New York Moves from Vision to Devilish Details on REV Pricing, Microgrids

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REV

Flooding from SuperStorm Sandy, a key reason why NY is pursuing REV. Credit: David Shankbone

New York is tackling the devilish details that will determine if Reforming the Energy Vision (REV) lives up to its promise of creating a market platform for microgrids and local energy.

Pricing, of course, is everything in energy markets. To that end, public service commission staff are preparing a proposal about who will pay for what on the distributed system platform, the exchange where demand-side resources will be bought and sold.

The benefit/cost analysis will help the state determine utility rates under REV and any necessary oversight by regulators, according to a solicitation for a consultant issued by the New York State Energy Research and Development Authority (NYSERDA).

The consultant will help state policymakers figure how local energy providers will pay to use the distributed system platform.

The state wants a design that encourages retail electric competition for demand-side products. At the same time, it hopes to establish a fair revenue stream for utilities, which are expected to manage the platform.

A range of players are likely to use the distributed exchange: entrepreneurs, energy service companies, utilities, businesses and consumers. The state is trying to give special attention to those who haven’t traditionally participated in energy markets, such as homeowners, low- and middle- income citizens, renters, small businesses, municipalities, and community groups.

It’s not clear yet what pricing method the distribution platform will use:  subscription fees, transaction fees or some combination of both. The state also needs to figure out how to set fees for dispatch and balancing services, for access to potential customers through an information platform service, and for data and engineering analysis.

Determining platform fees can get complex. NYSERDA says in the solictiation that  ‘two-sided market interdependencies’ could arise that impact pricing. Several questions therefore need to be addressed, according to the authority.

  • Are there products or services (including platform access, dispatch service, or balancing service) that should be priced differently on the generator side of the market than on the consumer side of the market?
  • How does this apply to so-called ‘pro-sumers’ who both generate and consume electricity?
  • Could load management on the demand side be used to address intermittency on the generator side? How should platform fees be priced to enable such solutions?
  • Could the platform pay electric vehicle owners for the ability to control the charging and discharging of their vehicle batteries? The vehicles would provide renewable generators with balancing or load leveling services.

That state hopes to complete the pricing analysis by year’s end. The full solicitation is available here. Bids from consultants are due April 22, 2015.

Microgrid comments due May 1

Separately, the PSC is seeking input by May 1 about the role of microgrids in New York’s new electricity market.

The commission is looking at possible microgrid configurations and their relationship to utilities. It has asked stakeholders to comment on how the state can assure that microgrid customers get reliable service at fair rates.

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After reviewing the comments, commission staff will make a proposal to state regulators on microgrid configurations and oversight.

The commission’s microgrid inquiry is available here.

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Elisa Wood About Elisa Wood

Elisa Wood is the chief editor of MicrogridKnowledge.com. She has been writing about energy for more than two decades for top industry publications. Her work also has been picked up by CNN, the New York Times, Reuters, the Wall Street Journal Online and the Washington Post.

Trackbacks

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  2. […] the Energy Vision is one of the biggest innovations in US energy policy in a long time. Known as REV, it gives local energy a boost through a new market exchange. The REV proposal is getting praise […]

  3. […] at the New York State Smart Grid Consortium, a public-private partnership closely involved with Reforming the Energy Vision, as well as the NY […]

  4. […] on market design and platform. It was put together by about 40 experts as part of the state’s Reforming the Energy Vision (REV). The core team includes staff from the Department of Public Service, the  New York State […]

  5. […] many other market observers and participants, the FTC champions the overall idea of REV and the market forces it could unleash. However, the agency urged the state to rethink some of […]

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