by Jeff St. John
June 19, 2017

For more than a year, California’s big three investor-owned utilities and grid operator CAISO have been holding monthly meetings to talk through the rapid rise of distributed energy at the grid edge.

The discussions haven’t been required by any statute or executive decree. Instead, they’re an attempt by both parties to get ahead of a set of challenges that could become a bottleneck for DER adoption and integration, said Matthew Tisdale, the CEO of More Than Smart, the nonprofit group that sponsored the talks.

Last week, More Than Smart released a report on the yearlong utility-ISO effort, complete with models of short- and long-term scenarios of DER adoption on both sides’ grid operations. It also featured some recommendations for future pilots and policy developments. In simple terms, it describes some fundamental disconnects between CAISO and the state’s big utilities on how today’s DER efforts are being managed -- and some relatively simple first steps to help resolve these disconnects. 

“We were trying to figure out, in terms of some of the DER providers, what their needs were from both systems -- where there are gaps, where there are things they couldn’t see,” Tisdale said in an interview.

What the monthly discussions revealed, first, was that there were stakeholders and industry participants "who’ve been down in their bunkers doing things the same way for years,” unaware of some of the fundamental differences between their version of grid operations and the other side, he said. 

As we’ve covered in depth at GTM Squared, California is breaking new ground in complicated DER integration, whether at the utility or grid operator scale. But some of the most important work underway deals with a relatively simple problem: communication and data sharing.

The lack of visibility and communications across the T-D Interface 

The main point of contact between CAISO and utilities is at the “T-D Interface” -- the set of substations across California where the two systems are linked.

Today, beyond that interconnection point, “the transmission operator has little to no visibility into what’s happening at the distribution level,” said Tisdale. That’s been okay traditionally, because of the relatively tiny penetration of DERs. 

But over the past five years, rooftop solar has started to add enough energy to the grid to make a difference in CAISO operations, he said. The state’s increasing negative energy pricing and curtailments are largely driven by utility-scale solar, but distributed solar is rearing its head. CAISO has an interest in seeing what rooftop solar is doing, beyond recording it simply as a reduction in load, as the operator does today, he said. 

Meanwhile, California also leads the country in energy storage -- some of it being deployed at levels CAISO can see, and some of it serving distribution operator or customer needs that are largely invisible to grid operators. At the same time, the state’s rising number of electric vehicles will soon constitute a resource in their own right, with the potential to either aid or hinder both grid operator and utility goals.  

California has lots of pilot projects going on to integrate DERs into the grid. But they’ve either been done in the context of serving wholesale markets -- such as with the Demand Response Auction Mechanism or CAISO’s new DERP market product -- or in the context of serving utility needs, such as the local capacity resource procurements by SCE and SDG&E. So far, however, none have taken the other’s perspective into account -- and this could create a host of potential problems. 

To illustrate the point, More Than Smart mapped the communications paths between CAISO and utilities using the one DER technology that’s widely in use today, demand response. This rather convoluted diagram draws out all the different communications between participants in a typical DR call using resources located on the distribution grid. 

“We found there were some relatively unique miscommunications,” Tisdale said. While the DER provider and CAISO were in good two-way communications with one another, “First, the ISO never talks to the distribution operator...and second, the DER provider never really talks to the distribution operator,” he said.

In other words, the utilities are out of the loop. 

But what if CAISO is calling up a DER that’s served by part of the distribution grid that’s experiencing a power outage? This might seem the simplest possible problem to predict. But in its analysis of current communications pathways, More Than Smart found that it could be overlooked, and lead to dispatch instructions that can’t be met.

At the same time, utilities may not have advance warning of a CAISO dispatch that could add or subtract unexpected kilowatts of energy from their local grid. In a worst-case scenario, this could lead to an “actual operational impact on the grid,” explained Tisdale.

Closing the gaps between utilities, grid operators and DER providers

The recommended solutions, thankfully, are relatively straightforward. First, utilities should start communicating information on distribution system outages or constraints to both CAISO and DER operators, so they can reconfigure their dispatch call-and-response accordingly.

Second, CAISO should start sharing its day-ahead DER dispatch schedules with the utilities, which could warn of any “infeasibilities in those schedules due to current distribution system conditions,” such as planned outages or local system constraints.

“It was really interesting to see the wholesale operator learning about how the distribution operator deals with situations like these,” Tisdale noted. “There’s a lot more reconfiguration of the distribution system going on than they were aware of.” 

Third, the report suggests that the companies actually aggregating and controlling the DERs -- the DERPs, in California’s unfortunate parlance -- be brought into the loop by reporting to CAISO “any distribution system constraints on DER performance that could limit the DER’s availability or cause the DER to deviate from an ISO schedule or dispatch.”

The logic here is that a DERP may have assets across many parts of the distribution grid, each of which may or may not be subject to outage or constraint -- knowledge the utility may not have at firsthand to report during an emergency. 

To help smooth this data-sharing process, the report suggests that utilities create pro-forma integration agreements for the growing number of companies wanting to bid aggregated DERs into the state’s wholesale markets. “In my experience working with these kinds of transactions on the regulatory side, you use pro forma [agreements] to lower transaction costs for the seller,” Tisdale noted. “This is a relatively small but growing market of energy services providers. They won’t want to send a group of lawyers to negotiate every time they want to add 500 kilowatts to a DERP.” 

To sum up, here’s a list of all the different types of information that each party might ideally have access to, and whether or not they’ve got it today, according to the report’s timeframe.

This is a complicated nest of new communications to manage, but it doesn’t really require any new technology. It’s more a matter of CAISO and utilities defining their terms and sharing their data. Today’s relatively small number of DERs serving wholesale markets means that, at least in the short term, it can probably be handled manually, the report notes. 

But in the longer term, it’s likely to require more automated processes, perhaps tied to CAISO’s real-time dispatches. This is a topic the report doesn’t get into, beyond saying that utilities and CAISO could take it up. “We’ve barely scratched the surface on that,” Tisdale said.

But it could certainly involve the integrated capacity analysis maps and locational net benefits analysis data that utilities are being asked to provide as part of the state’s push to calculate the costs and benefits of DERs as part of distribution grid investments. 

Solving these problems is also critical to the idea of “multi-use” applications, or sharing one set of DERs for both CAISO and utility values. “One of the things that’s really coming up in the multi-use applications is uncertainty of curtailment, of not being able to deliver what they promised to the market provider. It’s a financial risk to them. We’re trying to limit the amount of uncertainty there," he said.

There are some things that can’t be solved simply by sharing data. The report found that there’s a need for more short-term operational forecasting at the level of the T-D interface, primarily to give CAISO some insight into utility-controlled DER aggregation at that point of connection. “They’re impacting the load that needs to be served, with very little predictability,” Tisdale said. “We want to crack that open and improve our short-term forecasting.” 

At the same time, “We’re all very fond of technological solutions, and indeed when we get 10 percent of peak load served by distributed batteries,” or some such hypothetical DER-rich future, “we’re going to need them. But in the meantime, there’s no substitute for people talking to one another and understanding one another.”

As for where the discussion goes next, “Whether or not it gets more formalized, I’d leave that up to the ISO and utilities to determine.” 

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