We’re sorry if you missed our California’s Distributed Energy Future 2017 conference last week in San Francisco -- but we don’t want you to miss out on the insights.
In two days of workshops and sessions, Greentech Media and our guests hashed out a path through the jungle of distributed energy resource (DER) policy and economics in the state that’s likely going to set the national standard on the subject. The panels featured top California DER decision makers, including CPUC President Michael Picker, Commissioner Martha Guzman Aceves and former Commissioner Mike Florio; executives with Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric; and representatives of DER companies including Nest, SolarCity, BMW, eMotorWerks, Sunverge, Enphase, Bloom Energy, Green Charge Networks and Siemens Digital Grid.
This group yielded six-plus hours of conversation on topics ranging from underlying policy and economic issues -- why do we want DERs anyway, and how do we decide which ones are better than the others? -- to technology-specific dives on energy storage, smart inverters and distributed energy resource management systems (DERMS). It also had its share of news, from state grid operator CAISO’s update on applicants for its DERs-as-grid market players opportunity, to new solar-storage tariffs being proposed as part of California’s move to time-of-use rates.
Our live stream archive from Thursday’s CDEF 2017 event is a great resource to fill in this broad sketch. To make it easier for you, we’ve chosen some highlights, along with embedded clips. And for those who were there, let us know what we’ve missed in this overview.
GTM keynote: California on the national stage
• Shayle Kann, Senior Vice President, GTM Research
Shayle Kann’s keynote includes some choice GTM Research data on the subject of DERs, making it worth watching from the start. If you want the abridged text-based version, read Eric Wesoff's coverage.
One key observation is that the basic trends of decentralization, decarbonization and transportation electrification -- California’s main drivers for supporting DERs in the first place -- aren’t necessarily fated to work together for the good of the whole. “These three trends can benefit each other. They can also act to hinder each other, if not considered deliberately in light of all the other ones.”
Kann also pointed out that, despite the adversarial tone of some coverage on the subject, utilities aren’t the enemy. Not only are they the overseers of the massive infrastructure upon which DERs reside, they are big investors in the industry.
“Utilities have invested at least $2.9 billion in distributed energy companies since 2010, and that [estimate] is almost certainly too low -- that’s just the investments for which we know the dollar amount,” he said. And that’s a fast-growing number -- “over a billion [dollars] of that came in 2016 alone.”
One data point surprised even Kann. With 13 percent of the country’s population, California has 49 percent of its distributed solar (1.3 million customers), 47 percent of its EVs (570,000), and 49 percent of its behind-the-meter battery storage systems (1,900).
“All of you in this room know that California is a leader in distributed energy. What I didn’t realize is how consistently California is a leader across all of these technologies.”
Kann is a great fan of the CPUC’s Distributed Energy Resources Action Plan, published last summer, for its usefulness in simplifying the state’s DER policies. For example, it divides issues into three main buckets -- rates and tariffs; wholesale DER market integration and interconnection; and distribution grid infrastructure planning, interconnection and procurement -- to help separate TOU from DRP from DRAM, for instance.
Speaking of acronyms, Kann pointed out that the DERAP contains a 73-acronym appendix, indicating how complex are the issues it’s trying to network -- and inspiring him to read aloud the winner of a contest amongst GTM Research analysts to write a sentence containing as many of these acronyms as possible.
Fireside chat: The state of the California energy transformation
- Michael Picker, President, California Public Utilities Commission
Moderator: Shayle Kann, Senior Vice President, GTM Research
Michael Picker has helped set the CPUC’s DER agenda since he took over as commission president in 2014. He’s also got a wild-west theme that won’t quit. Here are some highlights from his fireside chat with GTM’s Shayle Kann.
Picker says that California has “solved” for the challenge of cost-effective solar. “We’ve become post-renewable. Now the challenge we face is really greenhouse gas emissions.” And on this front, California faces a problem -- only 20 percent of its carbon load is from the electricity industry. Another 30 percent is from the use of natural gas in heating and other uses, and 40 percent is from transportation.
