Navigant Research Blog

This Land Is a Demand Response Land for You and Me

— June 26, 2015

Just like the old children’s song, from California to the New York island, June has been a good month for demand response (DR) from coast to coast. First, the California Independent System Operator (CAISO) released a proposal to allow aggregated distributed resources to bid into its markets, potentially as early as next year. Then, the New York Public Service Commission (NYPSC) approved all of the state’s utilities’ plans (aside from Consolidated Edison [ConEd]) to commence DR programs this summer. The programs are modeled on ConEd’s existing suite of DR programs.

CAISO found a way to introduce a new acronym, distributed energy resource provider, or DERP, into the industry lexicon. The proposal lays out a framework for allowing aggregated resources of at least 500 kW to participate in the market. There is also a requirement that any aggregations serving more than a single grid pricing point must be limited to a single type of technology. Metering has been one of the hurdles to DR participating in CAISO markets because the system requires generation-scale monitoring. The new rules would allow DR to be aggregated via the Internet, providing for a broader range of resources to be brought to market with less cost. DERP aggregators will be a scheduling coordinator metered entity, which will avoid “having each sub-resource in a DERP aggregation engaged in a direct metering arrangement with the CAISO,” according to the proposal. Access to ancillary markets, however, will still require resources to allow constant monitoring by CAISO. CAISO’s board is set to consider the proposal in July, but would need approval from the Federal Energy Regulatory Commission (FERC) before it can move ahead with the plan.

Meanwhile, In New York …

A week later across the country, NYPSC gave the green light for the upstate investor-owned utilities to follow ConEd’s lead and offer distribution-level DR programs to their customers starting this summer, a very quick turnaround time. This order is one of the early wins of New York’s Reforming the Energy Vision proceeding to transform the utility model in the state. The programs have three basic types: a peak shaving program to be called on a day-ahead basis when demand is expected to hit the summer peak, a local distribution reliability program to be called on as needed for localized issues, and a direct-load control program that lets customers install a device that can be controlled by utilities to control loads to compensate for system stress. Customers can take part in the programs individually or through an aggregator. This summer, the utilities are prioritizing areas that offer the greatest benefits at the lowest costs, based on factors including system stress and local distribution constraints for the year. All of the DR programs will be available starting next summer.

So, while the DR community continues to wait for the Supreme Court’s ruling on FERC Order 745 on DR compensation, the states are pushing the DR agenda ahead rather than waiting for direction from the feds.

 

A Microcosm of Massachusetts Solar Policy

— June 19, 2015

I grew up in Massachusetts, went away for school, spent my 20s exploring other parts of the country, and came back home to settle down and start a family. Working in the energy industry, I closely follow state policy from a professional perspective. However, my personal and extracurricular worlds have also now become entwined in the ongoing soap opera that is the Massachusetts solar policy and its politics: the good, the bad, and the ugly.

For the first 8 years of home ownership, I lived in a condo, where I could not control what was done with the exterior of the structure. I would have loved to install solar while there, but it was not possible due to the building restrictions. I did get the condo association to undertake an energy audit with the local utility, which resulted in several thousands of dollars of savings on our condo fees. This was before Community Solar came into being, which has since flourished in Massachusetts and is perfect for the condo/apartment dweller who can’t install on-site panels.

Two years ago, my family moved into our own house in Franklin, Massachusetts. Literally, the first day we arrived, we had an energy audit and I contacted a solar company to get an estimate for a rooftop array. Without any utility bill history, the company had to estimate our electricity usage based on average square footage values and created a proposal. Knowing that our household would be more efficient than the average, I decided to hold off until we got some real data for a year to avoid unnecessarily overbuilding the solar. It turned out that we use about half the electricity of a typical house our size in our area (according to our OPower report), so it was a good thing we didn’t take the plunge right away.

Worth the Wait

After a year of data collection, I started compiling the plethora of mail offers that we received from various solar companies in preparation for getting some new quotes. Then, I heard about the new concept of municipal solar aggregation, promoted by the Massachusetts Clean Energy Center as Solarize Massachusetts. I figured as long as I was going to do it, I might as well take advantage of bulk pricing and get others in town to benefit from solar, as well. I spearheaded the Franklin Solar Challenge, where a committee of community volunteers put together an RFP and selected a vendor to work with who provided the best combination of pricing, product options, and service. I got my system installed in April after the harsh New England winter and got my first utility bill with $0 due and a bill credit! Over 100 homeowners have expressed interest, and we are on our way to getting the best bulk pricing available for everyone who participates.

 The Results

Brett house

(Source: Brett Feldman) 

But Wait… There’s More

The other side to the solar story in Mass is the fact that the net metering caps in certain utility territories are being hit now, meaning that no new projects above residential-scale can be installed. The state government and stakeholders are trying to work out a solution, but in the meantime things are on hold. I am on the Town Council in Franklin, the elected governing body of the town. We own a large piece of property along a highway that would be perfect for solar development, but due to the cap, it can’t be done at this time and the space might be used for condos and office buildings instead.

