The city of Washington has become the latest flashpoint in the debate over whether having utilities as microgrid owners is okay from a legal and competitive perspective. The debate is occurring before the District of Columbia Public Service Commission, as it considers microgrid policy within its larger grid modernization plan (FC 1130). Two industry giants squared off on the issue in recent comments filed before the commission. Exelon, one of biggest utilities in the United States, pushed for a utility role, while NRG Energy, the nation’s largest independent power producer, urged the commission to ban utilities from owning and building microgrids and other forms of distributed energy.

Similar debates are brewing in other restructured states. So, what the district decides is important because it could influence thinking elsewhere. The debate also is important because the commission plans to distribute more than $21 million for grid modernization test programs. Competitive utility affiliates are likely to vie for the money. A commission staff report suggests the money go to not only microgrids, but also advanced control systems, combined heat and power, demand management, electric vehicles, energy storage, fuel cells, solar, smart inverters, voltage regulation and district heating and cooling.

Exelon has argued in other jurisdictions that it makes sense for utilities to develop and own microgrids when they serve a larger public purpose. For example, the public purpose microgrid might help boost economic development in a blighted area. In the D.C. proceeding, however, Exelon instead focuses on the ability of competitive utility affiliates – not regulated utilities — to compete to provide microgrids.

Arguments favoring utilities as microgrid owners

Exelon describes two of its competitive affiliates that are positioned to build microgrids. One is Exelon Microgrid, which is developing 10 to 200 MW microgrids in New York. The other is ExGen/Constellation, which serves about 225,000 commercial and industrial customers in D.C., New York, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, Ohio, Pennsylvania and Texas, as well as more than 2.5 million residential customers. ExGen/Constellation wants to partner with its customers to install microgrids and other distributed energy resources with the money the commission plans to allot for demonstration projects.“This will not be possible if the commission were to adopt the recommendation to exclude affiliates from participating,” Exelon wrote in comments to the commission.

The debate over banning utility affiliates revolves around the idea that the utility will use its market clout to favor its affiliates in competitive situations. But Exelon argues that legal separations exist to put a wall between utilities and their affiliates. These walls have held during the common practice of utilities bidding for power for their standard offer service (SOS), including in the district, the company said. “There is no restriction on utility affiliates bidding in the SOS procurement. This is because the program was designed with certain features to promote transparency and to ensure that all bidders are treated fairly and equally,” Exelon said. Concerns about competitive preference are even less justified when it comes to distributing the grid modernization funds because it will be the commission – not utility – choosing award winners, said Exelon, whose affiliate Pepco serves district customers.

Exelon also argued that blocking utility affiliates from the program will likely lower the number of pilot project proposed, which undermines “the entire purpose of the program—to identify the best technologies for modernizing our energy delivery system and make the system more reliable, efficient, cost-effective and interactive.”

Arguments against utilities as microgrid owners

Meanwhile, NRG sided with staff, saying that utility ownership of microgrids and distributed energy should be “extremely limited.”

NRG argued against utilities owning microgrids for three reasons.

First, competitive companies are “uniquely positioned” to develop microgrids because they are often highly customized to satisfy the needs of individual electricity customers. Given the high degree of customization and differentiation among customers, “this is not the place for the monopoly utility,” NRG said. “Utility service is intended to be broadly available and non-discriminatory, and utility cost-recovery is designed to spread costs among customers.”

Second, NRG said it will be hard for regulators to ensure that utilities do not leverage their local name recognition and resources funded by regulated rates to gain market advantage.

And third, as microgrids and distributed energy become more common, the distributed grid will become more complex. Utilities will need to focus their resources on managing the new reality, NRG said.

“As DERs grow, utility sales on a volumetric and peak demand basis will naturally be reduced as consumers use on-site energy sources or simply become more efficient, and as consumers manage their peak demands to lower their costs and improve the utilization of the grid,” NRG said. “As this occurs, it will become more and more difficult for the utilities to maintain revenue sufficiency without increasing rates.”

The next step in the grid modernization proceeding is the filing of reply comments, which are due May 10.  Commission staff will review the comments and provide updated recommendations to the commission at a date yet to be determined.

MISSION

July 15, 2015 By Karl Njalsson

We are excited to announce that we are working on a product aimed at monitoring the solar generation from small rooftop micro-power plants and small solar businesses. These installations are usually too small to be observed under the same radar as those used for big grid-scale PV installations. Yet these small capacity additions at multitude of geographical locations add up quite a lot to the distribution system of modern day and the importance to quantify their production is vital to ensure a reliable, cost effective distribution grid operation. Our aim with this planned product is two-fold: first measure the pulse of rooftop solar PV growth in India (a country fast growing in it’s solar capacity addition) and second, provide installers and owners of rooftop PV plants an opportunity to better understand their power plant.

India’s recently announced an ambitious target to install 100 GW of solar power capacity by 2022. What would be the impact of reaching that goal?

The Economic Side

The solar sector has a potential to generate up to 1 million full-time jobs if the target 100 GW of grid-connected PV capacity by 2022 is reached. A joint study published by US-based Natural Resources Defense Council and India’s Council on Energy Environment and Water estimates that as much as 30% of these jobs would be long-term engagements. This in itself is a strong reason for establishing regulatory push and financing mechanisms for reaching this target.

In terms of financing of these projects, the ambitious Indian federal government eyes at a whooping $100 billion investment in this sector during the near seven year timeframe 2015-2022. A bulk of this is expected to come through foreign investments especially from China, Japan, Germany and the US while it also boosts indigenous manufacturing of the components in solar sector.

The reliance on import of fossil fuels is expected to reduce, helping boost the Indian foreign currency reserves on the side.

Energy Security

With 100 GW of solar capacity installed and considering that India receives ample sunlight about 300 days a year, around 9% of India’s electricity requirement could be met by solar alone (compared to current 0.5%). This would be a big factor in fighting the energy deficit in India, which is a result of electricity demand growth outpacing the growth in generation.

The broader benefit of solar energy would be towards the energy security and universal energy access for the people of India. Off-grid solar plants will be a huge relief to nearly 300 million Indians who currently rely on an instable grid connection.

Furthermore, decentralized generation through rooftops and small-scale solar parks would go a long way in reducing the burden on the already creaky electricity grid infrastructure. The current official figure of losses in the supply lines in most Indian states is in the range of 25-30%, almost all of it in the distribution leg of the network. Distributed generation through roof-top solar would save crores of rupees every month simply through part-offset of these losses.

The Climate Side

In the fight against global warming, this is good news. Of course the installation of solar panels does not reduce CO2 emissions per se, the coal power plants already installed will continue to run. The improvement however is evident when the increasing need for electricity is taken into account and thus the future coal power plants that will not need to be built.

The units created within the 100 GW target would cause emissions 125 mega tons CO2 extra per year if those units were created with coal plants. That is huge. It equals the whole CO2 emissions of Belgium, or almost 20% of the emissions from all the world’s aviation.

Sheer Size

As has been shown the impact of those 100 GW installed will be considerable. Before concluding let us consider, how does a 100 GW power plant look like? If the whole target, 100 GW was set up as one solar photovoltaic plant. How large would it be?

One would need to cover 1000 km2 with solar panels interestingly that is an area only a little bit bigger than Bangalore (754 km2).

Since we are playing with numbers, why not aim a little higher? How large area of would need to be covered to supply energy to whole of India?

In fact the numbers are quite surprising. The total electricity consumption of India could be met with a solar plant of the size of 5900 km2.

That area can be seen as small patch in the map of below: