RE: Comments on Staff s draft proposed rules for Interconnection of Distributed Generation Facilities (Docket No. RE-00000A )

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1 1800 M Street NW Suite 400S Washington DC energystorage.org October 4, 2017 Mr. Elijah Abinah Director, Utilities Division Arizona Corporation Commission 1200 West Washington Street Phoenix, AZ RE: Comments on Staff s draft proposed rules for Interconnection of Distributed Generation Facilities (Docket No. RE-00000A ) Attached please find comments from the Energy Storage Association ( ESA ) to Docket No. RE A before the Arizona Corporation Commission ( Commission ). Since its inception 27 years ago, ESA has promoted the development and commercialization of safe, competitive, and reliable energy storage delivery systems for use by electricity suppliers and their customers. ESA s nearly 200 members comprise a diverse group of electric sector stakeholders, including electric utilities, energy service companies, independent power producers, technology developers of advanced batteries, flywheels, thermal energy storage, compressed air energy storage, supercapacitors, and other technologies component suppliers, and system integrators. ESA is pleased to have the opportunity to provide comments on the interconnection of distributed resources in the State of Arizona, and we look forward to working with you and the other stakeholders to ensure energy storage considerations are incorporated into the final rules. Respectfully, Nitzan Goldberger State Policy Director Energy Storage Association

2 BEFORE THE ARIZONA CORPORATION COMMISSION Comment Opportunity Consideration for Docket No. RE-00000A COMMENTS OF THE ENERGY STORAGE ASSOCIATION Pursuant to the Comment Opportunity in the Arizona Corporation Commission ( Commission ) open Docket No. RE-00000A , the Energy Storage Association ( ESA ) respectfully submits the following comments and information for the Commission s consideration. I. ABOUT THE ENERGY STORAGE ASSOCIATION ESA was established 27 years ago to foster the development and commercialization of energy storage technologies. Since then, its mission has been the promotion, development and commercialization of competitive and reliable energy storage delivery systems for use by electricity suppliers and their customers. ESA s office is located in the District of Columbia. ESA members represent a diverse group of entities, including electric utilities, energy service companies, independent power producers, technology developers -- of advanced batteries, flywheels, thermal and compressed air energy storage, pumped hydro, and supercapacitors -- and component suppliers. ESA engages in regulatory and legislative policy efforts and includes leaders in the energy storage marketplace among its members. II. COMMENTS ON DRAFT INTERCONNECTION RULES ESA commends the Commission for the work it has done to date in engaging stakeholders on the issue of interconnection for distributed resources. Many of the modifications incorporated into the current draft rules reflect the progress and hard work that the Commission has undertaken with the help of engaged stakeholders. Our comments today focus on the remaining gaps in the draft interconnection rules as they pertain to energy storage. In these comments, ESA proposes specific modifications to existing language and additional language required to ensure the fair treatment of energy storage in Arizona s

3 interconnection rules. Additionally, ESA provides recommendations on needed revisions to streamline the study timeline process to provide greater clarity and a timely review for customers seeking to interconnect to the utility distribution system. Utility rejection of interconnection application is inappropriate ESA is very concerned with the current draft language that enables a utility to reject an application in instances where reliability or safety would be further compromised by a Distributed Generation installation. It is ESA s opinion that interconnection standards are intended to provide equal and fair access for all customers. As such, if a utility determines that a customer s proposed system with its current proposed use is unsafe to interconnect, the utility must be required to provide that information to the customer and determine appropriate modifications needed to the system before it can be safely interconnect to the grid. This is particularly important when discussing customer-sited energy storage systems, since storage systems are unique in that the project owner is entirely able to control the system s operational profile. Therefore, if a study demonstrates that interconnecting the proposed system would result in significant system reliability issues or upgrade costs, the project applicant may very well be able to modify the operating characteristics of their proposed system to mitigate the anticipated challenges and to significantly reduce any upgrade costs. In these cases, the customer should be able to return to the utility with the proposed modification to the performance characteristics of the system, and the changes should be reflected in the utility's review of the system s impact. For the utility to have certainty that the modified operational profile will be the one that is in use at the customer s site, the interconnection agreement between the utility and customer can memorialize those agreed upon operational controls. Inclusion of Net nameplate capacity ensures fair study assumptions While a number of important elements related to storage have already been incorporated into the current draft interconnection rules, ESA notes that there is one critical missing piece that

