Value of DER as NWA

Several states are pursuing formal approaches to valuating distributed energy resources (DER). This valuation of NWAs is in the utility planning stage, the same concept that is the starting point for all such initiatives. NWA analysis includes identifying all value that can be derived from DER, including:

• Energy cost savings
• Emissions reduction and other environmental benefits
• Local customer-level reliability/resiliency
• Avoided T&D capital and operating costs

Avoided T&D costs are the “Value to the Grid” and a focus of much attention.

DERs are connected to distribution feeders (substation secondary-side and lower) but contribute to constraints/violations in either T, D, or both sides of the grid.

DER Valuation Methodologies

DER valuation is based on three principles:

• Efficiency: Where DERs can provide a value to the distribution grid, they should be compensated for doing so. For example:
• Deferring large investments to accommodate for changes in load or to increase renewables hosting, or to improve local reliability
• Accuracy: DER should be compensated for services they provide to the T&D grid, including:
• Addressing different characteristics/capabilities of different DER technologies
• Addressing differences in locational and temporal value of DER
• Equity and fairness: Limit impact to non-participating customers and avoid over-compensation and distorted market signals:
• Avoid double-counting when some sources of DER value are compensated elsewhere
• Non-participating customers should not be harmed in terms of cost or grid performance

There are three ways DER can provide value to the grid:

• Real Power: Providing locational load (capacity) relief by reducing net consumption during peak
• Reactive Power: Providing voltage (volt-var) support to maintain voltages within limits
• Reliability/Reserve: Providing standby capacity that can be used during emergencies or to backup variable DER

Quanta Technology has a process to incorporate DER into the NWA valuation framework through the following steps (these can be customized to meet a utility’s needs):

• Step 1: Develop forecast scenarios for future planning period. Evaluate T&D system to identify binding constraints that would normally result in capacity projects.
• Step 2: Evaluate the “best” traditional grid investment alternatives to address each binding constraint
• Step 3: Calculate the “Allocated Cost of Capacity” (ACC) for each alternative per the magnitude of the constraint violation (real power, reactive power) on an hourly basis. The ACC must reflect deferral periods, benefit calculation periods, and avoided costs.
• Step 4: For each constraint, use the ACC as a penalty for violating the constraint and solve for Locational Marginal Value (LMV). These LMV are the value of generic DER at each node reflecting each DER’s value against the constraints and the ACC
• Step 5: Calculate least-cost generic DER as well as DER portfolio dispatch via an optimal power flow (OPF), using calculated LMVs, specifics of DER technologies, and feeder and DER capacity constraints.
• Step 6: Perform cost-benefit analysis and risk assessment for traditional solutions vs. DER as NWA

NWA Selection Methodology

There is a spectrum of approaches that can be taken depending on whether a more generalized or more granular approach is required. This is depicted in the figure. Quanta Technology can work to help assess the best approach for a utility.

Storage capability is also a consideration in an NWA analysis. Please see xxx.xxx.xxx for more information on storage considerations in the NWA analysis.

NWA Selection Toolset

• Through the collaborative efforts of Quanta Technology, Commonwealth Edison (ComEd), and others – in response to Illinois ICC inquiries regarding value of DER to the grid – a methodology was developed to help determine that the DER value is efficient, accurate, and fair.
• A software tool, DERVT, has been developed to assist in the valuation process. Features of the tool include:
• All modules and modeling components are transparent and allow evaluation of different concepts and approaches. This provides a unique capability to carefully investigate certain aspects of the methodology and understanding of the problem and the solution.
• Several features of the tool incorporate automation, flexibility, and computational efficiency.
• DEVRT can be seamlessly incorporated into a utility’s planning process and to serve as an additional analytical utility-planning tool.