California is getting serious about distributed energy resources (DER), which include small utility-scale solar, bioenergy and wind generation, energy storage, energy efficiency, demand response and combined heat and power facilities.
By definition, distributed energy resources interconnect to the distribution grid, which means they are located closer to load than are conventional resources. This makes for a more efficient and more stable grid, among many other benefits.
Governor Brown made big news in his January State of the State address within renewable energy and climate change circles by coming out strongly in favor of a 50 percent renewable energy requirement by 2030, up from the current mandate of 33 percent by 2020. He also highlighted the need to focus more on DER. With the governor’s support for the 50 percent target, it is likely that we’ll see this become a legal mandate before too long.
The legislature is already doing its part on DER, however. AB 327, passed in 2013, requires, among other things, that the state’s private utilities complete distribution resource plans by mid-2015, which will recalibrate how utilities plan for and interconnect DER.
I wrote in a recent column about the details of these new requirements, and I suggested that policymakers should elaborate on the vision of dramatically streamlined interconnection processes that the California Public Utilities Commission (CPUC) outlined in its initial implementation of AB 327. In this piece, I’m going to outline some ideas about what this could mean, focusing on actions that the CPUC could implement in the next couple of years.
A new “click-and-claim” option for online interconnection maps
California’s utilities have had online interconnection maps for many new years now, stemming in part from the advocacy efforts of my client, the Clean Coalition, at the CPUC. These online maps provide some information for developers about the potential for interconnecting distributed renewable generation of 20 megawatts and below, but the information is far from definitive, not always accurate and always subject to change. These maps could and should be improved. They should be the focal point of the new distribution resource plan process because they can readily disseminate all pertinent information to developers, policymakers and the public.
In particular, these maps should be modified to provide “click-and-claim” options for developers wishing to claim available megawatts of various types of DER. Under a new click-and-claim option, developers would browse the online maps for pop-up bubbles that show available interconnection capacity of each type of resource. Bubbles should pop up when the cursor moves over a circuit or line section (the grid unit below circuits) and also be searchable by area, megawatts available, size of line, etc.
Each utility will need to complete pre-studies of their distribution grids in order to provide this capability. Each bubble will show the available interconnection capacity given the current configuration of the grid and the existing interconnection queue. By clicking on a bubble, the developer will claim the available megawatts and should be required to pay a certain fee per watt in order to make the claim stick. For example, the current ReMAT (SB 32) procurement process requires $2/kilowatt, and this seems to be a reasonable fee for the new process.
In order to avoid queue-hogging, the claimant will need to meet various milestones. For example, the claimant should be required to show land ownership or a lease option for the property at issue within a certain timeframe of claiming the online megawatts. If the claimant doesn’t meet a milestone, it loses its claim and the available megawatts go back into the pool for some other claimant to click and claim.
A preapproval process will be necessary for developers to obtain eligibility. Once eligibility is obtained, the developer can use the online maps and claim as many megawatts as is allowed. Some kind of developer concentration limit should be imposed, as is often already the case for DER programs. This ensures some diversity among developers, and also ensures that a handful of the biggest and most deep-pocketed developers don’t get all the available megawatts as they become available.
Pre-studies should be updated each month, which will also update the online maps and the available capacity for each type of DER. This new process will take some work to implement, and it would make sense to start with one type of DER in order to roll it out. Since the online maps are already geared solely to generation, it would be best to start the click-and-claim optionality with renewable generation as the test case.
Combining interconnection and procurement in the click-and-claim process
Going one step further, California could and should be appropriately ambitious and combine interconnection authority and procurement contracts in this click-and-claim process. That is, by clicking and claiming any available megawatts, claimants should be able to obtain both interconnection approval (based on the pre-studies) and a pre-approved power sales contract (PPA) at the avoided cost or some other appropriate rate.
The CPUC’s distribution resources plan (DRP) process (R.14-08-013) is already studying the locational values of DER -- the grid support benefits provided by particular types of distributed energy resources in particular locations -- so it would make sense to plug these values into the click-and-claim maps as an appropriate contract value for the DER at issue, above and beyond the value of the generation alone (if the DER includes generation). A major advantage of DER is that they provide many additional distribution grid benefits. These benefits are being quantified now by the CPUC’s partners in the DRP proceeding, and the policy framework is already in place to use these valuations as part of a new procurement process.
The optionality I’ve outlined here would put California squarely at the forefront of interconnection and procurement streamlining in the U.S. and probably around the world. It would reduce the current interconnection process for DER, which takes from nine months at best (under fast track, for projects 3 megawatts and below) and up to three years or more for non-fast track eligible projects, down to literally the click of a mouse. This would be made possible due to the distribution grid pre-studies.
The process will not be entirely automated because the pre-studies will involve utility engineers in a manner similar to the current interconnection study process. This should ameliorate utility concerns about too much automation.
There is a relevant precedent for what I’m advocating here: the California Independent System Operator’s (CAISO) Distributed Generation Deliverability (DGD) process. Deliverability is another type of interconnection authority that allows developers to earn more for the power generated because CAISO is ensuring that that power can be delivered anywhere that it is needed on the grid, and this additional capability is valuable to utilities.
The DGD process provides free (there is no charge to developers) deliverability benefits to eligible applicants, while also dramatically streamlining the normal deliverability assignment process by reducing it from over two years to just a few months. The DGD process also involves pre-studies of the entire grid, done on an annual basis, in this case by CAISO working with the utilities. There is no online click-and-claim process for DGD but this is primarily an IT and ease-of-use addition to the pre-study idea pioneered by the CAISO and California utilities.
In closing, if California is to achieve the vision of the governor, legislature and the CPUC, we’ll need to innovate in many ways. The click-and-claim optionality I’ve outlined here for DER could and should be a part of that innovative spirit that California has long pioneered.
Tam Hunt is a lawyer and owner of Community Renewable Solutions LLC, a renewable energy project development and policy advocacy firm based in Santa Barbara, California and Hilo, Hawaii.