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Four Energy Regulatory Trends to Drive Grid Improvements in 2023

March 16, 2023

This year’s top energy regulatory trends will include an emphasis on improving grid flexibility, reliability and resiliency to better handle extreme weather and demand peaks. Stakeholders want to maintain access to affordable, reliable electricity as the industry transitions to intermittent renewable resources and adapts to evolving consumption and demand patterns that strain the grid.

“Energy systems and the electricity grid are undergoing unprecedented change on a scope, scale, and speed that challenges the ability to foresee—and design for—their future states,” North American Electric Reliability Corp. (NERC) researchers wrote in NERC’s 2022 Long-Term Reliability Assessment.

“The energy and capacity risks identified in this assessment underscore the need for reliability to be a top priority for the resource and system planning community of stakeholders. Planning and operating the grid must increasingly account for different characteristics and performance in electricity resources as the energy transition continues,” according to NERC.

NERC’s recommendations to industry and policymakers for addressing the reliability risks described in its assessment include:

    • Incorporating extreme weather scenarios in resource and system planning
    • Increasing focus on distributed energy resources (DERs) as they are deployed at increasingly impactful levels
    • Considering electrification’s impact on future electricity demand and infrastructure

Like NERC, regulators ranging from the local to federal levels have recognized the need to prioritize grid improvements and have responded accordingly. The following efforts will be among the top energy regulatory trends in 2023.


1. Leveraging Demand Response Aggregators in Traditionally Regulated States

About a decade ago, regulators in several traditionally regulated states restricted DR aggregators from representing customers’ demand response resources in wholesale electricity markets for a variety of reasons. Several states are reevaluating the restriction and considering how to leverage DR aggregator participation consistent with state regulatory policies and practices.

The restriction has served to limit participation of highly flexible demand resources due to constraints on regulated utilities’ ability to offer custom arrangements. Among the reasons regulators are revisiting the restrictions is a desire to increase DR participation to reduce costs, improve reliability and leverage flexible demand resources as a tool to help reduce carbon emissions.

Other drivers include rising costs of capacity to meet resource adequacy needs, and concerns about capacity shortfalls during extreme conditions or emergencies. In addition, the concerns about incompatibility with traditional regulatory models that prompted adoption of the restrictions have proven unfounded in several traditionally regulated states that allow DR aggregators.

In recent examples of states removing restrictions, Minnesota and Michigan have recently adopted proposals to permit DR aggregators to work with utilities to offer customers more options. Missouri is also reviewing its policies toward DR aggregators, and other states can be expected to follow suit.


2. Acknowledging the Importance of Capacity/Availability

Within the last couple of years, several reliability events have demonstrated the need for capacity markets to keep the lights on during grid emergencies. Sky-high energy prices were not enough to curb demand.

Most recently, energy prices shot up during Winter Storm Elliott in late December as generation resources failed amidst surging demand, prompting PJM and ISO-NE to dispatch DR to get customers to curtail their loads and avoid grid failures during the holiday period. Winter Storm Uri in 2021 similarly strained the grid in Texas to being within minutes of going into rolling blackouts that would have kept the state in blackouts for weeks. Unprecedented DR participation helped prevent a catastrophe then as the load shed reached 20,000 MW during the event and lasted for 70 hours.

In both events, grid operators turned to DR when high energy prices alone were not enough to avoid emergencies. Even when energy prices reach multiple thousands of dollars, as they did during Winter Storm Uri, customers may not reduce loads because they do not see the prices.

Indeed, researchers for NERA Economic Consulting have found that merely hoping that energy prices alone will incentivize market users to curtail demand during peaks is not good enough, and that successful recruitment of demand-side resources for help is “substantially enhanced by the presence of availability payments.”

In analyzing participation rates for more than 900 demand-side programs, researchers concluded that there is a continued need for availability payments. Demand-side resources represent a potential source of cost-saving and reliability enhancement for any electric system and programs that make availability payments have “much higher participation rates” than dynamic pricing programs that depend on consumers to base their consumption on market prices, researchers noted.

However, low capacity prices can reduce participation rates, and, therefore, harm energy users and grid operators. In addition to reducing availability, if capacity prices are too low for too long, energy prices can rise, and investors may not build more capacity resources (including DR, generation and energy efficiency).

CPower experts expect stakeholders to look for ways to eliminate pricing and regulatory impediments to DR participation this year because increasing DR participation would improve grid flexibility and help create the Customer-Powered Grid™ that would enable a flexible, clean and dependable energy future.


