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Essential Energy Insights - October 2021


Industry sees utilities, distributed energy resource providers combine efforts

The overridingtheme at the Smart Electric Power Alliance's annual conference in Washington, D.C.,was for utilities and distributed energy resource providers to work together formutual benefit toward grid modernization.

"Thekey thing is to find ways to share value for everyone to benefit," said EnergyHubCEO Seth Frader-Thompson, who spoke July 12 at the National Town Meeting on DemandResponse and Smart Grid on his view that consumer-installed distributed energy resourceshelp utilities and their customers reap benefits by providing critical grid services.

Innovativeutilities are working with third-party vendors to incorporate consumer-installeddistributed energy resources into load management programs, Frader-Thompson said.

He posedas an example that utilities could lease a Tesla Powerwall battery storage unit,which sells for $6,501, to customers for $1.25 per day in return for a customeragreement to allow the device to be used as a demand response resource.

However,Frader-Thompson displayed a spark of friction utilities and third-party providershave traditionally had with one another when he said the grid revolution is happeningwith or without the utilities, and he pointed to Nevada's 95% drop in distributedsolar sales to show "a test case of how things must change."

Utilityexecutives at the conference indicated their companies are embracing change. Senior VicePresident of Customer Operations Val Jensen said ComEd enables third parties todevelop new products and services. The Chicago-based Exelon Corp. subsidiary collaborates with developers to bringvalue to utility customers, he said.

SeniorVice President of Regulatory Affairs Caroline Choi said the utility grid is thebackbone for distributed energy resources provided to customers. DER planning isbeing incorporated into the EdisonInternational utility's regulatory regime, Choi said. Increasingly,DER is used to keep outages to a minimum across the utility's 4,600 distributioncircuits, she continued.

Chief Strategy and Operations Officer Paul Lau, who is responsible for the city-ownedutility's power supply operations, said central utility stations will become dinosaursin the future. Yet, utility distribution systems, which are the biggest part ofthe utility industry's future, are currently "the dumbest part of the grid."

"Thechallenge is how to bring visibility to the distribution system" so DER canbe used holistically to its fullest potential, Lau said. When utilities can aggregateand manage load at the distribution level they will be able to optimize customerinvestment in DER, he said.

CEO John Hewa said the Texas co-op is a distribution-only utility with a large,sparsely populated service area. Distributed generation is an important asset asis technology that remotely reports localized system and line conditions. As a consumer-ownedutility, customer-owned resources are a good fit, Hewa said.

FormerColorado Public Utilities Commission Chair Ron Binz, who now is a regulatory consultant,said he advocates motivating utilities to embrace DER through price cap regulationwith financial incentives and a return bonus on DER investments.

HawaiiPublic Utility Commissioner Mike Champley, whom Gov. David Ige has over objections of the state's Senatepresident, said DER should provide grid solutions including service quality andsecurity. However, he said the primary source of change has to be with the incumbentutility. Regulators can only do so much, he said.

The distributionsystem is the "last frontier" for wringing out inefficiency in the electricindustry, Champley said. As Hawaii continues to increase distributed solar penetration,energy storage will be imperative, he said.

Microgridswill be the building blocks for transformation to a distributed resources grid,Champley said. With microgrids there will be trials and advances in distributedresources without negatively impacting the larger grid. A gradual interconnectionof these building blocks will occur until the larger grid becomes a system of interconnecteddistributed energy resources, he predicted.