Distribution Resource Plans are Coming to Nevada. What’s that Mean to Microgrids?

Nevada’s new framework calling for utility distribution resource plans (DRP) could benefit microgrids, but it’s “only a single step in a long journey,” said Ken Horne, director for smart grid in the Emerging Technology and Business Strategy group  of Navigant Consulting.

The Nevada Public Utilities Commission has adopted a framework for implementing SB 146, a utility resource planning bill passed by state lawmakers last year. Under the new framework, the state’s investor-owned utility must look at clean resources such as energy storage, rooftop solar, and electric vehicles in their resource plans.

The goal is for distributed energy resources (DERs) to become a more important part of the grid. Nevada is the fourth state to call for distributed energy resources to be included in resource plans, following California, New York and Hawaii.

The draft order is one of a number of recent Nevada measures expected to give clean energy a boost in the state. Those measures, mostly enacted in 2017, were created in the wake of the state’s 2015 decision that eliminated net metering for rooftop solar and undermined the state’s solar rooftop industry. The measures reinstate net metering for rooftop solar, provide incentives for energy storage purchases by customers, and set energy storage procurement targets, among other efforts.

How microgrids benefit

The Nevada DRP framework is the result of months of discussions among stakeholders. During the process, those who filed comments included Tesla, Vote Solar, NV Energy, the commission staff, and Western Resource Advocates.

The result: NV Energy, the state’s investor-owned utility, must file three-year distribution plans as part of its integrated resource plans. Stakeholders will review the plans and help decide the needs of the grid.

While the commission’s ruling doesn’t specifically mention microgrids, they are expected to benefit (Docket 17-07020).

“From a microgrid perspective, there is clearly a benefit to knowing in advance where the greatest value is for DER services on the grid,” said Horne.

Microgrid interconnection is one of the biggest sources of cost uncertainty and development delays, he added.

Need DER price signals

“The transparent publication of where and when grid services may be valued by the utility and where the integration costs may be the most affordable, enables DER developers (including microgrid system developers) to screen and select sites that align to where the greatest value may lie for the benefit of both utility and developer (as well as their mutual customers).” This will help microgrid development by reducing development risks, Horne said in an email.

However, microgrid developers would benefit more if they had DER grid service price signals, he added. These signals are starting to emerge in the New York State Distribution System Operator System (DSO) construct.

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“Without a way to estimate and forecast the revenue streams that might result from a microgrid deployment in a particular location, developer pro formas will continue to exhibit either significant revenue risk or significant risk discounting of otherwise reasonable revenue estimates absent some measure of price certainty,” he said.

Other challenges are interconnection processing delays and lack of transparency in cost estimates for interconnection facilities. Add to that the fact that value steams that benefit the grid or greater society aren’t monetized, he said.

“So while the Nevada DRP framework is clearly way ahead of many other North American jurisdictions in terms of forward thinking DER and microgrid accommodation and engagement, it is still just a single solid step on a longer journey,” he said.

The draft proposal was approved at a public meeting by the Nevada commission on Sept. 26. A final order is expected soon.

What the order does and doesn’t do

“The thought is they’re going to take a more granular look at load and DER forecasts, feeder by feeder.”

“This regulation won’t decide what utilities will do with DER, but lists all the information and analyses the utilities need to include in their distributed resources plans filed with the commission,” said Robert Johnston, senior staff attorney for Western Resource Advocates.

NV Energy will submit the first of its distributed resource plans to the Nevada Commission in April of 2019 as an amendment to its most recent overall resource plan, he said. The commission will then have 165 days to accept, accept with modifications, or reject the plan. If the plan is approved, the utility under Nevada law will be able to recover all reasonable costs to carry it out from its customers. The utility cannot be questioned after-the-fact as being an imprudent investment.

“The regulation requires the utility to include specified information and analyses in its distributed resources plan, but the specific actions the utility will take to better integrate DER in to the electric grid will only be decided after the commission’s review of their plan,” said Johnston. “The thought is they’re going to take a more granular look at load and DER forecasts, feeder by feeder. Utilities will be looking at the costs and benefits of adding DER at various locations on the grid to identify potential DER solutions to grid needs.”

Four components of framework

Distributed resource plans can propose tariffs, contracts, requests for proposals…

The framework calls for four components, according to a press release from Vote Solar, Western Resource Advocates, and the Interstate Renewable Energy Council. Those four components include first, load and distributed energy resource (DER) forecasting and second, locational a net benefit analysis that aims to identify high- and low-value grid locations for DER solutions.

In addition, utilities must provide grid needs assessments to help prioritize projects that will address grid needs. The fourth component is hosting capacity analysis, which identifies the available capacity for distributed energy at certain points on the distribution network.

Distributed resource plans can propose tariffs, contracts, requests for proposals and other tools to ensure cost-effective measures are deployed, according to the ruling.

The plans can also identify investments needed to cost effectively integrate distributed energy in ways that benefit ratepayers. They also should identify obstacles to deploying distributed resources, including safety standards about tech or operation of the distribution system.

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