Consumers could outspend utilities in the adoption of solar, storage, electric vehicles (EVs) and other distributed energy resources (DERs), making it essential for utilities to track and integrate these DERs into their planning processes to benefit their customers and the grid.
That is one of the key findings of a new case study from the Smart Electric Power Alliance (SEPA) and Black & Veatch, detailing the efforts of California’s Sacramento Municipal Utility District (SMUD) to create such an integrated DER planning process. Through an in-depth study of its customers’ adoption of DERs, SMUD built a comprehensive customer database that will allow the utility to predict which neighborhoods will see higher levels of DERs. The database will also be used to model the impacts DERs might have on SMUD’s distribution and bulk power systems, as well as on the utility’s finances.
“An increasing number of utilities are integrating distributed technologies onto the grid, but with this study, SMUD has become an industry leader, providing insights and models that others can follow,” says Julia Hamm, president and CEO of SEPA. “We believe that integrating DERs into regular utility resource planning, as SMUD is doing, will quickly become an industry best practice.”
Other key takeaways from the report include the following:
Customers lead DER adoption: SMUD estimates that its customers and third-party developers now spend $150 million to $200 million per year on DERs, more than it spends on utility-scale renewables. Meanwhile, in a scenario with high penetrations of solar, EVs and unmanaged vehicle charging, distribution upgrade costs through 2030 were projected at a cumulative figure of $50 million to $100 million or more. Although these costs may seem large in aggregate, they are relatively small on a per-unit basis, and they could be reduced in the future by emerging technologies, such as smart inverters.
DER impacts must be looked at individually and in aggregate: For example, while the impact of solar alone can increase ramping requirements (i.e., the duck curve), the DER portfolio simulated in the SMUD study actually decreased ramping and flattened the utility’s net load profile.
Savings may not offset costs under today’s policies: The study shows that under its current rate structure, SMUD’s lost revenue and program costs for most DER technologies will be larger than its cost savings on the bulk system. Changes to rates and business models will need to be considered.
“This case study demonstrates that integrated DER analysis can identify potential problems, make utility planning processes more robust, and improve utility-customer relations through better policies and programs,” says Jeremy Klingel, senior managing director for Black & Veatch’s management consulting business. “But it will need to be a regular part of utility planning, and that will require organizational change and solid investments in analytics, databases and other IT infrastructure.”
“The advent of cost-effective DERs – such as rooftop solar and, ultimately, solar coupled with battery storage – will continue to mean flat-to-declining load growth for utilities,” says Paul Lau, SMUD’s chief grid strategy and operations officer. “As a public, not-for-profit utility, SMUD is keen on providing optimal rate treatment for DERs for those customers participating with behind-the-meter DERs and for those who do not.”
Lau adds, “SMUD also needs to consider operational and reliability issues as we plan our utility system for DERs, which is why this case study is an important first step to helping SMUD understand what DERs will mean going forward.”
The study, “Beyond the Meter: Planning the Distributed Energy Future, Vol. II,” is the follow-up to SEPA and Black & Veatch’s previous work, “Beyond the Meter: Planning the Distributed Energy Future, Vol. I,” which has been reissued with a new foreword by Tanuj Deora, SEPA’s executive vice president and chief content officer.