Transmission: More than Meets the Eye
True or false: Transmission and transmission planning are only relevant to large, conventional electricity generators, and distributed renewables are only concerned with the distribution system, and never the twain shall meet.
For many decades, this statement was profoundly true. But nowadays, with evolving technologies, improved planning processes and an expanded emphasis on integrated systems, the two previously disparate elements of our energy system are beginning to intersect. Whether helping states meet their renewable portfolio standard obligations or providing tools for grid operators to improve market balance and efficiencies, distributed renewables are increasingly relevant to transmission planning discussions.
Distributed renewables are, after all, distributed. From small-scale systems, like rooftop PV or backyard wind turbines, to community-scale systems or large-scale renewables serving dedicated load centers, distributed renewables come into play across all levels of the distribution and transmission system. Taking into account the unique characteristics, benefits and contributions of distributed renewable energy systems on the entire system can help ensure a more holistic approach to long-term transmission planning. To this end, IREC has been active in many state, regional and federal transmission-related activities, helping inform transmission-related decision making by ensuring accurate assumptions and highlighting the beneficial role distributed renewables can play in the transmission arena.
The U.S. West is currently a hotbed of transmission planning, accompanied by a dizzying array of acronyms, including FERC, CAISO, RETI, WECC, SWAT, TEPPC, EIM and NTA. (Just when you thought you’d gotten them all down!) IREC’s long-standing involvement in the Western Electricity Coordinating Council (WECC) proceedings have helped ensure the inclusion of more accurate cost assumptions for distributed renewables in the modeling process.
As with any modeling process, the cost assumptions have an important bearing on market growth and economic viability assumptions, all of which influence grid-planning efforts. For example, lower PV pricing correlates with increased adoption rates and higher penetration levels that, if taken into account for planning purposes, can help defer or avoid investments in expensive grid infrastructure.
On the flip side, excessively high or outdated cost assumptions tend to dampen the overall value of PV and other flexible technologies, such as energy storage (which can facilitate wider deployment of PV), in larger transmission and grid-planning efforts.
IREC’s involvement in several WECC efforts has led to significant improvements in cost assumptions. In 2012, the capital cost assumptions for PV in WECC modeling efforts were reduced from $6,000/kW-DC to $5,300/kW-DC for residential PV, and from $5,000/kW-DC to $4,500/kW-DC for commercial PV. Two years later, capital cost assumptions were reduced from $4,800/kW-DC to $4,400/kW-DC for residential rooftop PV, and from $4,000/kW-DC to $3,800/kW-DC for commercial rooftop PV. We anticipate that the inclusion of more accurate cost assumptions will yield more meaningful findings for the development of western transmission plans for decades to come.
In addition to wonky WECC efforts, IREC has also been an active participant in one of the hottest conversations ever to occur in the transmission-planning world: Energy Imbalance Markets, or EIMs. Born out of the need to integrate higher penetrations of renewable energy among the 38 balancing authorities in the western United States, the EIM is the handiwork of the Western Interstate Energy Board Public Utility Commissions’ EIM Working Group (of which IREC is a member).
The EIM is designed to benefit the western electricity systems by allowing system operators to maintain a balance between electricity production and demand, especially in smaller balancing authority areas. With an EIM in place, balancing authorities will pool resources to improve operation efficiency over the entire market, moderating the variability of supply and demand. Market entry, market participation, and market exit will be voluntary and relatively simple.
IREC believes the EIM has tremendous potential to create the easiest and fastest method to allow for the movement of power around the Western Interconnection, while also facilitating the integration of increasing amounts of renewables at the lowest possible cost.
To help ensure its effectiveness once implemented, we have worked collaboratively with stakeholders to provide input during the multi-year process, particularly with respect to the EIM’s framework and the transition to the EIM. The EIM is expected to launch in October 2014, with California Independent System Operator (CAISO) and PacifiCorp already signed up to participate. In addition, Nevada Energy is currently seeking permission from the Nevada PUC to join the EIM, and IREC is currently engaging policymakers and utilities in Arizona regarding participation in the EIM. We expect more updates on this front as it continues to heat up during the summer months, so stay tuned.
With the improved economics and significant growth of the renewables market, the separation of transmission planning and distributed renewables is becoming a relic of the past. The next frontier of an electricity system is characterized by more holistic and integrated thinking, planning, and technologies that seek to bridge gaps, yield solutions, improve efficiencies, and reduce costs.
Certainly, there are more details and challenges to work through as these efforts continue, but the important conversations and analyses are underway. And these days, that’s progress.
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