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Case study on DER at SMUD points to importance of planning

From the June 5, 2017 issue of Public Power Daily

Originally published June 2, 2017

By Jeannine Anderson
News Editor

Consumers could outspend utilities in the adoption of solar, storage, electric vehicles and other distributed energy resources (DERs), making it essential for utilities to track and integrate these DERs into their planning processes to benefit their customers and the grid. That is one of the key findings of a new case study by the Smart Electric Power Alliance and Black & Veatch that details the efforts of a California public power utility, the Sacramento Municipal Utility District,  to create such an integrated DER planning process.

Through an in-depth study of its customers’ adoption of DERs, “SMUD built a comprehensive customer database that will allow the utility to predict which neighborhoods will see higher levels of DERs,” SEPA and Black & Veatch said in a May 31 news release about the case study. The database “will also be used to model the impacts DERs might have on SMUD’s distribution and bulk power systems, and on the utility’s finances.”

“An increasing number of utilities are integrating distributed technologies onto the grid, but with this study, SMUD has become an industry leader, providing insights and models that others can follow,” said Julia Hamm, president and CEO of SEPA. “We believe that integrating DERs into regular utility resource planning, as SMUD is doing, will quickly become an industry best practice.”

‘Pace of change … is accelerating’

Although the growth of DERs is unevenly distributed from one utility service territory to another, “the pace of change within the utility industry as a whole is only accelerating,” said the case study. “Utility leaders who recognize this, and position their organizations to benefit from the transition to a high-DER grid, are likely to reap significant rewards from their early efforts to plan for the distributed energy future.”

The May 2017 report by SEPA and Black & Veatch is entitled, Beyond the Meter: Planning the Distributed Energy Future, Volume II: A Case Study of Integrated DER Planning by Sacramento Municipal Utility District.

Among its findings:

•  Customers lead DER adoption: SMUD estimates that its customers and third-party developers now spend $150-$200 million per year on DERs, more than the public power utility spends on utility-scale renewables. Meanwhile, in a scenario with high penetrations of solar, electric vehicles and unmanaged vehicle charging, distribution upgrade costs through 2030 were projected at a cumulative figure of $50-$100 million or more. Although these costs may seem large in aggregate, they are relatively small on a per-unit basis, and they could be reduced in the future by emerging technologies, such as smart inverters.

•  DER impacts must be looked at individually and in aggregate: For example, while the impact of solar alone can increase ramping requirements (i.e., the duck curve), the DER portfolio simulated in the SMUD study actually decreased ramping and flattened the utility’s net load profile.

•  Savings may not offset costs under today’s policies: The study shows that under its current rate structure, SMUD’s lost revenue and program costs for most DER technologies will be larger than its cost savings on the bulk system; and that changes to rates and business models will need to be considered.

“The advent of cost-effective DERs — such as rooftop solar, and ultimately solar coupled with battery storage — will continue to mean flat, to declining load growth for utilities,” said Paul Lau, SMUD’s chief grid strategy and operations officer. “As a public, not-for-profit utility, SMUD is keen on providing optimal rate treatment for DERs for those customers participating with behind-the- meter DERs and for those who do not.”

SMUD “also needs to consider operational and reliability issues as we plan our utility system for DERs, which is why this case study is an important first step to helping SMUD understand what DERs will mean going forward,” said Lau.

The case study “demonstrates that integrated DER analysis can identify potential problems, make utility planning processes more robust, and improve utility-customer relations through better policies and programs,” said Jeremy Klingel, senior managing director for Black & Veatch’s management consulting business.

“But it will need to be a regular part of utility planning, and that will require organizational change and solid investments in analytics, databases and other IT infrastructure,” he said.

The study, “Beyond the Meter: Planning the Distributed Energy Future, Vol. II,” is the follow-up to an earlier report by SEPA and Black & Veatch, “Beyond the Meter: Planning the Distributed Energy Future, Vol. I,” which has been re-issued.

Both reports are available for download on the SEPA website. For Vol. II, click here. For Vol. I, click here.


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