Navigant Research Blog

A New Era of Demand Response

— November 9, 2015

Tightrope_webWhat does the future of demand response (DR) look like? Hawaii is now a test bed, guinea pig, and innovator, as you can hear during a free 30-minute discussion this Thursday.

The amount of DR capability in North America has grown considerably in the past 5 years, both at utilities and within competitive markets such as PJM. However, DR technologies and policies have generally relegated DR to a minor role as a last-called resource. DR has typically been slower to respond than combustion turbines, and the load relief it provides has been difficult to assess precisely (if at all) in the real-time operating environment in which control center staff operate. Furthermore, regulatory policies in support of DR have generally focused on the magnitude of megawatts achieved at the expense of the quality and usefulness of those megawatts. However, slowly but surely, this trend is changing.

The use of DR in grid planning and operations has solidified as utilities increasingly rely on DR to meet installed capacity requirements and sometimes even operating reserve requirements. Furthermore, independent system operators led by PJM have incorporated DR into procurement mechanisms for capacity, energy, and ancillary services. Industry acceptance of DR as an integral part of the future grid continues to grow, with states like California and New York rolling out major regulatory initiatives and utility Hawaiian Electric issuing a request for proposals to DR aggregators for the provision of grid services, including ancillary services, from demand-side resources. So which technologies and policies will drive DR into the future as a more integrated and valued resource?

The Peak Load Management Alliance (PLMA) is hosting a free webinar on November 12 at 12:30 EST to highlight the significant regulatory and utility strategy initiatives taking place in Hawaii, where massive customer investment in behind-the-meter PV is encouraging Hawaiian Electric to develop innovative uses for DR to help manage the grid in real time. This could be the future for many utilities that are only now seeing the first effects of customer investment in renewables, storage, and other distributed energy resources.

This is a follow-on discussion from a Power Engineering article by Navigant regarding how a new era of DR is blurring the lines between generation and demand-side resources in Hawaii and elsewhere. The article covered some of the emerging DR technologies that are allowing DR to be viewed more on par with generators and reviewed new applications that are raising DR’s prominence as a valued resource alternative for utilities and system operators. Looking ahead, emerging state policies and utility initiatives are driving DR to a heightened prominence that would have been difficult to envision just 5 years ago.


Buildings and Climate Change

— November 6, 2015

Telescopers_webAccording to the United Nations (UN) Environment Programme, the buildings sector is estimated to be worth 10% of global gross domestic product (GDP), or roughly $7.5 trillion. Currently, buildings consume about 40% of global energy, 25% of global water, and 60% of global electricity. Buildings also emit more than 30% of global greenhouse gas (GHG) emissions. Under the business-as-usual projection accompanied by rapid urbanization, emissions caused by the buildings sector may more than double by 2050.

However, the buildings sector has among some of the most cost-effective and proven solutions for reducing energy consumption and GHG emissions. There are commercially available technologies that can reduce energy demand in buildings by 30% to 80%. Investment in building energy efficiency will lead to significant savings that will help offset incremental costs, providing a quick return on investment. Also, because existing buildings perform far below efficiency potentials in general, there are enormous opportunities for reducing energy consumption. Meanwhile, due to population growth and increasing urbanization, a new construction market is growing in developing countries, where construction activities account for up to 40% of GDP and provide opportunities for adopting energy efficient technologies.

UN Buildings Day

The buildings sector can play a critical role in mitigating climate change by reducing energy consumption and GHG emissions. Consequently, for the first time in the history of climate negotiations, a Buildings Day will be held on December 3, 2015 at the COP21 UN conference on climate change in Paris. This meeting is a mandate from the Lima-Paris Action Agenda of 2014, and it aims to discuss ways to limit global warming to a maximum of 1.5°C to 2°C. The Buildings Day at COP21 will showcase actions already taken by the buildings industry and will serve as an opportunity to encourage communications, collaboration, and implementation among various stakeholders.

In addition, a Global Alliance for Buildings and Construction consisting of governments, companies, financial institutions, organizations, academia, associations, professionals, and user networks will officially launch on that day. By putting the buildings and construction sector on the below 2°C path, the alliance commits to helping countries realize their Intended Nationally Determined Contributions, which are essential drivers for achieving the ambitious global climate goal.


California’s Role in the Rapidly Expanding Community Solar Market

— October 28, 2015

Community solar (also known as shared solar) has become a hot topic across the United States over the last couple of years as residences and businesses seek alternatives to conventional energy sources. According to a National Renewable Energy Laboratory (NREL) report released in April, about half of all homes and businesses in the United States cannot host a PV system of adequate size on their property. The community solar market has the potential to increase PV deployment by 5.5 GW-11 GW from 2015 to 2020.

Today, 13 states and the District of Columbia have shared renewables policies in place, and many other states are considering programs. Utilities across the country are embracing community solar, viewing it as an opportunity to retain their customers and compete against the burgeoning self-generation solar PV market by providing a utility 100% solar option. Navigant colleague Richelle Elberg discussed one such project in a blog earlier this month detailing how Tucson Electric Power’s Residential Solar Program is a win-win for solar proponents and utilities.  