3. Increasing Non-wires Alternatives for Grid Relief

Utilities, regulators, municipal cooperatives and public power utilities are seeking non-wires alternatives (NWAs) to expand their distribution networks because NWAs can reduce costs, decrease the reliance on traditional infrastructure investment and address the dual challenges of vehicle electrification and renewable resources. NWAs can also help the environment by using clean energy and can provide flexibility and resilience by deploying DERs locally.

In leveraging the flexibility of DERs, NWAs allow utilities to alleviate grid stress at peak times without building distribution wires. The benefits of this more cost-effective approach will multiply as utilities meet the surging demand brought about by the rapidly rising usage of electric vehicles.

NWAs also provide utilities with increased visibility into the presence and usage of behind-the-meter DERs. Furthermore, customers can help bring down energy costs and improve reliability and the environment in the communities where they work and live. Customers get the benefit of tapping additional revenue streams for their resources as well.

More states are likely to pursue the implementation of NWAs this year to help utilities achieve cost savings and improve reliability at low cost.


4. Accessing Federal Funding Programs for Utilities

Utilities may be able to implement NWAs with federal assistance. The U.S. Department of Energy’s Grid Deployment Office is administering a $10.5 billion Grid Resilience and Innovation Partnerships (GRIP) Program to “enhance grid flexibility and improve the resilience of the power system against growing threats of extreme weather and climate change,” as part of the Bipartisan Infrastructure Law.

“These programs will accelerate the deployment of transformative projects that will help to ensure the reliability of the power sector’s infrastructure, so all American communities have access to affordable, reliable, clean electricity anytime, anywhere,” according to the Grid Deployment Office.

There are three programs in all.

    • Grid Resilience Utility and Industry Grants ($2.5 billion) support grid modernization efforts to reduce impacts due to extreme weather and natural disasters.
    • Smart Grid Grants ($3 billion) focus on projects that increase the flexibility, efficiency, and reliability of the grid.
    • Grid Innovation Program ($5 billion) funding prioritizes projects that enhance grid resilience and reliability through innovative approaches to transmission, storage and distribution infrastructure.

The application process for the first round of funding for the GRIP Program, which totals $3.8 billion for federal fiscal years 2022 and 2023, is underway now.

Whether it’s at the federal, state or local level, stakeholders want to improve grid flexibility, reliability and resiliency. Therefore, preparing the grid to better handle extreme weather and demand peaks will be among this year’s top energy regulatory trends.

Subscribe to The Current to stay ahead of the energy curve. Or contact us to learn more about how CPower can help you stay atop energy regulatory trends.

Kenneth Schisler

Ken leads CPower’s regulatory and government affairs team, having previously served in similar roles at both Vicinity Energy and EnerNOC/Enel. He brings nearly three decades of policy leadership on innovation in clean and advanced energy technologies and collaborates with public officials, regulators, power exchange and system operators, academia and industry peers to unleash the potential of demand-side resources.

Three Reasons Why Your DER Strategy Isn’t Working

February 16, 2023

The next phase of a reliable and clean energy mix will center on deploying more distributed energy resources (DERs) and using them efficiently.

DERs have become increasingly prevalent, largely due to available market revenue streams, opportunities for demand charge mitigation, falling hardware prices for storage and renewable generation and deployment incentives like those in the Inflation Reduction Act. However, up until now, DERs have been mostly used through strategies centered solely on either tariff-based cost avoidance or confined to limited grid services program participation.

DER project owners and operators that only focus on cost avoidance or just participate in capacity programs, which require load reduction commitments ahead of time, often leave value on the table. To unlock the full value of DERs, owners and operators must balance priorities and make decisions based on changes in conditions like asset availability and market prices for energy resources. Only then will DERs fully contribute to a Customer-Powered Grid™ that enables a flexible, clean and dependable energy future.


Common Hurdles to Maximizing DER Value 

Maximizing DER value requires a comprehensive strategy. If you do not earn as much grid services revenue as possible and achieve the on-bill savings that you could, your DER strategy may not be working for one or more of the following reasons.


1. The strategy doesn’t consider all DERs.

DERs are any asset that consumes, generates or stores electricity. Or, to put it more simply: If it can reduce demand “behind the meter,” it can be considered and included in your DER strategy. These can be generation assets like generators, solar, co-gens and storage, but can also include energy curtailment and even energy efficiency.

