California Distribution Resources Plan
Locational Net Benefit Analysis Working Group
DRAFT Final Report – Due March 1, 2017 (request for extension)
NOTE: This is a first draft of the LNBA WG report. Comments in tracked changes can be sent to .
Table of Contents
Contents
Table of Contents 1
Acronyms 1
Executive Summary 1
Introduction and Background 3
Use Cases 4
WG Meeting Schedule 9
Categories of Recommendations 10
Improving granularity within LNBA methodology by using local values over system values 11
Methodology refinements to existing use cases 12
Expanding the functionality and usefulness of the LNBA heat map 13
Additional benefits of DER 14
Avoided transmission capital and operating expenditures 14
Uncertainty 16
Expansion of DER as a Solution Set 16
Future use cases considering locational value for resource valuation: draft principles 19
Acronyms
Executive Summary
Adopted in 2014, Section 769 of the California Public Utilities Code requires the IOUs to prepare a distribution resources plan which identifies optimal locations for the deployment of distributed energy resources. In August 2014, the CPUC began implementation of this requirement through Rulemaking (R.) 14-08-013, the Distribution Resource Planning proceeding. A Ruling from the Assigned Commissioner in November 2014 introduced the LNBA as a tool which would specify the net benefit that DERs can provide in a given location. Further guidance issued in May 2016 authorized a demonstration project to perform LNBA methodology for one DPA.
Pacific Gas & Electric, Southern California Edison, and San Diego Gas and Electric submitted their final Demo B reports at the end of December 2016. These reports summarize demo results, lessons learned, and recommendations on methodology calculation and next steps regarding implementation of LNBA.
The purpose of the Locational Net Benefit Analysis (LNBA) Working Group (WG) Final Report is to summarize recommendations made by the WG since the California Public Utilities Commission (CPUC) issued its May 2, 2016 Assigned Commissioner’s Ruling (ACR) within the Distribution Resources Plan (DRP) proceeding, provide support to the CPUC to make a Proposed Decision on Demonstration B, and assist the Commission in developing a roadmap to outline an implementation plan for an LNBA system-wide rollout, as well as to identify methodological refinements needed to enhance the LNBA to meet additional future use cases. This report summarizes WG recommendations based on three criteria: 1) immediate priority based on relevance for existing use cases, and within the scope of short-term WG activities; 2) long-term refinement items prioritized for developing new methodology; and 3) additional refinements related to the development of additional use cases, in coordination with related CPUC proceedings (including the Integration of Distributed Energy Resources (IDER) proceeding (R 14-10-003), NEM 3.0, and the Integrated Resources Planning (IRP) process).
note: will fill in as recommendations are finalized.
- LNBA Use Cases:
- LNBA Methodology Recommendations
- LNBA Implementation Requirements and Future Schedule:
WG Discussions have been facilitated by More than Smart, and the LNBA WG has met at least once per month, starting May 2016. It is expected to maintain this meeting frequency through Q2 2017. Meetings have been in person or via webinar and conference call. The following stakeholder groups attended at least one meeting or webinar of the LNBA WG:
[#]
California Distribution Resources Plan
Locational Net Benefit Analysis Working Group
DRAFT Final Report – Due March 1, 2017 (request for extension)
NOTE: This is a first draft of the LNBA WG report. Comments in tracked changes can be sent to .
- ABB Group
- Advanced Microgrid Solutions
- Alcantar & Kahl
- AMS
- Artwel Electric
- Bloom Energy
- CAISO
- California Energy Storage Alliance
- California Energy Commission
- California Public Utilities Commission
- CPUC Office of Ratepayer Advocates
- California Solar Energy Industries Association
- City of Burbank
- Clean Coalition
- Community Choice Partners
- Community Renewables
- Comverge
- Cross Border Energy
- DNV GL
- ECCO International Inc.
- Energy and Environmental Economics
- Electric Power Research Institute
- Energy Foundation
- Environmental Defense Fund
- Gratisys Consulting
- Greenlining Institute
- Helman Analytics
- ICF International
- Independent Energy Producers Association
- Independent advocates
- Independent consultants
- Integral Analytics
- Interstate Renewable Energy Council
- Kevala Analytics
- Lawrence Berkeley National Laboratory
- Lawrence Livermore National Labs
- MRW & Associates
- Natural Resources Defense Council
- Northern California Power Agency
- NextEra Energy
- New Energy Advisors
- Nexant
- Open Access Technology International
- Pacific Gas and Electric Company
- PSE Healthy Energy
- Quanta Technology
- Sacramento Municipal Utilities District
- San Diego Gas Electric
- SEIA
- Shute, Mihaly & Weinberger LLP
- Siemens
- Smart Electric Power Alliance
- SoCal REN
- SolarCity
- Solar Retina
- Southern California Edison
- Stem Inc.
- Strategy Integration
- Sunrun
- SunPower
- TerraVerde Renewable Energy
- The Utility Reform Network
- UC Berkeley
- Vote Solar
[#]
California Distribution Resources Plan
Locational Net Benefit Analysis Working Group
DRAFT Final Report – Due March 1, 2017 (request for extension)
NOTE: This is a first draft of the LNBA WG report. Comments in tracked changes can be sent to .
Introduction and Background
In accordance with the May 2, 2016 ACR in the DRP proceeding[1] (R-14-08-013), the LNBA Working Group was established to monitor and provide consultation to the Independently Investor Owned Utilities (IOUs) on the execution of Demonstration Project B and further refinements to LNBA methodology. CPUC Energy Division staff has oversight responsibility of the working group, but it is currently managed by the utilities and interested stakeholders on an interim basis. The utilities jointly engaged More Than Smart to facilitate the WG. The Energy Division may at its discretion assume direct management of the working group or appoint a working group manager[2].
The activities of the WG are organized by (I) short-term work related to the Demonstration Project B and improvements to LNBA that could be adopted in a Q1 2017 Decision and (II) longer-term work related to ongoing refinements to LNBA methodology beyond that time frame conducted in parallel, but not directly related, to the Demonstration B. Short term work should be addressed by the time of the submittal of the final Demonstration B report.
The aforementioned short-term work of the WG is defined in the ACR under Section 6.1:
6.1 Activity related to Demonstration Project B
a. Recommend a format for the LNBA maps to be consistent and readable to all California stakeholders across the utilities’ service territories with similar data and visual aspects (color coding, mapping tools etc.).
- Consult to the IOUs on further definition of grid service, as described in requirement (1)(B)(iv-v) of Section 4.3.1 above, and in coordination with IDER proceeding.
In addition to these specific tasks, the Ruling directed the WG to “improve and refine the LNBA methodology.” (p. 35) The WG explored many aspects of the methodology and sets forth recommendations below.
Compliance with ACR
The LNBA tool, as developed, evaluates DERs in locations against planned utility upgrade projects. The WG agrees that Demo B generally satisfies the requirements in the ACR to begin creating a methodology to evaluate the distribution deferral benefits of DERs, although many improvements are needed.
In evaluating Demo B, it is important to consider how the distribution deferral analysis and the LNBA Tool are likely to be used. The utilities have internal tools similar to the LNBA Tool that they plan to use to identify distribution deferral opportunities. The LNBA Tool may be useful to other parties that wish to influence the development and selection of deferral opportunities.
Data available in the LNBA Tool showing hourly load reduction needed in a given location to defer a planned upgrade is highly valuable. This will help developers create DER solutions that are designed specifically to defer or eliminate planned investments. The presentation of this data is a major step forward.
It is also clear that the development of the LNBA Tool within Demo B should not be construed as the advancement of a comprehensive, location-specific utility avoided cost calculator. Rather, it addresses the narrow question of evaluating DERs in single locations against certain distribution upgrades that are already in IOU distribution system plans. Deferring investments outside of those specific, identified, planned upgrades is outside the scope of Demo B. In practice, all of the benefits that DERs can provide will need to be quantified before a locational benefits analysis can be used in sourcing mechanisms.
Demo B does truth test the notion that it is possible for DERs to defer planned investments. The IOUs found that such deferral is possible. From here, the inputs and methodology for evaluating DERs against planned upgrades must be further refined, and questions regarding utility avoidable costs beyond deferral of planned distribution upgrades must be explored.
The Working Group will also need to explore how values within the LNBA could be used to determine compensation for DER services provided through sourcing mechanisms other than competitive solicitations, such as tariffs, standard offer contracts, incentives, or other market mechanisms. There is concern that the structure of the Tool is geared toward utility solicitations and may not serve the development of market mechanisms.
