DSM Plus DER - Finally Considering the Consumer's Perspective

Nov 19, 2015

The recently announced merger between the Solar Electric Power Association (SEPA) and the Association for Demand Response and Smart Grid (ADS) is welcome news for the electric industry and consumers. The idea was in the works for nearly a year, motivated by conviction that our industry would do better to start from the customers' perspective as we bring energy solutions to market.

At last May's ADS National Town Meeting, Nexant sponsored a pre-conference workshop on aligning distributed energy resources (DERs) with grid value. The workshop was coordinated by our own Principal Consultant Josh Schellenberg, an ADS Advisory Board member and now on the new SEPA-ADS Advisory committee. It was clear from the response to the May workshop that utilities, regulators, and technology providers alike were ready for an integrated industry effort. The collaboration that this merger will foster will give energy consumers the valued role that has been promised to them since the concept of the "smart grid" was first promoted.

One of the reasons Nexant hosted an entire daylong workshop focused on DER is that energy markets and technology are converging to drive adoption of renewable generation, e.g. solar wind and biomass etc., energy storage and microgrids. Utilities needed resource planning and grid management tools to help transform the current grid from its current model of historic central generation, one-way power flows to a more resilient bidirectional grid capable of accepting ever increasing levels of  customer-side generation and market driven demand management. Utilities are accustomed to working with end use customers on demand side management, but the same kind of relationship or partnership can now be extended to generation and other ancillary services at the distribution level.

The collaboration that this merger will foster will give energy consumers the valued role that has been promised to them since the concept of the "smart grid" was first promoted

Customers, of course, start with their own value propositions. This does not just mean they want to "defect" from the grid in economic self-interest. Nexant's experience with millions of customers participating in utility programs gives us a more realistic understanding of what customers want. And what they want, for the most part is still the reliability of the infrastructure that utilities provide, but also (reasonably) to be able to be active participants who are compensated for their contributions. For whatever the reasons customers may have (price point, independence, conservation ethic, or concern about climate change), DER is a looming prospect and grid architects want to be ready.

A typical example of a problem requiring us to combine our thinking came up at our workshop. The regulator of a small state ordered a pilot focusing on community microgrids (for instance, group a gas station, day care and convenience store together to have reliable services in event of an outage). The value of having a reliable and resilient source of highly localized power generation resonated greatly with customers. Utilities had already been handling interconnection and designing compensation rates for small customer-sited generation installations, but customer enthusiasm for the pilot raised broader questions: How should the utility leverage core utility competencies for successful engagement in the microgrid space? How would they clarify stakeholder roles and define an optimal mix (e.g. should the utility be an owner or operator)? How might they leverage the utility's knowledge of customer engagement dynamics to manage the new demand for microgrids?

Nexant Principal Consultant Josh Bode presented the concept of "locational value" – By combining various data sources including grid operational data, commodity pricing data, value of service data etc. with customer interval data to plot load shapes, duration curves and peak loads from customer to circuit rolling up to the substation, analysts can build a clear picture of how individual customers contribute to the performance of the grid. This kind of analysis can identify those customers whose loads are coincident with local grid characteristics and can be engaged in activities that support grid operations (Find more explanation in Josh's blog post here.) Workshop participants' feedback was that it was "genius to consider if customers on microgrids had certain kinds of load profiles that were similar to the circuit and could reduce load at peak and defer capacity build-out of substation."

Their next question was, "How can we get support to do this?"

With more  stakeholder collaboration between both sides of the utility revenue meter, we can get support to do this.