By Robert Mullin

SANTA MONICA, Calif. — Optimizing distributed energy resources and reducing greenhouse gas emissions cost effectively will require improved forecasting and the elimination of regulatory silos, speakers told Infocast’s California Distributed Energy Summit last week.

Margie Gardner, executive director of the California Energy Efficiency Industry Council, opened the two-day conference with a question that framed the big picture: “What’s the purpose of integrating DERs into long-term procurement?”

The three speakers on the first panel offered variations on a theme.

For Pacific Gas and Electric, “integration means selecting that set of resources” that provides the least-cost solution to reduce GHGs while also maintaining system reliability, said Antonio Alvarez, renewable integration manager for the utility.

The California Public Utilities Commission believes that DER can help the state meet its carbon reduction goals while providing “safe reliable service at just and reasonable rates,” said Pete Skala, deputy director of costs, rates and DER.

“The question is, to what extent and where do they provide costs and benefits?” Skala said. The regulators’ goal is developing the “right amount of DER” to allow ratepayers, utilities and DER providers to all see benefits.

Costs and reliability “are definitely major drivers” for the Southern California Public Power Authority (SCPPA), said Ted Beatty, director of resource and program development for the joint planning agency, which represents the Los Angeles Department of Water and Power and 11 smaller municipal utilities.

“We have some small utilities, too, so we kind of have a wide range of needs there,” Beatty said. “But in general, they all have needs to look at planning for DERs.”

Forecasting Challenges

SCPPA’s members meet monthly to discuss issues around forecasting — a process becoming more difficult because of the unpredictability of DER penetration. DERs don’t connect to the grid via the traditional utility planning process.

Members are trying to grasp the technical and financial implications of increased DERs and understand customer trends to gauge the potential distributed solar capacity in their service territories. That effort has been hampered by the fact that some SCPPA members haven’t installed smart meters at customer sites.

“If you don’t have [customer data], you don’t really know what’s going on in your system,” Beatty said. “All you see is the net load that moves up and down, but you don’t know exactly why.”

Alvarez said that his utility’s long-term planning process relies on demand forecasts from the California Energy Commission (CEC), which factors in energy efficiency and distributed generation gains as well as energy consumption.

Recent forecasts put California power consumption growth at less than 1% per year, but that number could turn negative with increased energy efficiency mandates embedded in legislation passed last year (SB 350). That could exacerbate the forecasting complexity brought on by increased DERs.

“This is not new,” Alvarez said. “We’ve seen energy efficiency cutting in half — or more — the growth in demand.”

Next year, the CPUC will require each of California’s load-serving entities to file an integrated resource plan that prioritizes emission reductions alongside other more standard requirements, such as resource diversity, reliability and cost-effectiveness. (See Integrated Resource Planning on the Horizon for California.)

The revised IRP will provide the industry an opportunity to improve forecasting of DER, Alvarez said.

The IRP is an “optimization process” that seeks to determine the least-cost mix of resources to reliably meet California’s goals for energy efficiency, renewable generation and electrification of transportation. “I think at the end of the integrated resources plan, you actually have a demand forecast and a DER forecast,” Alvarez said.

Utilities have to look at more of a range than rely on specific forecasts, added Beatty, who suggested the industry should be employing scenario planning.

“When you’re looking at a forecast, you have to look at the different paths that are out there,” Beatty said. “Today I can’t predict five years ahead how much solar is going to come in [to the system], how much storage is going to be added to the system — or anything, for that matter.”

Skala said that although traditional “utility-scale, one-directional flow” grid planning is adapting to recognize the bidirectional flows stemming from DER, additional changes are still needed.

Utility planners “are a conservative bunch by nature.” When you talk about “safe and reliable service at just and reasonable rates while we achieve the state’s carbon goal, they only hear the word ‘reliable,’” Skala joked.

The variety of distributed resources and energy efficiency efforts adds “thousands of measures to the planning process,” he continued. “It becomes a very messy beast for conservative grid planners to try to figure out and incorporate into their work.”

Adding DER to the Planning Mix

Gardner asked the panelists to pick the most important thing that could be done to better incorporate DERs into the planning process.

“We need to have better models that analyze customer decision-making [and] factor all those together to figure out where the customer is going to go,” responded Beatty. “Once we know that, I think we can kind of follow along with them.”

Solar is the most significant DER for SCPPA utilities, with some members having already reached their net energy metering caps under state rules. Those utilities also control a large amount of utility-scale solar, which undermines the cost-effectiveness of distributed solar that generates during the same intervals.

“It’s a challenging market for these guys, and it’s difficult to figure out where we’re going and which DERs are the customers’ choice,” Beatty said.

“There needs to be a lot more alignment within the state agencies and the California Independent System Operator in terms of all the various planning activities that are ongoing,” Alvarez offered.

Alvarez would like to see the California Air Resources Board, CEC and CPUC coordinate their efforts to produce more reliable demand and DER forecasts, eliminating the agencies’ planning “silos.”

“It would be helpful to get some of those results as an input into the electric IRP process, so we can actually see the interaction between the different sectors of the economy — where you can get the best reductions in emissions,” Alvarez said. “If you’re trying to find what’s the optimal solution for the state and the electric sector, you need to have a common set of metrics.”

Skala concurred with Alvarez’s view on the need to align regulatory proceedings that require utilities to procure separate types of resources — such as energy storage, demand response and energy efficiency — under different state programs.

“The more we can get process alignment in place, the easier it’s going to make on markets,” Skala added.

‘Adolescent’ Grid

The overlapping nature of California’s regulatory proceedings and the complication of integrating DER inspired a humorous analogy from Skala about the “nanny state” approach of setting various resource targets and the rules that apply to them.

“That caused me — in thinking about nannies — to think about the the grid in the child-rearing sense,” said Skala, the father of a 14-year-old daughter.

Historically, the grid — or demand, rather — has been a baby that’s been fed since the first light bulb, Skala said.

“And now we’re squarely in the adolescent period … so it’s a very confusing time, but it’s also a really important time developmentally,” Skala continued. “It’s really important to have clear and simple rules … that are designed to help customers and grid planners and everybody in that relationship make healthy choices.”

That will require sending clear signals to market participants, he added.

“But we also need to figure out what the utility model of the future looks like in that world, because if we don’t — to carry the analogy — we will have an empty-nester syndrome,” Skala said. “We’ve got to work it out in a way that works for the parent too.”