Community choice aggregation is becoming a huge new category of energy entity in California. From a few original outposts in the counties of Marin, Lancaster and Sonoma, CCAs are now growing across the state. Now Los Angeles region community organizers are trying to get six cities worth 6 gigawatt-hours of annual energy spend to join, which Picker noted will drastically expand the share of the state outside of utility control.
“At the end of this year, if all the communities in Los Angeles choose to join the community aggregator down there…40 percent of all electric customer load will be served by all these non-utility, non-regulated entities. That means that the traditional utility industry is disaggregating.”
Picker made waves earlier this month when he said on GTM's Interchange podcast that he’d like to bring the idea of retail energy choice back to California policy discussions -- something that’s been a bit of a third rail since the 2001 Enron energy crisis.
Only 14 states have retail choice today, a number that hasn’t changed in a decade, Kann noted. What might California’s look like? Picker won’t say: “I think it’s too early for me to speculate. I think I’m too naive.” But on May 19 in Sacramento, the CEC, CAISO and CPUC will be meeting to talk about it -- and Picker has plenty to say about the questions and compromises that will be involved.
What about his view of the Trump administration? Picker said he’s mainly concerned about health care and immigration policy, but that he’s not clear on Trump’s impact on FERC: “It’s a band of marauding economists who sit there in D.C., and they have their unique perspective on everything.”
However, he went on to say, “I think they’ve been fairly successful in accommodating a lot of changes in markets -- and given the nature of economists working together with lawyers, I don’t expect big changes.” But he’s worried about the flow of information. “It’s hard to have a clear sense of what’s going on.”
Keynote panel: Distributed energy resources as grid assets
- Will Greene, Product Manager, Energy Services, Nest Labs
- Ryan Hanley, Vice President, Grid Solutions, SolarCity
Lorenzo Kristov, Principal, Market & Infrastructure Policy, California Independent System Operator (CAISO)
The panel starts with Nest and SolarCity, two big contenders in California’s DER landscape, describing their approach to working with utilities and regulators on making a distributed energy-friendly grid. Largely speaking, DER grid values are being created through the CPUC’s distribution resources plan (DRP) and integrated distributed energy resources (IDER) proceedings, but current challenges like the Aliso Canyon closure are creating immediate opportunities.
What’s up with DERPs? This unfortunate acronym describes CAISO’s innovative effort to open grid markets to DERs, and CAISO market guru Lorenzo Kristov described the latest action on this nationally important project.
”We have five entities that have signed up as DER providers, and are, I would imagine, in the active process of developing the assets they plan to bring to the market,” he said. But they’re only in the first stages of actually bidding resources into grid markets, and ”we have continuing stakeholder initiatives to refine the rules.”
Beyond grid markets, CAISO and CPUC need to share a lot more information, he said -- “In the old days, the only thing...that was responsive was DR. With the proliferation of DER types, now the types of resources that can participate are becoming a lot more diverse.” Here’s his in-depth description of the three challenges ahead in managing them.
As for the opportunity for DERs to fill in different sets of value for the grid, SolarCity’s Hanley said: “I think it’s potentially massive.” That can be measured both in incremental revenue to existing projects and expanding the range of cost-competitive projects to come. “There are all the projects that don’t happen because there’s not enough revenue. If you're able either to access the wholesale markets, or provide distribution capacity or transmission capacity in a bilateral [way] with a utility, that can make the difference.”
Nest Labs’ Will Greene sees “almost unlimited potential” from the role of large numbers. While individual homes may or may not respond as their Nest thermostat dictates, “when you start dealing with the larger numbers, you have this wonderful thing where everything becomes much more predictive.” Here’s his explanation of this core concept as it applies to Nest.
