DG-IV Process and Outcome Overview

Gary Brinkworth August 31, 2015

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“Value of the Grid”

“Value of Solar”

DG – IV (solar focus)

v  To develop a methodology that is applicable to value any DG resource

v  Immediate focus was on small-scale solar (up to 50kW)

v  Develop a methodology with transparency, fairness, adaptability, and versatility

v  Uniquely includes the Value/Cost of the Grid

Distributed Generation Integrated Value (DG-IV) Purpose

Project Goals

Objective •  Develop a distributed generation & system value assessment •  Create a foundation for possible transaction models and programs

Framework •  Leverage the concepts identified in existing “Value of Solar” processes •  Identify the discrete value streams that apply in the Valley •  Create a clear, transparent, and repeatable process •  Ensure stakeholder input and support throughout the process

Applies to solar, but methodological framework will be replicated for other distributed resources

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DG-IV Process

Value of Solar

Cost of Solar

Integration

DG-IV

Distributed Generation –

Integrated Value

TVA Program Design

Delivery Vehicle Methodology, Analytics, & Calculation

Stakeholder Group Input

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DG-IV Process - Success Metrics

Transparency •  Accessibility to the information, data, assumptions, calculations •  Clear and well-defined •  Information provided in a timely manner with sufficient time for engagement

Fairness •  Views all stakeholders on an equal footing •  Compromise in process •  Inventory and consider all variables

Adaptability •  Broadly applicable to multiple forms of distributed resources •  Continuous learning process •  Evolving in a positive way over time

Versatility

•  Continues to work in a changing technology and business environment •  Ensures implementation to a widespread, robust set of markets •  Provides potential for differentiation so it works for a wide array of customers,

locations, and environments

We will develop a quality, actionable process that accomplishes:

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Project Overview •  Process – what did we do?

–  Held six in-person workshops over about 16 months –  Conducted two additional webinars on content related to EPRI’s

work

•  Result – what did we decide? –  General consensus reached on the methodology and calculation for

the DG-IV

•  Outcome – how do we know what we did and what we decided? –  TVA created first draft of DG-IV methodology report

•  Was reviewed by stakeholders and modifications made –  TVA is working to finalize the report for public release.

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Value Stream Components

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DG-IV Categories & Components

Included in DG-IV Methodology

Program Design Considerations

Placeholder Topics

Generation Deferral (Capital & Fixed Operations &

Maintenance)

Local Power Company (LPC) Costs & Benefits System Integration/ Ancillary Services

Avoided Energy (Fuel, Variable Operations &

Maintenance, Start-up) Economic Development Additional Environmental Considerations

Environmental (Compliance & Market) Customer Satisfaction Market Price Response

Transmission System Impact Local Differentiation Security Enhancement

Distribution System Impact Disaster Recovery Losses

(Trans. & Distr.) Technology Innovation

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Generation Deferral & Avoided Energy •  Values determined using TVA’s

resource planning tools •  Generation (capacity) deferral

includes capital and fixed cost components

•  Avoided energy includes fuel, variable O&M and start-up costs

•  Analysis approach compares two cases to identify value

–  Base case excluding any solar PV additions

–  Alternative case assumed installation of 2,000 MW of solar PV

–  Cost differences determined on a present value basis for total plan costs

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Environmental Component

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Primarily CO2 compliance (other embedded items – coal ash waste, cooling water, mercury, air effluent guidelines)

The Environmental component was heavily discussed

Renewable Energy Credits (RECs)

Social Cost of Carbon Common Pollutants Water Impacts

Consensus reached on green items (compliance and market values) 10

Transmission & Distribution Impacts •  Transmission: Primary impact is

transmission spending deferral by reducing localized peaks. Varies by location.

•  Distribution: Primary impact is effect of DG on distribution system capacity, voltage, and protection

–  TVA partnering with Electric Power Research Institute (EPRI) to develop a methodology to compute this value

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EPRI Distribution Analysis •  Distribution planning requires a detailed

look at characteristics and behaviors of each feeder

•  To quantify PV as a distribution resource, it must be considered in the same detailed manner.

•  Research provides insights on PV hosting capacity and help understand issues

•  Acknowledges that location matters; and that utilities required to maintain service quality and reliability

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Getting to an Example Value

1.  The example value is intended to be representative not definitive. 2.  Some values required further analysis. 3.  The example value only reflects the DG-IV methodology components. 4.  The example value is presented as both an average and first year

value. 5.  Transmission and distribution losses impact most – but not all –

components of the DG-IV. 6.  The example value (solar specific) is less than the current retail rate

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DG-IV Methodology

DG-­‐IV  Calculation  (G  +  E  +  ENVC  +  T  +  D)  *  (1  +  TL  +  DL)  +  ENVM

Generation Deferral

Avoided Energy Distribution Impacts

Environmental (Compliance)

Transmission Impacts

Transmission & Distribution Losses

Environmental (Market)

Illustrative Only

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•  Developed a robust methodology to calculate the value of DG (<50kW sized systems)

•  Gained a better understanding of :

•  Distribution level challenges •  Environmental concerns

•  Engaged key stakeholders in the process

•  Established that the DG value for solar, which represents the solar-specific avoided cost to TVA, is less than retail

•  Provided common understanding for future programs 15

Key Takeaways

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Next Steps •  Publish the final DG-IV document around the end of September •  Charter new stakeholder group to provide input on demand side

resource strategy •  Emphasis in program design phase will include more engagement

with local power companies

•  TVA Board has approved the 2015 IRP and FY16 budget including budget for renewables –  IRP sets direction for large scale renewables –  Signposts on renewable cost and performance will also be monitored

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