Last week, New York’s Reforming the Energy Vision (REV) proceeding achieved another key milestone as part of its electricity system evolution. The Market Design and Platform Technology (MDPT) working group, a stakeholder group composed of over 50 industry experts from New York and around the country, issued a final report of recommendations to inform the New York State Department of Public Service (DPS) Staff as they develop guidance to utilities to plan for and create a new, diverse, investment-friendly, and customer-oriented electricity system.
Focusing on the next five years—stage 1 of market implementation—the report recommends that the market’s distributed system platforms (DSPs), which the state’s utilities will run, offer a series of new or enhanced functions to enable REV’s implementation: a) distribution planning, b) distribution-grid operations, c) distribution market operations, d) data access, and e) platform technologies.
The report recommends the DSP increasingly rely on distributed energy resources (DERs) to meet system needs, offer enhanced planning functions to better integrate DERs into the distribution system, accurately value those resources, and further improve coordination between distribution and transmission system planning. The report recommends processes to involve market actors, and to make information about the grid and market opportunities available.
“For decades grid planning has sort of been a black box,” says Matthew Crosby, a manager within RMI’s electricity practice. “The costs to build, maintain, and replace it have essentially been kept under a regulatory process that doesn’t allow for a third-party market actor to see where the real investment opportunities may arise. The new paradigm should allow for a better articulation through open data of where the value streams are on the grid to enable third-party, private actors to actually make sustained investments.”
Distribution Grid Operations
The report recommends improvements to distribution-grid operations, enabling orchestration of the multi-directional power flow resulting from increased DER penetration as the market develops. The report recommends new functions to improve load and network monitoring to aid in more-efficient grid operations, including more-rapid response to system conditions.
Distribution Market Operations
The future grid architecture of the New York distribution system will include vibrant markets for standardized distribution-system products and services. In the near term, the report recommends DSPs offer system-wide awareness of DERs, administer RFPs or auctions to acquire DERs, and verify participant performance. Over time, the markets will evolve to integrate a wider array of market participants, products, and operations services.
The report notes that granular customer and distribution system data will facilitate a DER market and spur investment. The report identified means to streamline access to specific types of data, the current availability of such data, and the data interface issues for DSP planning and operations, while respecting customer data privacy and security.
As part of this, the group recommended near-term action for “getting to the low-hanging fruit of the locations for distributed resources on the system,” Virginia Lacy, a principal at RMI, says. Though the system will need ongoing data sharing, at the outset it’s helpful to know “where there are investments that are going to be required already, how could we potentially obviate or displace the need for that conventional investment through distributed resources,” says Lacy.
The report acknowledges that each utility’s existing distribution systems have developed at different paces and often in different directions owing to unique demographic, financial, geographic, and operational circumstances. Going forward, it identifies a set of core technologies enabling the new DSP functions, including: distributed energy resource management systems (DERMS), geospatial models of connectivity and system characteristics, sensing and control technologies, optimization tools that better account for DERs output in the grid, and a secure, scalable, and reliable communications network to serve as the backbone for these tools.
Gathering Expertise at the Leading Edge
The February 2015 PSC Order (i.e., Track 1) that created the MDPT working group requires each utility to file a distributed system implementation plan (DSIP) early next year. DPS Staff, incorporating recommendations from the MDPT report, will issue guidance on the DSIPs in September. Lacy adds: “This is a stakeholder effort that is informing [DPS] Staff and that helps push the collective thinking.” The MDPT working group “also had national involvement from a group of experts at the Department of Energy, California’s More Than Smart process, and others who really helped us stay at the leading edge of some of these market issues,” Crosby says. As a co-convener of the working group along with the public-private New York Smart Grid Consortium, RMI’s role was to set up the scope and to guide working group members. The report represents a range of views, not a consensus.
Moving Fast—and Staying Flexible
The MDPT report and the DPS Staff’s forthcoming DSIP recommendations align with parallel developments that collectively inform the REV process. In a separate track, the DPS Staff issued a white paper on July 28, 2015 that considers regulatory means to reward utilities for their new efforts and to modify existing ratemaking practices. The Track 2 proposal “looks at ratemaking and the utility business model, and considers the incentives to enable the utility to start to receive revenue for taking on this new role as the DSP,” says Lacy.
As these milestones are rapidly developing, “We do not have all the answers articulated,” says Aman Chitkara, a senior associate with RMI. “Ultimately,” Lacy says, “we’re going to learn a lot as we move through the process.” It’s important “to think about what are the foundational pieces,” she continues. “But we also have to recognize that we need to be flexible in making those investments to ensure a heterogeneous marketplace, because technology is changing quickly.”
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