The supply of flexible DERs, including load curtailment, onsite storage, electric vehicle (EV) fleets and other resources, is set for massive growth because the grid needs more flexibility to avoid failures caused by an aging infrastructure and the rising penetration of intermittent, renewable generation.

DERs that can be enrolled in demand response (DR) programs with short lead times, called on frequently, and be highly automated are particularly valuable. DR is the largest DER available in the market, and you don’t need anything other than the flexibility to curtail load to benefit from it.

As the need for flexibility increases even further, and existing and new DERs are incentivized to participate, including all your DERs in your strategy will become ever more important. Accounting for all your DERs is crucial because the more flexibility they collectively provide, the more valuable they are to the grid.


2. Underlying goals and the programs that will help achieve them haven’t been identified.

Unlocking latent DER value often begins with determining your goals. For example:

    • Are you pursuing all available financial benefits? Such as on-bill savings, grid service revenues and incentives? Optimizing returns requires considering all simultaneously.
    • How important is resiliency? Do you want to avoid business interruptions and associated revenue losses? Do you need back-up power? And, if so, what’s your non-emergency strategy for these assets? You may be able to earn revenue by supplying flexible capacity to the grid or to save money by using on-site generation and/or storage assets to reduce demand.
    • How can your DERs support your organizational objectives for sustainability? Customers and partners increasingly want to do business with organizations that share their concerns about helping the environment. You may also have to comply with regulations like limits on carbon emissions.

The best strategy for your facility will accomplish all your goals within a comprehensive framework of programs.


3. There is not an efficient plan for implementing DERs.

Unlocking the maximum earning potential of a suite of energy assets in complex markets requires creativity, focus and sophistication. Multiple DER projects, implementers and consultants can result in conflicting strategies.

Unfortunately, however, when it comes to problems that owners and operators face in optimizing their DERs, most solutions fall short in one or more areas. They:

    • Solve for grid services or on-bill savings – but not both.
    • Support only one type of DER asset – not multiple.
    • Depend on manual workflows and processes – instead of automation.

If a solution doesn’t solve for both grid services and on-bill savings, support multiple types of DERs and also automate workflows and processes, then your DER strategy doesn’t work. Therefore, you do not maximize the return on investment (ROI) in your DERs.


A Single Solution for DER Optimization

However, optimizing your DERs does not have to be complex. CPower’s EnerWise® Site Optimization solution can help you fully unlock the combined value of grid-services revenue and on-bill savings – in a single solution.

In automatically identifying and executing the most lucrative energy management strategies across on-bill savings and grid services programs and the different types of DERs, EnerWise addresses all the challenges around the optimization of DERs. A virtual energy manager, it maximizes the financial return, resiliency and sustainability benefits of energy storage, onsite and renewable generation and other DERs.

For example, in terms of financial benefits, EnerWise can help you:

    • Easily estimate and deliver the value from DER projects.
    • Justify DER investments and generate forecasted revenue and projected savings.
    • Shorten your DER project’s ROI horizon and maximize the financial return.

It also offers resiliency benefits such as:

    • Avoiding business interruptions by ensuring that back-up power is available.
    • Optimizing DERs’ usage according to resource and regulatory constraints.
    • Leveraging automated scheduling technology to manage your resources 24 hours a day.

And, when it comes to sustainability, EnerWise can:

    • Support organizational sustainability goals.
    • Redirect carbon-free power to help grid operators reduce reliance on fossil fuel resources.
    • Enable the transition to a cleaner and more reliable grid.

EnerWise has been named a finalist in the prestigious 2023 Edison Awards due to the energy optimization technology’s ability to help DER owners and operators get the most out of their assets. It is being honored in the Innovative Solutions and Services category for simplifying the approach to participation in multiple energy-market and utility programs.

Through its dynamic hourly scheduling customized for each site, EnerWise ensures each DER is allocated to the most lucrative available programs on an hourly basis, with one site averaging a 54% increase in grid revenues. It has expanded to 40 new sites across PJM and recently launched in ISO-New England.

EnerWise has drawn strong interest from DER owners and operators across crypto mining, government, education, manufacturing, retail and other commercial sectors who want to gain access to new value streams from their DERs.

If you would like to learn more about EnerWise or other ways to optimize your energy assets, call us at 844-276-9371 or visit CPowerEnergy.com/contact to find out how we can help you create and implement a DER strategy that works.

