigawatts in size by 2016.” KEMA 2012 Storage Application Development Outlook Source: Southern California Edison 5 Year Adoption Forecast (MWs) Source: CDA - KEMA Source: CDA - KEMA
Customer Evolution Linking Smart Grid with Web 2.0 Enables Customer Partnerships Customer In Control Customer In Context Customer Collaboration Customer Co-creation Zero Net Energy 8
Evolving Energy Ecosystem Convergence of Four Key Networks
Conceptual View of Customer Energy Related Transactions Occurring Today
Multiple DER Constituents Transactive systems & platforms must be able to reconcile multi-party objectives & constraints related to the same distributed resource Objectives & Goals Decision Criteria & Processes Constraints Bulk Power System Energy Financial Services Distribution Operations Customer Energy Provider Energy Devices Energy Related Services Value Perception Economic Utility Willingness & Ability
Transactive Energy Refers to techniques for managing the generation, consumption or flow of electric power within an electric power system through the use of economic or market based constructs while considering grid reliability constraints. The term “transactive” comes from considering that decisions are made based on a value. These decisions may be analogous to or literally economic transactions. Transactive Energy Workshop Proceedings 2012, prepared by the GridWise® Architecture Council, March 2012, PNNL-SA-90082 (http://www.gridwiseac.org/historical/tew2012/tew2012.aspx)
Value Creation thru Differentiated Services 22 Services that DER can provide with proper structuring and pricing Optimize energy & carbon costs Source: SCE
Unlocking Latent DER – Pricing Structure Matters Value Realization Requires Satisfying Multi-Party Requirements Traditional “best efforts” programs are not effective for most grid operations – need new approach Adapt Quality of Service Concept: Availability (On/Off or Will be) Guarantees (Firmness) Auditability (Measurement & Verification) Use of forward pricing structures to balance customer needs for comfort and convenience while providing firm resources for grid operations Differentiated services may be bundled to keep pricing simple – “good enough” is fine Forward pricing structures also enable customer side investments in enabling technology
Engineering-Economic Based Grid Controls Transactive Energy framework is focused on the convergence of multi-party business and operational objectives and constraints Not just markets, but also a broader integrated cyber-physical control system to ensure reliable electric services Not simply “Prices to Devices”, but coordinated and federated engineeringeconomic signals aligned to differentiated services across a broad time range Transactive Energy Markets T&D Grid Operations Customer
Distributed Energy Resources Platform
Central to Distributed Transition Variable & Distributed Energy Resources Require New Operational Systems Distributed Gen Energy Storage Electric Network + Central Gen Responsive Demand
Customer-Grid Evolution Net Zero Energy Source: P. De Martini
Virtual Power Plant: 2002-2020 Advanced Automation: Multi-direction and variability of DER power flows drive circuit design changes, new grid components and control systems
Utility Scale Micro-grid:1978-2001 Operational Evolution: 2017-2025+ Transactive Distribution: Creation of local balancing & markets variable connectivity
Multiple DER Constituents Transactive schemes must be able in reconcile multi-party Texas is beginning to face these issues to their market designs and objectives & constraints related to the same distributed resource system development for integrating demand response
Spatial & Temporal Changes Operational systems are challenged by increased span of control and decreasing timing of information and decision and control responses
Operational System Evolution Situational Controls Situational Intelligence Situational Awareness
Grid 3.0 Operating System EPRI’s Grid 3.0 Operating System concept reflects current investments Source: Newport Architecture and Interoperability Source: Cisco Sensing & Communications Distributed Controls Source: EPRI Model Based Management Graphics adapted from EPRI
Asset & Workforce Productivity Asset Management Integrating OMS and GIS with AMI Enabling the field workforce Combination of these systems are being used by utilities to address outage prevention and restoration
Cyber Security Risk Scale & Scope Threat surface is expanding in two dimensions: • Scale & reach of grid systems’ topology • Scope & complexity of the “Systems of Systems” Robust risk management processes become essential in planning, operations and governance
Grid 3.0 Operational Platform Integrated & Highly Scalable Platforms Are Necessary Today and Future Grid Controls GIS Distributed Energy Resources CIS Sensors /Smart Meter Situational Intelligence DERMS IRP WFM Asset Mgmt Adapted from Alstom
Evolution of Distribution Operations Analog to Digital Transformation Rich information needs to be transitioned to dynamic decision support systems and operational controls Images: A. von Meier 29
Investment Challenges & Strategies
Resilience & Reliability $675 billion in distribution investment thru 2030 provides opportunity for grid modernization to improve reliability and resiliency – challenge is rate impact Utilities reported average duration and average frequency of power interruptions has been increasing over the past 10 years at a rate of approximately 2% annually. LBNL 2012 U.S. Distribution Equipment Age 30% Beyond Expected Life 49% Near Expected Life Within Expected Life 21% Source: Black & Veatch 2008 Electric Utility Survey We conclude that it is likely that greenhouse warming will cause hurricanes in the coming century to be more intense globally and have higher rainfall rates than present-day hurricanes Nov 28, 2012
Increased Capital + Potential Stranded Asset Risk New distribution design standards w/advanced technology may create an additional 15% increase in capital costs Delays in changing distribution design, standards and advanced distribution platforms creates potential stranded asset exposure $775B +15% BAU Dist. Investment: $675B1 (Billions) Dist Asset Base DER Driven Investment: +$100B2 Potential Stranded Assets from BAU Investment t5 t10 t15 Sources: 1. Brattle-EEI Forecast 2010-2030 2. Caltech Resnick Estimate 32
Advanced Tech Deferral Consequences Deferring advanced distribution investment to address DER policy targets compounds both capital costs as well as the time to course correct - creating significant network performance gaps, unmet policy targets & customer expectation problems Investment Options & Decision Points Modern Grid BAU DER Adoption Years t5 t10 t15 t20 t25 t30 33
Uncertainty Factors Distribution infrastructure investment today is a 20+ year bet on the future Load: Power Flow Growth + + Volatility Increasing + Time Scales Decreasing + Technology: + Learning Curves Investment: Tech Adoption Risk Multi-Directional Power Globalization Uses + R&D + Adjacencies + Market Adoption $€¥ Capital Markets + Venture Capital + RD&D Funding 34
Balancing Objectives: Opportunities & Challenges Distribution capital expenditures forecasted to outpace transmission by more than 2:1 US Cumulative Source: Brattle Group $675B Challenge is how & who will pay for it!
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