Distributed Energy Resources, Non‐ Wires Alternatives, and the Value of The Grid
The concept of deploying Distributed Energy Resources (DER) as Non‐Wires‐Alternatives (NWA) in lieu of traditional investments in Transmission and Distribution apparatus and systems has gained attention and
momentum in recent years with a number of informal and formal state initiatives underway that support the consideration and application of NWA.
A number of frameworks or roadmaps for evaluating Non‐Wires Alternatives to traditional grid investments have been developed and published. They are a step forward in the discussion around what
the energy infrastructure should look like in the future as we shift away from the old model of centralized large‐scale generation, transmission, and distribution.
These frameworks typically identify various “stacked benefits” of the NWA, including energy cost savings, emissions reductions, and intangibles such as customer choice. Advocates of NWA often argue that grid
investments risk becoming “stranded assets” in the near to medium future as energy efficiency programs, renewables, and shifts to distributed resources reduces the need for grid capacity.
Additionally, the different states have required or suggested that utilities formally develop a process for evaluating DER as NWA on the basis of where the DER is located (locational value) and when it provides
services to the grid (temporal) value. This has up till now been a gap in all the frameworks – they basically “stop” at the transmission take out point or the node where Locational Marginal Price in the wholesale
markets is published – they do not evaluate the avoided cost of grid investments from NWA on a locational basis within the distribution system.
The locational and temporal nature of DER valuation has been analyzed at length and a theoretical basis for computing the locational value of DER, the Locational Marginal Value (LMV) of delivery of kW and
kVAR on an hourly basis is presented and illustrated on a summary basis in this paper.