Navigant Consulting is currently collaborating on the Community Solar Value Project, one of 15 projects chosen for funding in 2015 by the U.S. Department of Energy’s SunShot Initiative under its Solar Market Pathways Program. The project aims to increase the scale, reach, and value of utility-based community solar programs through project design and the integration of demand response and storage.

California’s Role

California is one of the four states paving the way. In late 2013, the California state legislature signed into law Senate Bill (SB) 43, the Green Tariff Shared Renewables (GTSR) Program bill. The GTSR Program is intended to expand access to eligible renewable energy resources to all ratepayers who can’t access the benefits of onsite generation and to also create a mechanism where customers can meet their electricity needs from eligible renewable energy resources. SB 43 set a statewide program cap of 600 MW as well as utility caps. It required California’s investor owned utilities (IOUs) to propose a voluntary shared renewables program to the California Public Utilities Commission.

SB 43 Utility Program Caps

Andrea Blog Table

(Source: Navigant Consulting)

Decision 15-01-051, published on January 29, 2015, established the steps for California IOUs to implement the GTSR Program, including outlining the two program components:

  • Green Tariff (GT): Under a GT, a customer pays the difference between their current generation charge and a charge that reflects the cost of procuring 50%-100% of solar generation for their electric needs.
  • Enhanced Community Renewables (ECR): Under an ECR, a customer agrees to purchase a share of a local solar project directly from a solar developer in exchange for a credit from their utility for the customer’s avoided generation procurement and for their share of the benefit of the solar development.

The rate design approved by this decision ensures that utility customers not participating in the GTSR Program do not bear any of the costs of the program, an important point of discussion at utilities developing shared solar programs across the country. All Renewable Energy Certificates (RECs) from GTSR projects are transferred to the IOUs for retirement on behalf of participating customers. Many community solar programs currently do not retire the RECs on the customer’s behalf, which may become a point of greater discussion in the future.

Projects are to be located within the IOU service territory and within reasonable proximity to participants of the GTSR Program. GTSR projects should be sized between 500 kW and 20 MW, with smaller projects considered at a later program phase.

Pacific Gas and Electric, Southern California Edison, and San Diego Gas and Electric are currently in the process of rolling out their programs. Once launched, the programs will be open to new subscribers until January 1, 2019, or until the individual utility capacity caps are met.


India’s 100 Smart Cities Program Spurs Investment and Criticism

— October 28, 2015

Narendra Modi, India’s new prime minister, has embraced technology more so than any of his predecessors. With 15.7 million followers on Twitter (I was happy when I reached 100) and more than 30 million Facebook followers, the global leader recently made an imprint on the high-tech epicenter of Silicon Valley, visiting a number of companies there last month to talk about how technology can help India face difficult social, economic, and environmental issues. His 100 Smart Cities program is a landmark of this philosophy, aspiring to develop new urban spaces to support overwhelming population growth, adapt to climate change, and create a modern economy. But many have asked if this program really has the capability of supporting these development needs, and if it is instead channeling funds away from areas that desperately need support.

Modi introduced his program in June of 2015, just a month after taking office, pledging a short term investment of $1.2 billion for the planning of projects across the country to be completed over the course of 7 years. Other countries such as Japan, the United Kingdom, Singapore, and the United Arab Emirates have also promised billions in investments. Indian cities planned for upgrades and development are predominantly located in the economic corridor between Delhi and Mumbai, as well as in Special Investment Regions and Special Economic Zones where there are fewer restrictions upon international business and investment.

The program’s flagship city of Dholera, located in Modi’s home state of Gujarat, has been in planning mode since 2009 and is currently under construction, with completion expected in 2020. Plans for the megacity include a modernized smart grid infrastructure that supports high levels of renewables and a citywide communications infrastructure and smart city platform that supports both public and private sectors.

Challenges Loom

But aside from Modi’s smart city plan is the fact that much of India will still remain severely underdeveloped. A number of Indian and international development groups have spoken out about the negative impacts of developing isolated super cities while the rest of the country remains underdeveloped and without adequate public infrastructure and access to utilities. Large parts of the country still need to be electrified, and many that are suffer from as much as 40% capacity losses from theft. This has led to a troubled financial state for many of India’s utilities, which are expected to struggle to balance these issues and attract financial support for smart infrastructure investment.

Developing smart cities as a top-down initiative leaves room to overlook the ground-up steps required to effectively meld together technology and community interests. Without citizen participation as an integral part of planning, even if citizens have access to smart city infrastructure to some degree, what are the chances that it will be relevant to them? This is a concern particularly with the country’s poorest citizens, which remain a majority of the population in the country, and may face loss of farmland in areas where smart cities are scheduled to be developed on top of it. Additionally, a large part of this population is dispersed among the outskirts of many cities—how can centralized smart infrastructure provide support to those that can’t easily access it? Modi’s planning, as big and impressive as it sounds, still has some issues to address in order for it to enable economic growth for all of India’s citizens.


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