So there is a personal story for you that offers insight into the various aspects of solar drama in Massachusetts.

 

Dispatches from the National Town Meeting on Demand Response

— June 4, 2015

One year after the U.S. Court of Appeals’ decision to strike down Federal Energy Regulatory Commission (FERC) Order 745 and question FERC’s jurisdiction over demand response (DR), the DR community appeared alive and well at the 12th annual National Town Meeting on DR in Washington, D.C. There was a plethora of enthusiasts, from utilities, regulators, and vendors, talking about drivers for DR and how the industry could progress in a post-745 world should the Supreme Court uphold the lower court’s decision.

The event kicked off with a roundtable of state regulators discussing DR and, more broadly, electricity industry transformation based on distributed energy resources (DER). Michael Picker, president of the California Public Utilities Commission, compared the DR industry to the telecommunications industry by talking about how incumbent communication providers lost 40% of their landline base and the world transitioned to a mobile model. The dialog was past the utility death spiral concept, but it indicated that the reality of stagnant or decreasing load and customer-side energy solutions will have to be addressed. The big chicken-and-egg question was whether regulatory change or business model change needs to come first, and little consensus was reached.

Changes Ahead

Following the regulators, a panel of utility executives outlined their opportunities and pain points from the changing landscape. Interestingly, when given a list of disruptive technologies to rank, energy storage and solar came out on top, while DR was on the bottom. DR is seen more as a positive force and tool for the utility to manage the grid and engage customers. One theme that arose is that utilities will need to add new skills to their workforce as the business shifts from strictly a wires and hardware model to more software, information technology, and customer outreach.

One other major area of focus was New York’s Reforming the Energy Vision (REV) proceeding. REV has gotten a lot of attention since it was launched a year ago, but now people want to know where the rubber will hit the road. It appeared that speakers who are involved in REV had a bit of trouble really explaining the market transformation that is espoused. That doesn’t mean that important changes won’t occur, but as the rest of the country watches REV proceed, it will learn what to emulate and what to avoid.

These issues and other drivers and barriers to DR are discussed in Navigant Research’s new Demand Response Enabling Technologies report. By the time the National Town Meeting comes around next year, the Supreme Court will have decided DR’s fate one way or another … and hopefully it won’t make for an unlucky 13th gathering.

 

EnerNOC Rides the Tesla Wave

— May 13, 2015

Tesla’s announcement on April 30 of its stationary storage product has been treated like the biggest energy news since Edison invented the lightbulb. Elon Musk’s cult of personality has captured the world’s attention, and anything he says gets extreme coverage. That’s not to say that there is no substance behind Tesla’s developments or that they won’t lead to changes in the industry. At the very least, the attention raises the profile of the normally staid energy world, which should benefit all players in the space.

One company that caught the Tesla wave was EnerNOC, which announced a partnership with Tesla’s new commercial and industrial storage offering. EnerNOC’s stock jumped over 20% after the news hit. That’s the short-term bump that such notoriety can lead to. I spoke with Micah Remley, EnerNOC’s senior vice president of product, to learn about what the company sees as the real benefits of this relationship.

Enhanced Intelligence

Basically, Tesla will provide the storage hardware to a facility and EnerNOC will provide the software smarts to tell the unit when to charge or discharge in an optimal manner. The software does this by taking in signals from inside the building and from external markets and figuring out how to gain the most financial benefit on an ongoing basis. Remley said that the Tesla unit has some smarts as a standalone unit, but the gains from EnerNOC’s software should outweigh the costs. When asked about the potential economic impact on EnerNOC’s business from this relationship, Remley said it is too early to measure as the partnership is still in its pilot phase. But it does not appear that this will add significantly to the bottom line in the near term.

I spoke with EnerNOC’s CEO Tim Healy at the company’s analyst conference back in November 2013, when the company launched its foray into the energy intelligence software space. I asked him if he planned on getting more into the hardware side with topics such as combined heat and power, solar, and storage; Healy said EnerNOC is clearly focused on the software side of things. It appears the company has found a way to keep to that mantra while not letting the proliferation of distributed energy resources pass it by.

Back to Earth

EnerNOC struck a similar deal with SunPower in the solar space in March that didn’t get nearly as much attention as the Tesla deal. From EnerNOC’s standpoint, things like solar and storage are just new endpoints that can be integrated into its existing software that has mainly been developed for demand response purposes. This move represents an important diversification strategy as competitors offer holistic solutions, customers demand central control systems for all of their various resources, and regulators in states like New York and California attempt to add value to all types of new technologies and market structures.

EnerNOC’s stock has come back down after the Tesla hype, but the partnership strategy should benefit the company in the long term.

 

Blog Articles

Most Recent

By Date

Tags

Clean Transportation, Electric Vehicles, Policy & Regulation, Renewable Energy, Smart Energy Practice, Smart Energy Program, Smart Grid Practice, Smart Transportation Practice, Smart Transportation Program, Utility Innovations

By Author


{"userID":"","pageName":"Brett Feldman","path":"\/author\/bfeldman","date":"7\/5\/2015"}