Grid Flexibility: Weaving a Thousand Possibilities Into One Integrated Plan
As the Northwest energy market becomes more distributed and expectations evolve, utilities themselves must change the way they evaluate, plan, dispatch and manage resources. In the first track, GridFWD 2018 examines the new perspectives and tradeoffs that utilities must pursue to create flexibility not just in the grid itself, but also in the operations, regulations and business models that shape the industry.
Smart Grid Northwest evangelist Terry Oliver talked about these issues with Josh Keeling, Supervisor of Customer Energy Solutions at Portland General Electric and organizer of the Flexibility track at GridFWD 2018. Below is an edited version of their conversation.
Session 1: What’s New in the Flexible Resource Zoo
Josh Keeling: When we started the regional conversation about the coming value of end-use flexibility, there were two things happening: There were traditional demand-side, flexible resources operated out of customer program organizations at utilities in a very restricted way. Then, concurrently, there were smart grids being developed on the distribution system. Often you have one of those resources fulfilling the needs of the other. For instance, customer-side resources that are now providing distribution use cases.
What’s even more interesting is where we’re starting to see aggregated resources on the customer side of the meter that are optimizing both locally and on the distribution system. It’s also interesting how BPA uses CVR, dynamically, for voltage regulation.
Terry Oliver: The difference is the original CVR was a conservation resource. You just wanted to reduce voltage or distribute it more efficiently down the feeder. Now you’re trying to figure out how a cluster of distribution feeders managing voltage dynamically can create a benefit either in the larger distribution system or in the transmission system.
Josh: Such issues lead to a ton of confusion—nobody knows what to call any of these resources. “Okay, that CVR example is demand response.” Well, no it’s not, but what is it? Then on the flip side, what do you call voltage regulation that uses behind-the-meter customer resources? Is that DR? There are hard organizational and operational questions about who has governance over that.
Terry: I think you’ve nailed it. What’s the purpose of classifying it or naming it a particular thing? It can have an impact on debate about how a resource should be managed to serve the goals of the utility and the customer.
Josh: That is particularly true in the Northwest because of the fact that we’re vertically integrated utilities. So we have all this interesting discussion happening.
As we consider that zoo of resources, what are the unique complications or questions that come up? And how do these different resources compete or complement each other? How do we make decisions between competing resources where one provides a number of use cases and may be a simpler resource to manage?
Terry: As utilities, because we have 100% penetration of our product, you have to remember there’s always an S curve for market penetration. When you look at water heater control where, because of voltage, it’s probably not going to be a consumer-installed option, which means it’s a truck roll, which is expensive. As we talk about these technologies, we have to consider what it’s going to take to get the technical issues worked out, then to get them accepted into the market, and finally to adapt the market to use them. It’s also not just about the utility – this is a shared opportunity and effort for utilities, customers, stakeholders and other regional partners.
Josh: That’s an area where I think conferences like this are critical because the Northwest, more than anything else, needs everyone – utilities, stakeholders, policy makers – to coordinate so the value propositions for these different potential programs or resources can be determined. You have to start creating value propositions for vendors — that map to a compelling customer value proposition — and the technology will come out of that.
Session 2: Ops Dispatch & Program Development Working Together for DER Integration
Terry: I think Portland General Electric has gone further than many in trying to rethink operations and dispatch in a dynamic sense. My experience in looking at utilities, for the most part, has been that they “set-it” and wait for the next hour and then set it up again. It’s not dynamic at all.
Josh: Yeah. Even organized markets have this problem, which is that market design always has flaws and wherever the flaws are, then you have to figure out how to fill in the gaps. Storage, more than anything else, made us ask this really hard question.
Terry: It’s visibility—we’ve been blind but we’re now starting to be able to see. We’re starting to see syncrophasors come in, you’re starting to see different sorts of devices attachable to either the line or transformer, that give you near real time information on how things are actually operating as opposed to how we think they are. But we’re still sort of missing the continuous, real time analytics that we need to give us full visibility and full foresight to enable all the dynamism that is possible and beneficial.
