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Idea of “Suitability Criteria” Paves the Way for NWA

Mar 25, 2018 7 MIN. READ

With growing interest from utilities and regulators in distribution non-wires alternatives (NWA), the concept of suitability criteria is emerging as an important tool in the evolving distribution system planning process.

Non-wires alternatives (NWA) are basically a catchall term for the process of identifying portfolios of distributed energy resources (DER) that can deliver the needed reliability, security, resiliency, and safety—along with potentially other services—identified by system planners as localized needs. While the NWA concept has been around for decades, especially on the bulk system, the practice of geo-targeting DER products and services at the distribution level to meet a distribution system need has gained steam in the last five years. Examples abound around the country of utilities creating NWA pilots or even more scaled implementation.

What’s driving this surge of interest? It’s part regulatory, part financial. NWA have been mandated in some jurisdictions (for example, New York which as far back as February 2015 required all distribution utilities to identify at least one NWA project) as a means to integrate DER into the grid, and thereby improve reliability and resilience, as well as reduce greenhouse gas emissions. In some states, in addition to this kind of regulatory interest, utilities are also motivated by the opportunity to achieve net savings. One example is Consumers Energy in Michigan, which is in the implementation phase of their Swartz Creek pilot, an NWA to address load growth in a suburban area. Another example can be seen at APS in Arizona, which is implementing two 1 MW/4 MWh storage systems to cut expenses by half and improve customer reliability, as the solution defers 20 miles of transmission and distribution (T&D) infrastructure.

But how do you focus on the best opportunities to create real value? It is a question that links an appraisal of DER performance—in other words, the services and values that DER can provide—with utility planning criteria. Utilities can start answering it through discussions with stakeholders to develop a process to identify which projects provide the best opportunities for DER to meet a system need in a more cost-effective way than the traditional alternative.

For example, these questions were front and center in a series of meetings that ICF facilitated on behalf of the New York Utilities among utilities, developers, environmental advocates, and regulatory staff in mid-2016, in the run-up to the Supplemental DSIP filing—a plan from the Joint Utilities of New York detailing how they would evolve distribution planning, grid operations, market operations, and information sharing to integrate DER, reduce system costs, stimulate market services, and more generally, become distributed system platforms (DSP).

It was clear that stakeholders and utilities had a shared interest: They both wanted a way to avoid combing through every investment dollar and allow everyone to focus their time and resources on the very best opportunities—the ones that made commercial sense for developers and financial sense for customers and the grid in that they would deliver services at a lower cost. In addition, utilities wanted to make sure that they could apply a logical, value-driven planning process that incorporated NWA (one that ICF worked with them to develop).

The result was collaborative development of what we called “NWA Suitability Criteria,” a set of guidelines that planners can use to identify and prioritize utility distribution infrastructure projects that would be addressed with DER products and/or services through an NWA solicitation. ICF and the Joint Utilities of New York focused on three factors: 1) project type, 2) timeline, and 3) cost (see Figure 1).

Figure 1. NWA Suitability Criteria Framework

Project Type

Categories of traditional distribution infrastructure projects and NWA applicability to replace them. Most commonly: load relief and reliability projects.

Timeline

Time required to complete procurement and implementation of project based on size.

Cost

Baseline cost value (BCV) to compare traditional infrastructure (TI) projects, i.e. if TI>BCV then a NWA is considered.
"The suitability criteria for non-wires solutions being developed by New York’s utilities may be one of the more advanced efforts to standardize DER valuation in planning." — Pacific Northwest National Laboratories Senior Energy Analyst Juliet Homer

This framework was designed to have inclusive and flexible criteria, which increases the number of potential NWA solutions and avoids unduly limiting or eliminating projects from consideration. It therefore meets both utility and stakeholder needs: allowing a value-driven planning process that inclusively identifies the best NWA opportunities. It also offers the prospect that as DER developers continue to improve product performance, reduce deployment timelines, and become more cost-effective—and as utilities gain experience with soliciting and deploying such solutions—the number of T&D projects suitable for an NWA are likely to increase.

