DER expert Steve Fine on how utilities should be thinking about non-wires alternatives (NWAs) today
A. There’s been a conceptual evolution, really. Until recently, regulators and many stakeholders saw NWAs as a way to change how utilities invest in the grid—alleviating or mitigating traditional investments in the poles and wires of the distribution grid. And also as a way to get more distributed energy resources (DERs) deployed on the system. These aren’t bad goals at all, but there was an idea that a lot of these NWAs would be cost-effective, and that is proving harder than initially anticipated. The excitement around NWAs was partly driven by one of the biggest NWAs in the country, which is Con Edison’s $1 billion Brooklyn Queens Demand Management project. BQDM demonstrated a huge cost savings, but it turned out to be mostly a unicorn project that set high expectations across the industry that didn’t bear out. The process ended up being more diffuse and a little messier for most utilities than was originally understood.
Q. Right, so when utilities try to pull the BQDM model into their own context, it’s not an apples to apples match?
A. Not at all, on multiple fronts. First of all, the bulk of investment currently going on in the distribution sector is around aging infrastructure replacement, which often does not lend itself to a DER-oriented solution. For those applications where DER could be a solution, where there are load growth pockets or potential power quality issues due to overloads, there is an additional rub. When utility engineers put a traditional wires solution on their system, they know exactly what it’s going to cost them, and exactly, within specific tolerances, how it’s going to perform. It’s all textbook engineering. Now all of a sudden we’re asking these distribution engineers—who take their jobs of keeping the lights on very seriously—to put all these different resources (energy efficiency, demand response, solar, storage…) on the system and to guarantee the same level of grid reliability that traditional systems have entailed. That’s a big ask. So a lot of what we’ve seen are pilots going in to test these things so that the utility engineers can start to get a little more comfortable with DERs performing these types of grid solutions.
Q. Interesting. In addition to pilots, how can utilities identify whether they have untapped potential for NWAs?
A. Utilities know very well where they have pressures on the distribution system. They have a really good sense of what shape their system is in and where there might be a need for investments to help address growth. But they need to look comprehensively across their system and think about which substations are potential candidates for NWAs, and then screen those substations through two sets of suitability criteria: (1) are they real candidates for NWAs from a physical and growth perspective, and (2) can they deploy NWAs cost-effectively? And it’s that cost-effective piece that we’ve been working with utilities on quite extensively to help them understand whether they can get those load reductions in the required hours at the required location on a basis that’s cost-effective relative to traditional infrastructure investment.
"NWAs have an important bridge role to play as we continue to decarbonize the grid and work toward a more sustainable future."
Q. How are some of our clients and partners thinking about NWAs?
A. They’re thinking about them cautiously. As I mentioned before, they need to keep the lights on and they take that charge very seriously. So they don’t want to disrupt their system. On the other hand, their customers have a desire for NWAs and utilities have a need to make their systems more resilient. These are all things people are thinking about right now, system-wide, and clearly DERs and NWAs have a role to play in that. But we’re still in early stages and utilities are very much in “show me” mode: they understand that they need to adapt and integrate more DER on their system, both from a planning and operations perspective, but they’re still getting comfortable with how to actually operationalize that.
Q. Any final takeaways?
A. It’s important to realize that NWAs are a laudable goal but they’re not a long-term play in and of themselves. They’re a bridge, but not the end point. The end point is going to be getting actively managed load on the system that the utility can help control and effectively dispatch and blend into the total resource planning and operations of the system. Right now, the utility is in the best place to do that. Eventually this might change as the market evolves, but NWAs have an important bridge role to play as we continue to decarbonize the grid and work toward a more sustainable future.