Josh: I agree. We are working on how we’re going to dynamically manage all resources because we believe we’re moving into that new future. I’ve seen many utilities who built up their DER organizations out of energy efficiency, for good reason. But energy efficiency is not dynamic, so there was never a need for any sort of dynamic, real time operations component.
On the analytics question, we definitely could use more data, and more monitoring. But I would like to see us focusing not on data, but on insights, and then work backward. What do we need to know as an insight, that informs a decision. Then we can figure out what data we need from there. Instead of saying let’s get some data and we’ll figure out what to do with it later.
Session 3: Build, Buy or Partner: Finding the Best Path Forward to Add Flexibility
Josh: [Looking at utility-vendor relationships] Avista has done a good job of nurturing vendors and spinning out companies in this region. The question is, what functions really need to be handled in the utility? What parts are really unique to an individual utility and what parts aren’t?
Then, the buying question, I mean, it’s sort of a question of how much control you need to have and where do you need to have it? Different utilities have used different strategies, but we are all experimenting and hashing that out. I think we could do a better job of being a little bit more systematic and not just doing demonstration projects, but showing a pathway to a scalable model.
Learning should be a means to an end, such as a scalable business plan. If you do that, then you can create that vendor ecosystem.” – Josh Keeling
Terry: It leads me to wonder if there is a skill set that we’re missing. I watch what happens in ENEL, and it looks like their conversations are different when they’re talking with vendors. It may be about how the conversation is structured in a way that leads to co-investment, co-learning.
Josh: I think utilities know we need to complement our knowledge base with additional skills – for example, focused data science. We bring a tremendous amount of expertise and know-how to the table, but we also know when we need to bring in vendors or consultants who offer specialized knowledge or skills or perspectives that can help us bridge a gap or find the best way for us to approach a challenge.
Session 4: Virtually There: Taking the Next Step from DERs to VPPs
Josh: When looking at VPPs, I definitely believe they are the future of resource acquisition through the utility, or at least a huge component of it. Batteries made us ask all the hard questions about what value means for a resource, because batteries can basically provide such a wide range of services. I think VPPs make us ask all of these interesting, hard questions about how we’ll do resource planning and acquisition in the future. When you start looking at DERs from a VPP perspective, you have to basically say, what does that mean for my IRP? In what ways does planning need to evolve?
You can make a VPP into anything you want. You can buy it in any size you want. It’s just going to take a while to build. How do you want it spread across your system and what does it mean for your planning process? We are working closely with regulators, policy makers and other stakeholders to keep electricity accessible, affordable and equitable for customers in all the communities we serve, so that everyone can benefit from a clean energy future.
Terry: It connects really well to the issue of, what’s the value in different locales? I remember New South Wales did a program to offset a capital investment in their distribution system. They basically said, it’s this set of feeders and we need this many megawatts, and so you all bid on how you can do that. It can be DSN, it can be batteries, all of the above. We just don’t want to have to build that substation or reinforce that particular part of our distribution system… You can say, okay well, instead of expanding this Salem district, we’d really like a virtual power plant here. What will it cost me? Then you also have to go back and change the regulation.
You can’t be rewarded for capital investment if what you’re doing is buying VPP as a service.” – Terry Oliver
Josh: Right. It also makes you ask all of the hard business model questions, because it’s not capital expansion if it’s associated with a VPP.
The VPP space is a lot more nascent than the press makes it sound sometimes. VPPs today, they’re mostly either just a big acquisition of some behind the meter batteries, or a DR program, or both. They’re not being treated actually as VPPs in the way that I think we really want to move in the future, which is how do we construct an aggregated portfolio that optimizes system benefits? I think that while there are lessons to be learned from the hardware and software side, the harder questions are around the process for resource acquisition, operations, and portfolio construction.
Learn more about flexibility in the Northwest energy grid at GridFWD 2018, October 11 and 12 in Vancouver BC.