Figure 21 illustrates where NWA Suitability Criteria would be introduced within the distribution system planning process. First, planning engineers identify system needs over the next 5–10 years and describe the types of needed projects with their associated costs and forecasted date of service. This step provides a basis to determine the value of an NWA solution. Second, the NWA Suitability Criteria are applied to the listed projects, identifying NWA opportunities and traditional solutions. And third, the NWA sourcing process ensues for those system needs that meet the suitability criteria.

Figure 2. Where NWA Suitability Criteria Fits in the Planning Process

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A recent DOE/PNNL report identified NWA as an emerging advanced distribution system planning practice—officially adopted by California, New York, and Rhode Island, as well as the subject of investigation in increasing numbers of states—and Pacific Northwest National Laboratories Senior Energy Analyst Juliet Homer particularly called out the suitability criteria concept for its value as a planning tool in a recent Utility Dive article, saying: “The suitability criteria for non-wires solutions being developed by New York’s utilities may be one of the more advanced efforts to standardize DER valuation in planning.”

Since the Supplemental DSIP was filed outlining the suitability criteria concept, the individual New York utilities have submitted utility-specific matrices detailing how the NWA Suitability Criteria framework will apply within their specific systems and to their individual planning practices (see Figure 3 for an example).2 While there is some variation among individual utilities and some stakeholders might prefer other specific levels for certain criteria, the broad alignment on the shared NWA Suitability framework is “to provide greater clarity, certainty, and long-term visibility to the market and help streamline the broader NWA procurement process.”

Figure 3. Example of Utility-Specific NWA Suitability Criteria Matrix (Con Edison)

Criteria

Potential Elements Addressed

Project Type Suitability

Project types include Load Relief or Load Relief in combination with Reliability. Other categories have minimal suitability and will be periodically reviewed for potential modifications due to state policy or technological changes.

Timeline Suitability

Large Project (projects that are on a major circuits or substation and above)  36-60 months
Small Projects (projects that are feeder level or below)  18-24 months

Cost Suitability

Large Project (projects that are on a major circuits or substation and above)

 No cost floor
Small Projects (projects that are feeder level or below)  Greater than or equal to $450k 

There are three key takeaways here:

  1. Distribution-level NWA are becoming a more widely used mechanism for achieving DER integration, reducing greenhouse gas emissions and system costs, and enabling customer choice. For this reason, utilities are beginning to work toward standardizing NWA procurement practices to make them more efficient and effective.
  2. The suitability criteria concept has gained traction not only as a useful approach to meet utility and stakeholder needs and focus on high-value opportunities, but also as a key connection point in the planning process linking DER valuation to system planning. For that reason, ICF expects that more utilities will build on the Joint Utilities’ NWA Suitability Criteria to develop their own framework to formally include NWA into their distribution system planning toolbox.
  3. An open stakeholder process on integrated distribution planning and DER value capture, which happened in the NWA suitability criteria discussion, is benefiting all parties, which is why more states are realizing the value of stakeholder engagement for tackling these issues.
  • 1Case 16-M-0411, In the Matter of Distributed System Implementation Plans (“DSIP Proceeding”), JOINT UTILITIES’ SUPPLEMENTAL INFORMATION ON THE NON-WIRES ALTERNATIVES IDENTIFICATION AND SOURCING PROCESS AND NOTIFICATION PRACTICES (May 8, 2017). Available at: http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId=%7BF33A02A0-0A2A-47CC-9EA5-E00EC0B600C8%7D
  • 2Case 16-M-0411, In the Matter of Distributed System Implementation Plans (“DSIP Proceeding”), Joint Utilities Filing of Utility-Specific Implementation Matrices for Non-Wires Alternatives Suitability Criteria, Appendix 1. (March 1, 2017). Available at: http://jointutilitiesofny.org/wp-content/uploads/2017/11/3E7E6426-F3FC-46F3-A8C4-CD44625DA792.pdf
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