Value of DER Implementation. ULI Electric Cities July 26, 2017 Stephen Wemple, Utility of the Future

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1 Value of DER Implementation ULI Electric Cities July 26, 2017 Stephen Wemple, Utility of the Future

2 Agenda Overview of Value of D Order New Solicitations for Non Wire Solutions EPRI Study on DER Values & Next Steps 2

3 Outcome of Value of DER Order Systems operating as of March 9 New residential & small commercial systems installed through sooner of January 1, 2020 and Phase 2 Order. No changes -- receive NEM for life of system, can opt-in to new structure Eligible for 20 years of NEM New large commercial and industrial, remote net metering installations Receive Value Stack without transition credit New community DG projects Tranche 0 receives NEM for 20 years, others receive Value Stack for 25 years with transition credit that declines by tranche Generally, transfers Renewable Energy Credits (RECs) to the utility for use in offsetting utility s default load obligations 3

4 Unpacking the Value Stack Component Description Energy Day Ahead Hourly LBMP Installed Capacity Volumetric credit applied to production in all hours with option for higher credit in summer on-peak periods Environmental NYSERDA REC or cost of carbon Distribution Relief Value (DRV) Locational System Relief Value (LSRV) Market Transition Credit (MTC) Applicable to customers not eligible for MTC Based on performance during 10 peak distribution hours of previous year valued at MCOS Additional incentive for DER developed in high value areas based stretch of MCOS Credit for mass market to bring compensation close to NEM Declines for new projects as tranches fill 1. Higher of NYSERDA REC value or EPA Social Cost of Carbon less RGGI NEM/ Tranche 0 Distribution Supply VS LSRV MTC DRV VS with MTC Capacity Energy VS with MTC & LSRV Environmental 4

5 New Utility Requirements Hourly metering for all Value Stack customers Implement highly-complex, project-specific compensation based on individual project performance, and subscriptions Manage new cost allocation Manage transfer of RECs De-average marginal cost studies to determine high value locations and compensation levels 5

6 Implementation activities Locational Distribution Values Interim proposal included in May 1 filing Identify criteria to determine high-value areas based on Loading of sub-transmission and network/load areas Segment network/load areas based on criteria Determine MW cap in each high-value area Stretch/squeeze Marginal Cost Of Service (MCOS) into DRV, LSRV To be replaced with updated granular MCOS Compensation based on actual exports each year during top ten distribution load hours Model of DER performance to derive initial compensation 6

7 19% of Con Edison load is in a high-value area Areas eligible for LSRV, subject to caps

8 $/kw-yr Con Edison: LSRV and DRV Rates 50% MCOS stretch: $226 (Avg Marginal System-wide Cost) DRV only LSRV + DRV 11A-3P CSRP Window 2P-6P CSRP Window 4P-8P CSRP Window 7P-11P CSRP Window Values Based on Typical Solar Production Coincidence with Peak 47% 32% 13% 12% Initial DRV ($/kw-yr) $ $ $25.45 $23.09 Initial LSRV ($/kw-yr) $ $ $17.96 $16.30 LSRV + DRV ($/kw-yr) $ $ $43.41 $39.39

9 Supply LBMP ICAP REC Generating Capacity Intermittent Solar PV Wind Micro-hydro Dispatchable Farm waste generation Fuel cells Micro-CHP Storage Alternative 1 Alternative 2 Alternative 3 Description Per kwh; equivalent to capacity portion of utility retail rates Per kwh: concentrate credits during 460 summer hours Per kw-coincident with prior summer capability period NYCA peak Value updated Every November 1 and May 1 based on ICAP strip auctions Every May 15 based on concentrating prior year s Alt 1 capacity rates Every month based on ICAP spot auctions Eligibility Intermittent resources Intermittent resources Required for dispatchable, optional for intermittent Proposed Generating Capacity Rates Applicable to Value Stack Projects cents/kwh export New York City Westchester Alternative 1: pending approval; effective 5/1/17-10/31/ Alternative 2: 460 hours HB 14 - HB 18; 6/1/17-8/31/

10 Cost Allocation & Recovery In the money energy and RECs full-service customers Market value of Capacity as load modifier all delivery customers Out of the money portions & MTC delivery charge allocated based on participating customers SC Incorporate purchased energy & REC attributes into procurement for full-service customers 10

11 Illustrative Community Distributed Generation Residential Members SC1 MTC = $0.087/kWh Demand-metered Member SC2 MTC = $0.093/kWh Project Credits DRV = $500/month Small Commercial Members DA LBMP + ICAP + E = $0.10/kWh PV Output = 10,000 kwh

12 VDER Progress July 17 & 18 Phase 2 Working Groups initiated to address Low and Moderate Income Enhancements to Value Stack Rate Design July 24 Comments on Implementation Plan August or September PSC Order implementing Value Stack 12

13 Agenda Overview of Value of D Order New Solicitations for Non Wire Solutions EPRI Study on DER Values & Next Steps 13

14 NWS Solicitations Two Request for Proposals already completed for 4 MW need by MW need by 2021 Six additional opportunities identified for Flushing, Williamsburg, Plymouth Street, Water Street, W 42 Street, and Glendale 14

15 Agenda Overview of Value of D Order New Solicitations for Non Wire Solutions EPRI Study on DER Values & Next Steps 15

16 Decreasing DER effectiveness Key Findings System topology matters Constrained transformer Neighboring transformer A Dispersion of DER contribution from point A E B D C Multi-directional power flows Locational sensitivity Dispersion in a Network System (Con Edison)

17 Key Findings Impacts of DER Deployment

18 Thank you. 18