It’s Hard to Quantify the Value of Resilience Accurately, but California is Trying
Creating an electric resilience metric is an important goal for the microgrid industry, and it is part of an effort by the California Public Utilities Commission (CPUC) to speed the deployment of microgrids.
As part of the overall effort — prompted by SB 1339, which requires regulatory changes to support microgrid development — the CPUC Resiliency and Microgrid Working Group (RMWG) is looking into various ways to quantify the value of electric resilience.
Most recently, the working group looked into an electric resilience metric often used by regulators and utilities — the Interruption Cost Estimate (ICE) calculator — and learned that it needs to be updated, especially for outages that last more than 24 hours.
Joe Eto, staff scientist with Lawrence Berkeley National Laboratory, said during a RMWG meeting last week that the calculator is used in rate cases across the country to identify the costs associated with power outages and to put a price on the value of avoiding outages.
The lab is now seeking information to update the ICE calculator with more recent data because the existing data on which the calculations are based is outdated.
How electric resilience is measured now
As it stands now, the ICE calculator puts a price on the cost of outages, based on customer group, time of day and length of outage.
For example, the ICE calculator says that for a 1-hour power outage in the afternoon, the cost for medium and large commercial and industrial customers is $20,360.
Utilities are being asked to help fund additional work on the calculator, which would result in a new metric in two to three years, said Eto. The US Department of Energy, which originally funded the ICE calculator, has said the upgrade to the ICE calculator is not within its budget.
The RMWG workshop, held May 12, is part of the CPUC’s microgrid proceeding, which was initiated in 2018 by SB 1339. The measure directed the CPUC, in consultation with the California Energy Commission and California Independent System Operator, to develop policies related to microgrids. As part of the rulemaking, the CPUC organized the working group, which explores, among other issues, standardized metrics for measuring the value of resiliency and reliability.
Learn more about the economics of resilience and microgrids at Microgrid 2021: The World Awakens to Microgrids. Special sessions are devoted to the costs, savings and earnings of microgrids on May 18 and May 20.
Lawrence Berkeley National Laboratory is planning to develop survey questions about “long duration outages” — those which last for more than 24 hours — and use the answers to update the equations that underlie the ICE calculator, said Eto. The surveys on which the ICE calculator are now based are up to 20 years old, and they aren’t statistically representative of all areas of the US, he added. And they’re not appropriate for estimating the cost of outages that last for more than 24 hours. Once the ICE calculator is updated, it will continue to be a public domain tool.
Right now, the ICE calculator is used around the country, mainly in rate cases, to demonstrate the value of utilities’ proposed distribution investments aimed at improving reliability.
Not only are the surveys underlying the ICE calculator based on old data, they were also conducted when no one worked from home, said Eto. This means they don’t reflect changes in how residents use electricity, including the use of computers and other electronics.
And the ICE calculator is not appropriate for longer outages in part because the calculator doesn’t reflect the costs of business outages that affect the supply chain.
For example, if a product manufacturer loses power and is unable to make shipments to other companies that need that product to create their own products, the other manufacturers also suffer from the outage.
“The supply chain effects are impossible to estimate by only asking one customer,” Eto said.
Image courtesy of Lawrence Berkeley National Laboratory
Hard to quantify societal value of a microgrid
In response to a question from a participant at the RMWG meeting, Eto noted that microgrids offer benefits to the people and companies that are connected to them. “People who benefit from microgrids are those being served by the microgrid,” he said. But focusing solely on those people and companies doesn’t account for the broader benefits to the rest of the grid. “Those are trickier to quantify,” he added.
“To the extent that facilities being supported by a microgrid have broad societal benefits — keeping a police station or hospital energized — that’s a consideration.” This underlines the limitation of metrics like the ICE calculator, according to Eto. “In the rubric of minimizing societal costs, the societal costs are costs that need to be considered when looking at microgrid investments,” he said.
The goal of placing value on resiliency is to minimize the total societal costs of providing reliable power, he said. And distributed energy resources and microgrids can play a role in that effort. Electric distribution systems could be augmented by investments in distributed resources either by customers or by utilities. “It doesn’t matter which side of the meter the investments are on,” said Eto.
Research shows electric reliability degrading
More people are now paying attention to the more frequent and prolonged storms, floods, wildfires and other disasters that are devastating some areas. Lawrence Berkeley National Laboratory looked at utility data over the last 15 years and concluded that reliability has been worsening over time.
“That decrease in reliability is correlated with bigger storms and severe weather, and these events are why we’re seeing more discussion around resilience. Now people want to do something,” Eto said.
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