Ronald L. Schoff Senior Program Manager,

Technology Innovation

EIA Energy Conference 2015 June 15, 2015

Value of the Integrated Grid

Utility Integrated Distributed Resource Deployment

2

Electric Power Research Institute Our Mission…

Safe

Advancing safe, reliable, affordable and environmentally responsible electricity for society through global collaboration,

thought leadership and science & technology innovation

3

The Traditional Electric Power System

Central Generation

Predictable Consumption

Power Flow

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Consumer Options are Driving Change…

Advanced Technology (Inverters, control systems, active distribution component, etc.)

Distributed Generation (Inverters, control systems, active distribution component, etc.)

Demand Response

Energy Efficiency

Behavioral Initiatives (Time of Use rates, etc.)

Energy Storage

Graphics Courtesy SCE

Need to Improve Understanding of Customer Expectations & Decisions

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Outlook of Residential and Commercial PV

Factoids1

Residential system prices fell 7%, from $4.91/W (1Q13) to $4.56/W (1Q14)

Non-residential system prices fell 5.7% year-over-year, from $3.95/W to $3.72/W

Supply Chain, Overhead and Margins – largest cost category (40%)

Other significant include the PV module (20% of total pricing) and direct installation labor (13%) of total pricing).

Trends Residential PV installations exceeded non-residential More than 1/3 of residential PV installations came on-line without any state incentive School, government, and nonprofit PV installations increasing Future price decline will depend on addressing soft costs

2009

$8.00

2014

$4.56

Residential PV System Price PV Module Price Trend

1SEIA/GTM Research 1Q2014 PV

43% decline in 5 years $6.00

$5.00

$4.00

$3.00

$2.00

$1.00

$0.00 1990 1995 2000 2005 2010 2015

PV Module Price per Watt

Key contributor to price reduction

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Value of the Grid to DER

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14

12

10

8

6

4

2

0

0 2 4 6 8 10 12 14 16 18 20 22 24 Hour

PV Output

Residential Load

Power (kW)

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Lithium Ion Technology Outlook

$180-$225

$100-$120

$1000-$1200

$500-$600

$400-$500

$200-$250

Projected Cost (in $/kWh) 2015 2020

$800-$1000

$400-$500

Costs can differ significantly at the cell, battery pack, and complete system levels

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Energy Storage Applications

Energy storage has potential applications across the entire electricity enterprise value chain

Transmission Operator Distribution

Operator

Load Serving Entity Industrial

Customer

Commercial Customer

Multi-Dwelling Unit

Residential Customer

Microgrid/Sustainable Communities

Other Substations

Substation Energy Storage

Distributed Resources

Large-Scale Renewables Substation Microgrid Residential

Commercial & Industrial

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0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Controlled Water Heater (kWh) Uncontrolled Water Heater (kWh)

Smart Appliance as a Grid Resource Water Heater – Passive Energy Storage

Average energy draw profile of an electric water heater Intelligent set point control, charging and discharging decoupled Intelligent set point control to provide grid benefits

Hours

kW

Smart appliances will make it easier to engage

customers in demand response programs…

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The Power System – Looking Forward

Consumers Become Energy Producers

T & D Becomes More Controllable and Resilient

Generation Becomes More Flexible

Loads Become More Interactive and Dynamic

Power Flow

A More Dynamic End-to-End Power System

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Insights From a Real Power System

40

35

30

25

20

15

10

5

0

Hourly PV+Wind Generation (GW)

2011 2013 2012

Insights from a Dynamic System

Maximum Hourly Ramp ~10GW

Maximum Hourly Down Ramp ~7GW

~36 GW

~0GW

When the Scale of Balancing Becomes Unpredictable and Dynamic

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Insights From a Real Power System When the T&D System Becomes Increasingly Dynamic

PV Generation Germany [MW]

200

150

100

50

0

-50

-100

-150 25,000 0 5,000 10,000 15,000 20,000

Trend

MW

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Vision of the Future...

Grid Modernization

Communication & Standards

Integrated Planning & Ops

Informed Policy & Regulation

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Integrated Approach to Deploying Distributed Energy Resources (DER)

The integrated approach allows

Local Energy Optimization to become part of Global Energy

Optimization

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The Board of Directors of the National Association of Regulatory Utility Commissioners recognized the contributions of EPRI’s “Integrated Grid” for evaluating the value of energy resources and grid

connectivity, and commended EPRI for its beneficial analytical framework and communications outreach to stakeholders.

EPRI’s Integrated Grid Concept

Extensive Electricity Sector Stakeholders in All Phases

Phase 1 Integrated Grid

(IG) Paper FEB 2014

Phase 2 Benefit/Cost Assessment

FEB 2015

Phase 3 Integrated Grid

(IG) Pilots NOW

http://integratedgrid.epri.com

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Steps to Apply Benefit-Cost Framework

Formulate Question

Define Scenarios and Assumptions

Evaluate Scenarios Using Benefit-Cost

Framework

Compare Scenarios and Identify “Best”

Option

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EPRI’s Integrated Grid Benefit-Cost Framework

Hosting Capacity Energy

Thermal Capacity

Distribution System

Bulk System

Customer or Owner Cost/

Benefits

Societal Costs/Benefits

Benefit/Cost

1 4

5

3

2

6

Core Assumptions

Adoption/ Deployment

Scenarios

Market Conditions

Resource Adequacy

Flexibility

Operational Practices & Simulation

Transmission Performance

Transmission Expansion

System Net Costs

System Benefits

Reliability

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Distribution Impact – The Basics

Understanding the Costs and Benefits of Increasing Grid Penetrations of Photovoltaics, EPRI, Palo Alto, CA: 2014. 3002003270

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Distribution Framework Flowchart

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EPRI’s Integrated Approach to Distribution Assessment

! Hosting Capacity Analysis –  Voltage –  Protection

! Thermal Capacity Analysis –  Deferral of system upgrades –  Loss of life

! Energy Analysis –  Distribution losses

! Primary and secondary ! Load and no-load losses

–  Energy consumption

! Reliability Analysis

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Results from Hosting Capacity Analysis How much PV can a feeder hold before needing upgrades?