In a final note of caution, CAISO’s Kristov warns against trying to stack too many revenue streams. “That could be a nightmare in a sense. The more you stack revenue streams, you have to define them, the more you have to define performance requirements, you have to measure them -- this whole area of multiple-use applications is a hugely complex area. And I think it would be worthwhile to search for simpler ways to do that. What are the most essential values?”
Otherwise, there is “a huge requirement of communications and measurement, infrastructure and so on, and endless arguments about double payment.”
The role of rate design in a distributed energy market
- Sonia Aggarwal, Director of Strategy, Energy Innovation
- Jamie Fine, Director, Energy Research & Senior Economist, Environmental Defense Fund
- Sean Gallagher, Vice President of State Affairs, SEIA
Moderator: Jeff St. John, Senior Editor, Greentech Media
This conversation covered the fundamentals of California’s latest rate-design issues as they pertain to DERs, including the emergence of time-of-use rates for the masses and the need to create specialty tariffs to prime the pump.
In this extended dialogue, Sean Gallagher of SEIA and Jamie Fine of EDF compare different ideas for tariffs to encourage solar, batteries, demand response and other DERs. SEIA's preference would be a short but high-differential peak time rate, as high as 50 cents per kilowatt-hour -- but those rates would be set by the utility and customer.
The SDG&E experimental vehicle-grid integration pilot rate supported by EDF is a day-ahead hourly dynamic rate, with hour-by-hour prices given to customers a day in advance, but updatable in real time. “I agree that the concern is that this is maybe too risky for many customers. I note that there’s also an attractive, profitable opportunity for customers who want to take on that risk.” But then, it’s just one of many potential rates -- and new sources of value, like the location net benefit analysis, could add to it.
Managing and optimizing DERs: Distribution system technology and solutions
- Mark Esguerra, Director of Integrated Grid Planning, Pacific Gas & Electric Company
- Dr. Mike Fife, Chief Technology Officer, Demand Energy
- Sonja Glavaski, Program Director, ARPA-E, U.S. Department of Energy
- Sonita Lontoh, Vice President of Strategic Markets, Siemens, Digital Grid
- Moderator: Steve Propper, Director, Grid Edge, GTM Research
The subject of this panel is the distribution grid itself, and the technology that goes into making it DER-ready. The first 20 minutes or so are devoted to exploring the various approaches from the utility down and DER integrator up, from core interconnection improvements to next-generation “transactive energy” platforms.
ARPA-E's role is to support technology breakthroughs on this front, but also to help it find its place in the market, program director Sonja Glavaski said. Right now, while she’s seeing lots of effort on DER-grid integration, “to the best of our knowledge, there is a significant lack of tools that industry could use both for planning and for operations. If you want to do rigorous analysis both for return on investment, for hosting capacity, there are no software packages that you can go and buy to do this. Some large OEMs have internal proprietary tools that they use -- but if smaller companies want to provide, for example, installation of DERs, they cannot make the case. Nor can people like utilities do that to make a wise investment.”
PG&E’s Mark Esguerra described the utility’s DER pilots to date, and where they’re yet to go. The first steps are toward behind-the-meter load modifying resources that can back up distribution grids. “We recently deployed a storage unit that’s helping to defer a transformer bank.”
“The next level of complexity we’re starting to get into is behind-the-meter resources -- not centralized, but aggregated. One pilot with multiple vendors in the San Jose area is testing smart inverters, batteries and a DERMS platform, but it’s still in the early stages," he said.
Underscoring the early stages of this field, Demand Energy CTO Mark Fife said that, as a startup -- albeit one recently acquired by Italy's ENEL -- “Almost everything we do is a pilot." Each new project requires a unique set of approaches to a unique set of circumstances.
“We’ve only just now really started to deploy a production block, with software that’s fully developed and can manage demand charges, supply charges, all time-of-use based, provide backup power, reserve energy for backup power, interface with other equipment and curtail of necessary -- all that stuff.”
