Resources that can deliver for local needs
Utilities, customers, and local government jurisdictions all want to reduce the reliance on traditional infrastructure investment in favor of other resources. These new resources can deliver services identified by system planners to meet localized needs - usually in a way that produces cost savings for customers.
Non-wire alternatives (NWA) are the catch-all term for the process of identifying portfolios of distributed energy resources (DER). Oftentimes, jurisdictions integrate NWA and DER into their systems in order to reduce greenhouse gases. But regulators also support the move as they look to achieve net cost savings and push more innovative businesses and regulatory models for utilities. In addition, utilities want to discover how to make NWA a more standard practice—how to think about new ways of doing business and potentially achieve new revenue streams. Today, there is NWA activity on the distribution level in almost half of U.S. states, and NWAs are an emerging part of the standard utility planning approach over the next five to 10 years.
The basic idea of the NWA has been around for decades, mostly on the bulk system. However, over the last five years, as DER penetration has risen and costs have fallen, there has been an increasing level of interest in implementing these solutions at the distribution level. Utilities have noticed this trend and are becoming more proactive on NWA pilot programs.
However, there is still a lot of learning and testing that needs to take place to determine what makes the most effective and efficient NWA. Since NWAs are substitutes for traditional infrastructure investments, regulators are actively discussing the proper earnings mechanisms or other incentives to induce the kind of NWA investment they want. Another concern is that solicitation practices, legal and financial terms, and operational rule sets need to be in place in order to move beyond demonstration projects.
Many utilities are determining best practices and standard approaches in real-time. Integrating DER into utility planning and operations is causing utilities to be more collaborative among what have traditionally been separate departments. This is critical for utilities to resolve internally as they integrate DER onto their systems.
Benefits and opportunities for utilities that implement NWAs include:
- Reduced greenhouse gases
- Net cost savings
- Analyzing distributed energy resources for NWAs
- Improved innovation
Key lessons of NWA implementation are:
- It is beneficial to use a broader resource mix that can provide the right combination of cost-effectiveness and performance.
- Utilities and regulators should prepare to experiment with different measures and service territories.
- Portfolio development should build upon practical experience in the local area.
Watch Non-Wire Alternatives 101, then discover more about NWA implementation for the communities you serve.