The electricity sector faces game-changing conditions driven by higher expectations from electricity customers, technology advances and new policies seeking to engage customers themselves as participants in the system. A report from the Edison Electric Institute states that distributed resources and microgrids are a potential threat and utilities need to get ahead of this trend at the regulatory level.
What if utilities chose instead to leverage microgrids and a more distributed framework, taking advantage of customer investment and new utility services to make the system better while increasing returns? What if utilities were in fact to lead the transformation ahead by leveraging a microgrid approach to grid modernization?
A utility microgrid approach divides vast territories into a network of manageable customer centric nodes that enable new grid service and customer investment for grid support. Imagine a network of utility and private microgrids defined by the cities, campuses and major developments that utilities serve. This new microgrid approach enables new utility services, leverages private investment, and includes greater collaboration with city governments. Utility microgrids could include each city within the utility territory. This city approach to utility microgrid enables the utility to develop joint smart grid plans with each city, leveraging city resources to reduce ratepayer costs for smart grid (e.g., tree management).
This approach also enables the local governments to specify and invest in targeted smart grid improvements such as undergrounding and lower costs by coordinating these investments with already planned sewer and road construction. Further, imagine utilities serving as the distribution system operator, calling on customer assets to stabilize the grid through price response and grid service.
In this future, utilities encourage investment in price response, grid service, district energy and islanding capability for critical facilities—recognizing that this capability can be utilized for grid service. The value of microgrid architecture extends far beyond catastrophic weather events. This approach leverages distributed energy and demand response when the grid is stressed or power prices are high.
Key benefits to utilities, customers, ratepayers and the bulk grid include
- Increasing smart grid investment through targeted riders that enable new utility service and customer- or city-directed investment.
- Strengthening the current utility business model by sustaining the grid price advantage, introducing new utility services and the resulting economic development from improved service.
- Leveraging local generation for efficiency, price response and grid services.
- Reducing peak demand and wholesale prices by providing price response and market participation.
- Providing ancillary services to the local distribution and transmission system operators.
- Facilitating the inclusion of district and renewable energy systems.
Several utilities have made the case for targeted utility service rate riders that serve as a foundation for a dramatic shift toward a more performance and distributed utility of the future. This precedent provides the foundation for a shift toward utility microgrid services that improve bulk grid performance and utility earnings.
The following are just a few examples of potential for new utility services:
- Targeted investment in the grid by cities requiring higher levels of reliability, especially cities vulnerable to hurricanes, tornadoes and other threats. Illinois has a model rate rider (Local Government Compliance or LGC rider) that enables cities to direct utility grid improvements paid for via a special rate rider
- Utility ownership and investment in thermal distribution
- Utility investment in customer microgrids and a utility master controller technology that leverages customer assets to improve grid power quality and economic efficiency, as has been demonstrated and implemented in Denmark
GBCI is administering a sustainable energy rating system, Performance Excellence in Electricity Renewal or PEER. PEER provides a design framework that utilities can use to build out a performance-based smart grid program and microgrid approach, deciding where investment will be optimal.
This includes, but is not limited to
- Completing a microgrid mapping or division of the operator grid into a network of distinct utility microgrids.
- Applying the PEER performance credits to rate and prioritize the utility microgrids based upon reliability, capacity constraints, utilization factor and other key indicators.
- Selecting one or more utility microgrids to demonstrate the benefits, pilot new riders and make the case for expanding the program systemwide.
- Using the PEER credits and reliability simulator to develop a self-healing and undergrounding conceptual design for the electrical distribution system.
- Using the PEER Energy Efficiency and Environmental guide to optimize the supply and local clean energy power mix. Utilities can deploy PEER to develop long-range city/utility smart grid improvement plans that leverage city resources and private investment.
Additionally, the PEER team at GBCI is rolling out a series of education courses, serving as a training program that can help utilities design, specify and operate customer and utility microgrids. Ultimately, PEER allows utilities to provide dramatic improvements in reliability, resiliency and efficiency while increasing profits.