Use Cases
In completing the short-term activities, the IOUs developed an LNBA tool through Demonstration B in coordination and consultation with the LNBA Working Group. Collectively, the LNBA WG agreed on the following near-term applications, or use cases, at the May, June, and July Working Group meetings:
1. LNBA Public ToolProvide Public Information: LNBA can provide a heat map and data ofthat customers and DER providers can use to identify potential optimal locations for deploying DER. The objective of Demo B was to meet this use case (Demo B). The final public heat maps are a visual representation (feeder-level) of where DERs can defer or avoid planned utility infrastructure projects (as identified in the Distribution Investment Deferral Framework (DIDF), currently under development in DRP Track 3, sub-track 3). The developed LNBA tool serving this use case employs public data and indicative values to identify system-level deferral benefits. The tool is technology-agnostic, and users may input a DER-specific profile to receive technology-specific estimates of the avoided cost, or net benefit, that their DER project would provide.
2. Prioritizing DER deferral opportunities: LNBA methodology may be used to develop a prioritization of DER deferral opportunities for utilities by the Distribution Planning (or Deferral) Advisory Group (DPAG or DDAG), which is an envisioned stakeholder group in the DIDF that would inform the selection of deferral opportunities for solicitation via the IDER Competitive Solicitation Framework. For this use case, the IOUs would replace the indicative values used in the public tool with confidential, market-sensitive values that would more closely resemble the values the IOUs would use to evaluate DER bids in an IDER competitive solicitation. This would provide a more precise net benefits estimate and would allow the DPAG/DDAG to select the deferral opportunities that are most likely to provide the greatest ratepayer value. However, utilities have stated that they will use a proprietary version of the tool to evaluate bids in a competitive solicitation. Thus, the LNBA tool may be used to help in prioritization, but will not be used for final assessment.
During these meetings, the WG also acknowledged the need for the consideration of future use cases, which will be further clarified and defined as the Working Group receives additional guidance from the CPUC on how the LNBA may be used in related proceedings and DRP tracks. For example, some WG members believe that LNBA can increase transparency in utility planning. Prioritization of distribution system upgrades is normally done by the utilities in a closed process. LNBA can provide a small amount of visibility into distribution planning. Also, the Working Group recommends a new use case that focuses on data needs to support the development of future sourcing options. This would provide the necessary linkage between the LNBA and IDER processes, ensuring informed and effective decisions can be made regarding various potential sourcing options.
The WG agreed that an additional primary goal of this report is to help the Commission develop a roadmap for the application of LNBA to other use cases, and consider the additional methodology refinements needed in prioritized manner to facilitate the use of LNBA within these use cases. A number of Commission proceedings and initiatives are looking to the LNBA to develop location-specific avoided cost values for use in various cost-effectiveness analyses to indicate high-value locations for DER deployment, inform resource procurement decisions, and develop location-specific rates or tariffs for DERs.
Many of these uses of the LNBA will be developed in concert with other CPUC proceedings and initiatives. To assist the WG in understanding the potential uses of LNBA within these multiple proceedings, the CPUC Energy Division identified the following proceedings and initiatives:
· IDER Unified Cost-Effectiveness:
The Integration of Distributed Energy Resources (IDER) proceeding (R.14-10-003) is pursuing development of a unified cost-effectiveness framework[3] that can be used for technology-agnostic resource evaluation. IDER was originally scoped as the Integration of Demand-Side Management (IDSM). D.15-09-022 expanded the scope of R.14-10-003 beyond demand-side program coordination to determine the mechanisms needed to source DERs to meet the required characteristics and values developed in the DRP.
In the early stages of this proceeding, Energy Division characterized the universe of cost-effectiveness methods adopted by the various demand-side resource proceedings. The results of this mapping effort were summarized in a Staff Proposal[4] and discussed at a July 30, 2015 workshop[5]. It was noted that all demand-side programs used E3’s avoided cost calculator for cost-effectiveness studies. However, a number of common weaknesses were identified across the methodologies, including[6],[7]:
o Lack of geographic granularity: Cost and benefit inputs are based on statewide, utility territory-wide, or (occasionally) climate zone-wide average costs and prices. While this is appropriate for some quantities (e.g., natural gas prices), it is far less appropriate for other quantities (e.g., avoided distribution costs).