Protection Protection & Voltage

Protection

All penetrations in this region are acceptable, regardless of location

Some penetrations in this region are

acceptable, site specific

No penetrations in this region are acceptable, regardless of location

Feed

er E

valu

atio

n C

riter

ia

Voltage Voltage

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Assessing DER Across Entire Distribution System

* Streamlined Methods for Determining Feeder Hosting Capacity for PV, EPRI, Palo Alto, CA: 2014. 3002003278

EPRI Approach ! Uses current utility planning tools

and data (In beta-testing with CYME and SynerGEE)

! Evaluates each feeder individually ! Can be applied throughout entire

system (1000’s of feeders) in automated fashion

! Feeder-level results that are aggregated up to substation level for bulk system analysis

! Captures impact and value efficiently w/o sacrificing accuracy

System-Wide Assessment Capturing Feeder-Specific Results

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EPRI’s Integrated Grid Benefit-Cost Framework

Hosting Capacity Energy

Thermal Capacity

Distribution System

Bulk System

Customer or Owner Cost/

Benefits

Societal Costs/Benefits

Benefit/Cost

1 4

5

3

2

6

Core Assumptions

Adoption/ Deployment

Scenarios

Market Conditions

Resource Adequacy

Flexibility

Operational Practices & Simulation

Transmission Performance

Transmission Expansion

System Net Costs

System Benefits

Reliability

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EPRI’s Integrated Grid Benefit-Cost Framework

Hosting Capacity Energy

Thermal Capacity

Distribution System

Bulk System

Customer or Owner Cost/

Benefits

Societal Costs/Benefits

Benefit/Cost

1 4

5

3

2

6

Core Assumptions

Adoption/ Deployment

Scenarios

Market Conditions

Resource Adequacy

Flexibility

Operational Practices & Simulation

Transmission Performance

Transmission Expansion

System Net Costs

System Benefits

Reliability

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Benefit-Cost Framework

Societal  Impacts  

Customer  Impacts  

Bulk    System    Impacts  

Distribu6on  System    Impacts  

• Net  Capital  Cost  Changes  • Net  Fuel/O&M  Changes  

(Avoided  less  Incurred)  

•  Net  Capital  Cost  Changes  •  Net  O&M  Cost  Changes  

(Avoided  less  Incurred)   Change  in  U6lity  Cost  (The  U4lity-­‐Cost  

Func4on)  

• Reduced/Increased  Emissions  • General  Economic  Effects  

Mone4za4on  Protocols  

Direct  Customer  Benefits  

Net  Societal  Benefits  

• Reliability  Improvement  • Resiliency  Improvement  • Customer  Equipment  Cost  

Mone4za4on  Protocols  

Societal  Benefits  

Physical Impacts Monetized Benefits & Costs

Economic Viewpoint that is Comprehensive and Flexible

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Distributed Energy Resource Impacts  Element   Impacts   Benefit   Cost  Distribu6on   Loss  Reduc6on   x  

Capacity  Upgrade  Deferral   x  Reconductoring   x  Line  Regulators/STATCOMS   x  Relaying  /Protec6on     x  LTC  accelerated  wear     x  Voltage  upgrade   x  Smart  Inverters   x   x  O&M   x  

Bulk  Power    System  

Genera6on  Mix/Requirement  Changes   x     x  Deferral  of  Transmission  Upgrades   x  Transmission  losses   x  O&M   x   x  Fuel  Savings   x  Conges6on   x  System  Opera6ons/Uncertainty   x  

Customer   DER  Investments   x  Societal   Emissions  -­‐  CO2/GHG,  Hg,  SOx,  NOx     x  

Cyber  Security   x  Health   x  Macroeconomic  effects   x  

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Distribution System Integrated Storage Benefit-Cost

6

5

4

3

2

1

0

Mill

ions

($)

Distributed Storage with 1 MW/4 hr. Battery in 2015

Cost Benefit Source: Results generated from CPUC inputs into EPRI Energy Storage Valuation Tool

Cost Taxes (Refund or Paid) Operating Costs Financing Costs Capital Expenditure

Benefit Distribution Investment Deferral Frequency Regulation Non-Spinning Reserve Spinning Reserve System Electric Supply Capacity Electricity Sales

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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Total Fixed Total Variable

Utility #1

Utility #2

Utility #3

Utility #4

Utility #5

Utility #6

Utility #7

Utility #8

Utility #9

Utility #10

Analysis of cost for 10 representative US utilities

Cost Composition of Residential Bills (approximated from public data)

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Putting IG Framework to the Test Pilot Projects

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Outcome of Integrated Grid Technology Pilots

Expected Learnings !  Consumer behavior and

acceptance !  Technology performance

and life cycle costs !  Installation, O&M costs !  Grid integration and

architecture !  Benefit/cost assessment !  End-of-life environmental

impact assessment

Technology pilots demonstrate the

value to all stakeholders of

an integrated approach

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Together…Shaping the Future of Electricity

For More Information: Ron Schoff (rschoff@epri.com; 704.595.2554)

http://integratedgrid.epri.com