At this year’s GridFWD conference delegates met for the first time in beautiful Vancouver, British Columbia, home of our Canadian headquarters. Enbala was present in full force, as a sponsor, panelist and moderator. The well-attended event covered a range of pertinent and enlightening topics including grid modernization and decarbonization.
One such discussion, moderated by Graham Horn, Enbala’s VP, Business Development, focused on the path from DER grid presence to VPP flexibility. Graham was joined by Jeremy Twitchell, Energy Research Analyst with Pacific Northwest National Labs (PNNL), J.P. Batmale, Division Administrator at the Oregon PUC, and Smriti Mishra, Strategic Partnership Manager with National Grid.
The Journey has Begun
Central to the conversation was the question of how to build virtual capacity. Jeremy Twitchell (PNNL) made the point that utilities in the Northwest tend to be “energy long and capacity constrained.” They have the resources but are not in a position to dispatch everything at the same time.
DERs are becoming prolific, and PNNL has found that much of that momentum is driven by the customer. Whether it’s solar panels, smart fridges, thermostats or water heaters, customers are investing in DERs. This means their impact on the grid is inevitable.
Unfortunately, DERs are still traveling a bit of a rough road, not yet entirely understood or accepted by every facet of the industry. Twitchell highlighted two of the biggest obstacles: planning and regulation. Current planning methods are rooted in the traditional Integrated Resource Planning (IRP) model primarily concerned with reserve margins—designed to meet needs but tending to result in overbuilt systems. However, he mentioned that Congress has issued directives to find solutions, suggesting that energy has become a quiet nonpartisan issue in a time of political turmoil.
Regarding regulation, Twitchell observed that utilities are still more incentivized to build new peaking plants than to utilize existing resources, due to arduous IRP processes that rely on old cost data or inadequate incentives. This translates to big risks for ratepayers and investors, underscoring the need for better models and more innovative regulatory frameworks, such as performance-based regulation.
As Twitchell said, “It doesn’t require a complete regulatory overhaul -- just a change in thinking.” J.P. Batmale (Oregon PUC) believes it is possible to build a non-carbon-based portfolio, but it will take some thought in terms of the appropriate regulatory framework to accompany it. As he put it, “There’s a maturation process for DERs to become a trusted alternative.”
Part of that process will involve creating a better awareness of system value based on understanding what’s available and where. Batmale spoke about SB978 and how the Oregon PUC is engaging with more stakeholders than ever before.
Smriti Mishra (National Grid) gave some background on the utility’s collaboration with Sunrun, drawing particular attention to how quickly residential markets developed with the acceleration of residential storage. Now the challenge, she noted, becomes figuring out how to capture that value. Mishra offered a few suggestions, including standardized programs, data transparency and exceptional customer service. She said that customers aren’t just pushing for DERs; they want to understand how their devices are being used, which Sunrun devoted a lot of time to figuring out. Clear messaging goes a long way towards promoting participation, she commented.
Around the Bend
Reaching a land rich with virtual power plants (VPPs) certainly comes with its share of roadblocks. After identifying what they were, the discussion turned to moving beyond them. Batmale explained that it’s important not to compartmentalize the process of working with commissions as “us versus them,” but rather to find ways to work together to unlock the value of DERs. “Come and talk to us; otherwise, we’re the intellectual caboose,” he said, adding solutions which include storage providing flexible capacity are garnering particular interest.
On the lab side, PNNL wants vendors, commissions and utilities to engage and leverage the National Labs to get past any remaining implementation issues, saying, “Tell us what you need, and let’s see if we can help.”
So, how does a utility get commission approval? Essentially, it comes down to telling a well-thought-out story. It’s not enough to present an idea with the justification being “just trust us. ”When a utility presents their challenges in an understandable way and shows that they really know their customers, it’s a difficult story to reject. In Twitchell’s words, “Regulators don’t like to just say no, but they do need a reason to say yes.”
The Road Ahead
Ideally, in the long run, VPPs will reach a point where DERs are providing every service possible and are considered a cost-effective, trusted, safe and reliable resource like any other. It’s happening. As Mishra pointed out, National Grid has invested in Enbala, using VPPs to provide ancillary services.
As the panel concluded, Twitchell offered the comparison to the past, when other resources have had to overcome obstacles to be accepted. This is the VPP’s turn. But early resistance doesn’t mean newer ideas won’t break through and reach their potential. Often quite the opposite is true. However, for change to occur, collaboration is necessary at all levels, including engaged vendors, labs which are there to help and regulators who appreciate input on dockets.
Everybody is in this together… and that’s the only way we’ll get there.