Pacific Northwest Utilities Conference Committee

Transcription

1 Pacific Northwest Utilities Conference Committee Elements of Transformation Paul De Martini Senior Fellow November 6, 2015

2 Evolution of Customer & Distribution Grid 3 Stages of Evolution as DER Adoption Grows & Market Opportunities Expand Utility functions will evolve over time as customer adoption of DER grows and the opportunity to enable the net value created in this transition 2

3 Telecom Industry Transition Example Telecom revenue growth from new services leveraging modern broadband fiber and mobile platforms and market partnerships $250 $200 $150 Personal Consumption/Person/Month Revenue Transition $100 AT&T Break-up 1996 Telecom Act ecommerce Mobile $50 Broadband Video & Data Wireline $- Sources: FCC, Industry Analysis and Technology Division Wireline Competition Bureau, Sept US Census Bureau Retail ecommerce Revenue data used to estimate per adult monthly spend 3

4 Electric Utility Industry Hypothetical Question is how utilities may be allowed to participate in the new revenue streams that are being created in a more distributed future Conceptual Regulated Utility Industry Revenue Composition Revenue Transition PURPA Cust DER Svcs Market Enabling Svcs Dist. Platform Svcs Transp. Electrification Trad. Distribution

5 Future Utility Economics Are Different Network service provider business models emphasize Network Economics and Economies of Scope. This means that value is derived from increasing the number of connections to the distribution system and related usage of grid services and leveraging people, processes and technologies to offer more customer services at low marginal cost. 5

6 Innovation through Value Networks Discussion should no longer be about Us vs Them, but rather Us with Them to create sustainable value for all customers Successful businesses today create value & revenue through their role and relationships within value networks Electric Industry Value Network Utility industry thinking (regulation and business) will need to transition from value chain to value network Value Chain orientation is zero sum as roles and responsibilities change Value Network orientation seeks to expand opportunities for all based on cooperation and coopetition This requires re-considering old paradigms regarding competition and innovation in electric industry about utilities ability to participate 6

7 Retail Electricity Competitive Transition Competition has expanded considerably over past 10+ years 2015 Competitive Electric Retail Landscape Category lines are blurring as competitors are bundling services and technologies Rapid evolution in services due to information and energy technology advancement Energy & Technology Platform Providers DER Services Providers Technology Services Providers Gov t & Local NGO energy services providers + Sustainable City efforts Technology based ESCOs expanding into Local Gov t integrated energy services Cities 7

8 Example Customer Energy Budget Allocation Certain customers are spending more on electricity services when considered more fully - including enhanced reliability and home energy automation Monthly Residential Traditional Service $75.00 Monthly Residential - Self Optimization $ EE Spending 9% Home Automation 5% EE Spending 7% Grid Energy 4% T&D 15% Grid Energy 36% T&D 55% Solar PV 23% Onsite Back-up Generation 46% Based on PA utility analysis and customer spend 8 8

9 3 of Value from Information Derivative information from customer & device behavioral analytics fusing independent information sources is creating new revenue opportunities Value derived within energy value chain across use, delivery and production Value derived from insights on behavior of people related to non-energy related services/sales Value derived from insights on behavior of things such as equipment/appliances 9

10 Future Utility Business Options (depending on regulation) 10 10

11 What Grid Is Needed? Current Path Distribution system refresh underway is increasing capacity Continued replacement of aging electric infrastructure Refresh involves upgrading to higher voltage levels in areas with high DER potential New design practices incorporate larger sizes for wire and transformers that improve reliability & DER integration More Resilient/Reliable/Safe & Visible Extending distribution automation to improve fault isolation and service restoration capabilities Continued upgrades on distribution protection systems (substation communications and analog to digital relays) Integration of field sensors (smart meters, other sensors) into grid operational systems that enable situational intelligence Digitization of field asset information (completing the analog to digital transition) Open Grid Platform Seamless: Enable multi-directional real & reactive power flows Enable transactions across distribution with utility distribution company, bulk power operations and wholesale market Open & Transparent: Low barriers to access physical connections & value monetization opportunities Streamlined interconnection rules and processes Transparent processes for planning and operations Access to distribution planning & operational information (qualified access) Transparent locational value determination and monetization Network & Convergent Value: Physical and operational qualities that yield greater safety and reliability benefits Qualities that may create greater customer/societal value from each interconnected DER ( network effects ) 11

12 Power System Convergences Multiple convergences have occurred and continue to occur at differing paces and times. Additional convergences will occur, largely due to consumer interactions and greater use of distributed energy resources. 12

13 Distribution Planning Process Integrated Grid Planning Required California Dist. Resources Plan Example Source: CA More Than Smart Shift from Deterministic Engineering Analysis + System level Benefits Analysis Toward Dynamic Engineering Methods with Locational Benefits Incorporated 13

14 CA DER Hosting Capacity Analysis 14

15 DER Hosting Capacity Maps 15

16 Wholesale Distribution Customer & Societal Potential DER Value Components Value Component Regional Bulk Power System Benefits System Energy Price Wholesale Energy Resource Adequacy Flexible Capacity Wholesale Ancillary Services RPS Generation & Interconnection Costs Transmission Capacity Transmission Congestion + Losses Wholesale Market Charges Subtransmission, Substation & Feeder Capacity Distribution Losses Distribution Power Quality + Reactive Power Distribution Reliability + Resiliency Distribution Safety Customer Choice Definition Regional BPS benefits not reflected in System Energy Price or LMP Estimate of marginal wholesale system-wide value of energy Reduced quantity of energy produced based on net load Reduction in capacity required to meet Local RA and/or System RA Reduced need for resources for system balancing Reduced system operational requirements for electricity grid reliability Reduced RPS energy prices, integration costs, quantities of energy & capacity Reduced need for system & local area transmission capacity Avoided locational transmission losses and congestion LSE specific reduced wholesale market & transmission access charges Reduced need for local distribution upgrades Value of energy due to losses bet. BPS and distribution points of delivery Improved transient & steady-state voltage, harmonics & reactive power Reduced frequency and duration of outages & ability to withstand and recover from external threats Improved public safety and reduced potential for property damage Customer & societal value from robust market for customer alternatives Emissions (CO2, Criteria Pollutants & Health Impacts) Energy Security Water & Land Use Economic Impact Reduction in state and local emissions and public and private health costs Reduced risks derived from greater supply diversity Synergies with water management, environmental benefits & property value State or local net economic impact (e.g., jobs, investment, GDP, tax income) Source: CA More Than Smart 16

17 DER Services Portfolio Development & Operations For illustration only DER Services Development DER Portfolio Development DER Portfolio Management (Renewable DG, Storage, DR, EE, EV & Power Electronics) 17

18 Distribution Functional Evolution Functional capabilities required with increasing distributed resources and market opportunities including for providing distribution services as non-wires alternatives + retail transactions across distribution 18

19 Dist. Grid Conceptual Functional Structure The Distribution System Operator function illustrated in the diagram can and in most cases should be part of the utility distribution operations for a number of technical and practical considerations Operational Dispatch Schedule Coordination Energy Markets TSO Regional Coordination Ancillary Services Physical Operations Trans. Interconnections Transmission Alternatives Transmission Planning T-D Interface DER Oper. Dispatch Schedule Coordination DER Services Portfolio DSO Dist. Alternatives Assessment Integrated Planning Process DER Supply-side DER Load Modifying DER DO Utility DSO Physical Operations Dist. Interconnections Engineering Analysis 19

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