Siemens is involved with DERs around the world. Sonita Lontoh with Siemens Digital Grid described two that are worth checking out. The first is with Arizona Public Service, with its DistribuTech-award-winning project to monitor and control about 1,600 solar rooftops with utility-owned and controlled smart inverters -- and in the future, energy storage and grid controls. The second is with RWE in Germany for a large-scale virtual power plant development, perhaps to build on the two companies’ existing VPP. “It’s still kind of in the works, but we’ve made the announcement," said Lontoh.
Glavaski closed out the discussion on DER-grid integration pilots by mentioning ARPA-E’s work with Green Mountain Power (and Tesla) and Stanford University. But she added, “We need to look to large-scale deployments. [...] The devil’s in the details, and pilots don’t always scale up.”
Community choice aggregation
- Joe Galliani, Acting Chair, South Bay Clean Power Advisory Committee
- Beckie Menten, Director of Customer Programs, MCE Clean Energy
- Barry Vesser, Deputy Director, Center for Climate Protection
- Moderator: Julia Pyper, Senior Editor, Greentech Media
We’ve already covered CPUC President Picker’s view of CCAs as a critical new player in the state’s energy future. This discussion included three CCA proponents going into deep detail on how they’ve done it, why it’s worth it, and how DERs fit into their plans.
Joe Galliani of the South Bay Clean Power Advisory Committee described how a CCA grows from community organizing to action. Los Angeles has 82 cities eligible for CCAs, the largest being Long Beach with 3.3 gigawatt-hours, he said.
Over the past year or so, his group has collected a half-dozen that “combined have about 6.4 gigawatt-hours of power. We think that’s more than enough for a CCA.” He also diverged into an acronym soup of CCA organizing, and the challenges of competing with a rival proposal from Los Angeles County.
Beckie Menten of Marin Clean Energy, the first operational CCA, noted that DERs are a tricky investment for an entity that doesn’t capture distribution grid benefits, as utilities do. But it’s working on EV charging programs, local storage amounting to 3 megawatts, and a longstanding energy-efficiency rebate program. “We’re starting to see some real potential.”
The future of mobility: Electric vehicles as a grid resource
- Adam Langton, Energy Services Manager, BMW
- Val Miftakhov, Founder, eMotorWerks
- Parina Parikh, Clean Transportation Regulatory & Legislative Policy, San Diego Gas & Electric
Moderator: Julian Spector, Staff Writer, Greentech Media
EVs are going to be a huge grid drain -- or a huge grid support -- if California ends up hitting its goals of electrifying the transportation sector. The state’s big IOUs have just embarked on their first big EV charging pilots, and Adam Langton of BMW described how its work with PG&E is informing this rollout.
This first pilot, focused on curtailing charging load during one-hour events, started in mid-2015. Since then, it has conducted 209 demand response events -- and “for folks familiar with demand response, that’s a lot of events to do over an 18-month period.”
To make sure this frequency of turning off chargers doesn’t sour EV owners on the experience, “The driver needs to always have control over their charging. We prioritize mobility over any grid service.”
The next interesting phase in development is using EVs as sinks for excessive green energy: “We want to explore is the idea of starting and stopping charging to align with renewable energy.”
The future EV landscape will have a lot of passenger cars parked in garages or workplace parking lots -- but that’s not the only kind of EV that utilities are interested in, SDG&E’s Parina Parikh pointed out.
SDG&E now has seven proposals out there, across different classes of EVs. “One of the proposals focuses on commercial fleet delivery vehicles, and we’ve designed a grid-integrated fleet for the commercial sector that takes advantage of the renewable energy in the middle of the day, and takes advantage of lower prices at the middle of the night.”
“We have medium and heavy duty we’re trying to explore in terms of pilot programs. There’s also a lot of research being done looking at taxis and ride-share drivers and the amount of driving they do,” she said.
Smart inverters and interconnection standards: Optimizing the DER/grid interface
- Clinton Davis, Senior Vice President of Product & Programs, Sunverge Energy, Inc.