CPower Ready To Help School Districts Unlock Full Value of Electric School Buses Through Federal Rebate Program

February 06, 2023


Photo Credit: Lion Electric

School districts have three months to buy almost $1 billion of clean school buses and infrastructure with federal rebates. Districts will then turn their attention to receiving their electric or alternatively-fueled buses and installing infrastructure — and CPower can help. 

CPower helps districts with electric buses reduce their electrification costs, increase their communities’ resiliency and green the grid, through partnerships with EV fleet owners, charging operators and schools across the country.  

The U.S. Environmental Protection Agency’s $5 billion Clean School Bus Program, a five-year program, is accelerating the greening of fleets through electrification. In its first round of funding, the EPA awarded a total of $948.8 million in 2022 Clean School Bus rebates to 403 applicants in October.  

Selectees have until April 28 to submit payment request forms for eligible zero-emission and low-emission buses and infrastructure to the EPA. The EPA expects the 2022 rebate program to fund approximately 2,500 school bus replacements. Funds come from one of two separate pools, one for Zero-Emission (ZE) Buses and one for Clean School Buses, which can include alternatively-fueled buses in addition to electric buses. 

Transitioning to electric school buses helps communities and the environment in many ways, including improving children’s health and reducing air and noise pollution, according to the Environment America Research & Policy Center. Electric school buses equipped with vehicle-to-grid (V2G) technology that enables them to deliver power to buildings and back to the grid provide additional benefits as well. 

 

 

The Environment America Research & Policy Center notes: 

    • School buses are the largest form of public transportation in the U.S., with 480,000 nationwide and 95% are powered by diesel. Fewer than 1% are powered by electricity.  
    • Replacing every school bus with a V2G-capable electric bus of the same type would:

        • Avoid 8 million metric tons of greenhouse emissions per year. 
        • Create 61.5 GWh of extra stored energy capacity – enough to power more than 200,000 average American homes for a week.  
    • Electric school buses could also provide backup power during emergencies, like in remote areas that need electricity during outages or for essential facilities anywhere. For example, the energy stored in a single Type D electric bus could power the equivalent of five operating rooms for more than eight hours, and a single operating room for 43 hours, according to the Environment America Research & Policy Center. 

Though the V2G technology that the Environment America Research & Policy Center advocates for is still in its infancy, researchers note, removing adoption barriers through means such as policy changes and program funding could facilitate the transition to electric school buses by making investments in buses and infrastructure financially feasible for districts. The EPA’s Clean School Bus Program is a step forward in that regard, helping to roll out thousands of cleaner, quieter electric school buses in districts nationwide. 

Districts have also pushed ahead independently. For example, CPower is turning the country’s largest electric school bus fleet into grid-ready resources by partnering with Highland Electric Fleets and Maryland’s Montgomery County Public Schools (MCPS).  

MCPS notes the partnership will deliver cleaner, healthier transportation for students and communities while supporting grid reliability through demand response solutions.  Together, the partners will use MCPS’s fleet of EV school buses (EVSBs) to provide grid services and increase reliability for PJM, the largest grid operator in the U.S.  

Because school buses run on a consistent daily schedule, electric buses such as those that Highland provides to MCPS are ideal resources to provide grid resiliency services. CPower will ensure that buses are fully charged and ready to run while also allowing Highland to reduce electrical loads when needed, thereby helping to keep the grid in balance. 

CPower similarly helps grid operators balance energy demand and supply through a partnership with bp pulse for fleets (formerly AMPLY), which provides fully managed charging services to public sector and commercial businesses with EV fleets. The partnership also drives new revenue opportunities for fleets while offering transmission and distribution grids the flexibility to integrate V2G-ready EV chargers as distributed energy resources (DERs). The Logan Bus Company, the largest school bus provider for the New York City Department of Education, is the first project to leverage this partnership. 

As the national leader for grid balancing and reliability solutions, CPower is helping to create a Customer-Powered Grid™ that will enable a flexible, clean and dependable energy future. Helping school districts transition to electric school buses helps bring that future to fruition.  

 For more information on how we can help your school district unlock the value of your EV school bus fleet to drive energy flexibility, grid reliability and revenue opportunities, call us at 844-276-9371 or visit CPowerEnergy.com/contact to find out. 

 

Brad Widdup
Brad is Director, Distributed Generation at CPower. His 25 years in the energy industry include serving as regional vice president for Oracle’s Utilities Global Business Unit. 

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