De Martini - Univ of Florida Oct 11, 2012
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Transcript of De Martini - Univ of Florida Oct 11, 2012
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© 2012, Newport Consulting Group
Evolution of Distributed Markets & DER Pricing
Paul De Martini
October 11, 2012
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Source: ACEEESource: EIA
2011 US State Renewable Policy 2010 US State EE Policy
Policy is Spurring DER Adoption
Combined with accelerating improvements in DER technology price & performance are creating opportunities for electric system efficiencies
Over 80% of US population under the equivalent of EU’s 20/20/20 Plan
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Solar PV is Reaching Tipping Point
2010
McKinsey & Co.
SEPA Report:• More than 1.2 million solar PV panels were installed
by the top 20 corporate solar users in US
• Walmart and Costco combined have more solar PV on their store rooftops than all of the PV capacity deployed in the state of Florida
• The top 10 companies (by capacity) have individually deployed more solar energy than most electric utilities in the U.S.
$0.10/kWh installed by 2020
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DG Policy will change distribution design + operations
White House 2020 goal to increase total CHP in U.S. by 40GW (50%) to over 120GW
McKinsey forecast 200 GW of Solar PV in 2020
322 GWs Solar + CHP
100,000 Distribution circuits(20% of US total)
= 3.2 MWs/circuit
Sources: SEPA, DoE, USCHP
50 GWhs of Solar PV115 GWhs of CHP
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Electric Network + LargeTraditional Gen & VER
Responsive Demand4,500 MW15% of Peak
Conceptual Example: CA Utility System Peak at 30,000 MWs
Distributed Gen10,000 MW30% Adoption
Distributed Storage3,000 MW10% Adoption
2025 Grid: CentralizedHybrid Grid: Centralized & Decentralized
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Customer-Grid Evolution
Automated (advanced)
Transactive
2005 2015
Passive &
Deterministic
2010
Campus
Micro-grid
Virtual Power Plants
“Interconnection
w/Grid & Markets”
Utility-scale Micro-grid
“Integration w/Local
Balancing Markets”
Customer
Relationship
Distribution
Operations
Active &
Stochastic
Bldg/Home
Nano-grid
“Self Optimization”
Instrumented
Intelligence
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Operational Evolution: 1978-2001
Traditional Design: Controllable gen flowing power to deterministic aggregate load
generationstorage
load
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Instrumented & Intelligent: Increased DER will require better state information
and decision support analytics
Customer Micro-grids: 2002-2014
Customer
Self-Optimized
Micro-grids
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Virtual Power Plant: 2002-2020
Advanced Automation: Multi-direction and variability of DER power flows drive
circuit design changes, new grid components and control systems
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Distance & Temporal Considerations
Operational systems are challenged by increased span of control and decreasing timing of information and decision and control responses
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Customer Experience Paradigm Change
2008 2015
Ric
hn
ess
Customer
Experience
Distribution
OperationsInstrumented
Intelligent
Context
Control
Automated (advanced)
Collaboration
TransactiveCo-creation
2010
Drives increasing real-time interdependency bet customer experience and
distribution operations that will redefine both
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Differentiated Services Approach
22 Services that DER can provide with proper structuring and pricing
Source: SCE
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Unlocking Latent DER – Pricing Structure Matters
Traditional “best efforts” programs are not effective for most grid operations – need new approach
Adapt Quality of Service Concept:
Availability (On/Off or Will be)
Guarantees (Firmness)
Auditability (Measurement & Verification)
Use of forward pricing structures to balance customer needs for comfort and convenience while providing firm resources for grid operations
Differentiated services may be bundled to keep pricing simple – “good enough” is fine
Forward pricing structures also enable customer side investments in enabling technology
Value Realization Requires Satisfying Multi-Party Requirements
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Current DR Pricing Schemes Don’t Scale
Multiple prices to distributed resources create multiple uncoordinated
feedback loops – plus opportunity to game pricing options
CAISO
Source: CAISO
Source: P. De Martini
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“Prices to Devices” Create Unacceptable Oscillations
Lessons to be learned from High Frequency Trading –especially since this involves physical reliability not just market economics
Source: Nanex
High Frequency Trading
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Distributed Controls
Integration of DER with Markets & Grid Changing Control Paradigm
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Operational Evolution: 1978-2001Utility Scale Micro-grid: 2017-2025+
Transactive Distribution: Creation of local balancing & markets
variable connectivity
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Net Metering: Creating Clean Energy Divide
Issues: Net metering shifts costs from DER customers
to non-DER customers (Customer avg income adopting Solar PV in CA = $100k/yr)
Net metering rates are not linked to the cost of DER technologies being promoted
Recommendations: “Avoided cost” purchase rates based on the
costs that the utility clearly avoids by accepting generation from distributed generators, or market based price reflecting distribution locational values
Retail rates should be modified so that all fixed costs are recovered through an access charge paid by all customers connected to the grid
SCE Net Metering Rate
Any support mechanism for these technologies must be fair, efficient and sustainable and preserve the interests of DER and non-DER customers alike
Source: Edison International