4 must be added. Considering the unique ability of customers to control the profile of their energy storage systems, studying the worst case scenario is inappropriate and would lead to longer study timelines and unnecessary and costly upgrades. A customer s proposed use of the system, therefore, is a critical component of the interconnection application and must be incorporated into the utility s determination of the interconnection study assumptions. ESA recommends that the Commission include additional language around studying and modeling assumptions for energy storage systems that will create an interconnection process that does not result in onerous and unnecessary study timelines and potentially steep upgrade costs for unlikely system behavior. This element of interconnection is currently being considered in Nevada and Maryland as those two state commissions review interconnection standards. ESA recommends the following language to be included in the interconnection rules: Net Nameplate Capacity: The gross generating capacity of a Small Generating Facility or the total of the gross generating capacity of the generating units comprising a Small Generating Facility as designated by the manufacturer(s) of the generating unit(s) minus the consumption of electrical power of the generating unit(s). Where the gross generating capacity of a Small Generating Facility is limited (e.g., through the use of a control system, power relay(s) or other similar device settings or adjustments), the Net Nameplate Capacity shall be the maximum specified by the applicant in the application based on the Proposed Use of the Small Generating Facility, provided utility agrees that the manner in which the customer proposes to limit the maximum capacity that the facility is capable of injecting will not adversely affect the safety and reliability of the system. Proposed Use: The operational characteristics of a Small Generating Facility upon which the applicant s technical review is based and under which the Small Generating Facility is bound to operate upon the execution of the interconnection agreement. The Proposed Use for a Small Generating Facility may include a combination of electric generators and/or energy storage devices operating in specified modes during specified time periods including but not limited to export, load management, backup, and/or market participation. ESA believes this language strikes the right balance between the responsibilities of the utility to ensure system reliability and safety on the one hand and recognizing the wide variety of applications of energy storage that customers may want to employ on the other hand.

5 Definition of inadvertent exports is not aligned with best practices for energy storage ESA recommends the removal of the requirement that the duration of export of power from the Customer s Generating Facility shall be less than two (2) seconds for any single event as a criterion for non-exporting inadvertent exporting system. ESA is concerned that this requirement has not been explored through a stakeholder process, particularly one that includes equipment suppliers. Most importantly, the current definitions in states that have recently adopted modifications to their interconnection rules to account for energy storage technology have developed a requirement that the duration of export of power from the Customer s Generating Facility is less than 30 seconds for any single event for systems to meet the criteria for inadvertent exports. These states include Hawaii s Rule 22 1, California s Rule 21 2, and Nevada s draft Rule 15 3 under review. Further clarity is needed around exemption for stand alone storage systems In the current draft rules, R (D) proposed language reads: Stand alone energy storage systems connecting behind a Customer s meter for the purposes of peak shaving and/or back up Customer load which are designed to operate as Non-Exporting Systems are not subject to these rules. After Customer installation of said system, the Customer shall submit relevant information about the energy storage system as specified in the Utility s Interconnection Manual to the Utility. ESA seeks further clarity around this proposed language. It is not clear by the current language whether these systems are entirely exempt from any process, or whether it would be subject to separate utility interconnection procedures that are not covered in this tariff. Exposing 1 Pacific Gas and Electric Company s approved Rule 21 tariff, see 2 Hawaiian Electric s approved Customer Self Supply Rule 22 Interconnection tariff, see 3 NV Energy proposed revisions to Rule 15 tariff, see

6 systems to procedures that are determined by the utility, rather than the rules that are being carefully developed in this proceeding, is problematic. ESA is concerned about any section in these draft interconnection rules that directs the customer to follow the specific guidelines of the Utility s Interconnection Manual. Unlike the robust stakeholder process that is involved in developing these interconnection rules, where the public is able to provide input on the fairness and appropriateness of the guidelines, the utility manual is not developed in a transparent process. Therefore, either the manual s development must be exposed to a stakeholder process, or alternatively the requirements should be incorporated into these draft rules. ESA is concerned about any reference in these rules that direct the customer to follow the specifications of the Utility s Interconnection Manual. Unlike the robust stakeholder process that is involved in developing these rules, where the public is given an opportunity to provide input on the fairness and appropriateness of the interconnection process, the utility manual is not developed in a transparent process. Therefore, either the requirements should be incorporated into these draft rules, or alternatively the utility manual s development must be exposed to a stakeholder process. Definition of customer and generating facility require revisions to better reflect energy storage ESA notes that the definition of customer does not sufficiently incorporate energy storage. The current definition of customer is: Customer means an electric consumer that generates [emphasis added] electricity on the consumer's side of the Utility meter. Energy storage is a unique resource that has multiple applications and capabilities. As such, limiting the definition to generation does not capture the wide variety of customer and grid services that an energy storage system is able to provide. Instead, ESA recommends the Commission adopt the following modification to the definition:

7 Customer means an electric consumer with a Generating Facility on the consumer's side of the Utility meter. And the definition for Generating Facility should include the following edits in order to ensure that the definition includes energy storage: "Generating Facility" means all or part of the Customer s electrical generator(s), energy storage system(s) or inverter(s) together with all protective, safety, and associated equipment necessary to produce electric power at the Customer s facility. A Generating Facility also includes any QF. III. CONCLUSION ESA applauds the Commission for taking on the important task of updating the interconnection rules to reflect the unique characteristics of energy storage. Our comments are intended to ensure that Arizona customers are confident that should they choose to invest in energy storage technologies, they will be able to interconnect those resources in a transparent, affordable and streamlined fashion. RESPECTFULLY SUBMITTED this 4th day of October By Nitzan Goldberger State Policy Director Energy Storage Association Original and 13 copies of the foregoing filed with: Docket Control Arizona Corporation Commission 1200 West Washington Street Phoenix, AZ 85007