- Jeffrey Kwan, Utilities Engineer, California Public Utilities Commission
- Jaspreet Singh, Senior Product Manager, Enphase Energy
Moderator: MJ Shiao, Director, Solar Research, GTM Research
After years of effort, California is becoming the hot spot for smart inverters. Starting this year, all solar systems in the state will have to come with a key set of defined advanced capabilities. Because the work being done on Rule 21 interconnection for these will be aligning with IEEE standards on the subject, the path that California ultimately opts for is of great importance. That led to a fairly technical discussion for this panel, broken down into the state’s parlance for technology stages, Phases 1, 2 and 3.
Jaspreet Singh of Enphase Energy gets into the nitty gritty of Phase 1 functions for inverters. Sometime in September, UL certification will be required for all new inverters, the first stage of compliance, he said. Enphase has done work with PG&E, as well as in Hawaii with HECO, to check the effects of these implementations on real-world grid environments. Since they’re largely automated, it’s important to know what will be happening beyond the utility’s direct control.
Phase 2 deals with communications, and as Sunverge SVP Clinton Davis said, it’s an exciting expansion of what smart inverters can do. “One of the goals is just to provide the visibility and control into the utility networks in a similar way that they’re managing their systems now,” which means building to what utilities are using now. “If you bring up something new, it’s going to cause a lot of heartbreak.”
Even the switch from DNP-3 to IEC 61850 can cause issues, he said -- and those are global standards for SCADA systems.
Phase 3 is the place where DERs become dispatchable. As Jeffrey Kwan, CPUC utilities engineer, said, “I think it’s just really a great benefit for the grid.” The timeline to get there, however, is still several years away. While Phase 1 is already in the Rule 21 tariff, and Phase 2 is coming soon, IOUs are starting to deliver tariff revisions incorporating Phase 3 functions.
Financing California's distributed energy future
- Andrew Beebe, Managing Director, Obvious Ventures
- Geoffrey Eisenberg, Principal, Ecosystem Integrity Fund
- Emily Kirsch, Co-Founder & CEO, Powerhouse
- Scott Zimmermann, Associate, Energy & Infrastructure, Wilson Sonsini Goodrich & Rosati
Moderator: Eric Wesoff, Editor-at-Large, Greentech Media
Start from the top and watch all the way through to hear moderator Eric Wesoff tear into the panelists about about bad VC investments in cleantech -- Aquion Energy and Sungevity being the latest -- or tune in for the panelists, who’ve got a different story to tell.
Andrew Beebe, a successful solar entrepreneur who’s now managing director of Obvious Ventures, has done yoga with Eric Wesoff -- not a relaxing experience, he joked.
More seriously, he pointed out the many successes -- Tesla, Nest, First Solar, SunPower -- and added that the lost money at least hasn’t been “redundant” investments. He plugged Obvious Ventures’ investments in Mosaic Solar, Enbala, and sees “a real renaissance in extremely focused, capital-light, usually financially focused businesses” in green energy and sustainability.
Geoff Eisenberg of Ecosystem Integrity Fund described his firm’s view that most of Silicon Valley doesn’t understand sustainability and that “we should not expect, or underwrite to, a multibillion-dollar type of exit” in the space.
Emily Kirsch described her path from Van Jones-inspired community solar advocate to chief of the Oakland’s Powerhouse solar incubator, and how she supports the latest tech trends through startups like Sun Exchange, which is crowdsourcing based on the solar blockchain. “I’ll make a return for the next 10 years, and no one has to do anything.”
Attorney Scott Zimmermann reaffirmed the capital-intensive nature of the industry.
"We saw a lot of investments into this space in the late 2000s and the early part of this decade that were looking for those huge returns. There’s a recognition that that’s not that reasonable for a capital-intensive business.” That’s returned the industry to a more project-finance-focused frame, with “different investors at every stage of the way wiling to put that project finance capital to work” -- and at rates of return in the 10 percent to 15 percent range, far lower than VC valuations, he said.