Far from threatening the grid, non-transmission alternatives can enhance reliability and complement existing and new transmission infrastructure, according to a new study.
Implementing these resources begins with understanding each option, and it ends with filling the system’s needs with the most economical set of options.
“The first question planners need to ask is ‘What do I need for the system?’” Julia Frayer, managing director of London Economics International and lead author of Market Resource Alternatives: An Examination of New Technologies in the Electric Transmission Planning Process, told Utility Dive. “Then it is important to study transmission and all the Market Resource Alternatives (MRAs) that can help meet that need.”
MRAs—London Economics's term for non-transmission alternatives—include energy efficiency, demand response, utility-scale generation, distributed generation, energy storage, and smart grid.
To keep distortion and prejudice out of the study of MRAs, it is important “to make sure the cost-benefit analysis is comprehensive,” Frayer said.
Complementarity, not substitution
"We are talking about what the Federal Energy Regulatory Commission (FERC) meant in Order 1000 when it told transmission system planners they had to consider ‘non-transmission alternatives,’” former FERC Chair Jim Hoecker told Utility Dive, explaining why the transmission trade group WIRES, which he advises, commissioned the study.
“MRAs are important but they aren’t all deployed the same way and they have different characteristics,” Hoecker said. “Sometimes they help rationalize the transmission planning process and sometimes they have nothing to do with it.”
The term NTA [non-transmission alternatives] contains the implication that alternatives will substitute for transmission, Frayer said, hence the change in terminology to Market Resource Alternatives. But they are all part of an integrated electric system: Transmission needs generation and generation needs transmission.
“And that applies to all the MRAs,” Frayer added. “The system does its job, to deliver electricity, only because all the components are there. Substitution is the worst word to describe that. We need to talk about complementarity.”
“Each of the technologies has enormous benefits and will be absolutely critical to the future of the electric system,” Hoecker said. “But it is a dangerous misunderstanding to think these technologies simply obviate the need for a robust transmission system. We may get to the point where we don’t need a network of wires. But I can’t foresee that.”
The WIRES report uses what Frayer called “moon charts” to show complementarities between transmission and MRAs in providing energy, capacity, ancillary services, system loss reductions, system lifespan, continuous service, and locational services for wholesale and retail customers. The objective, she said, was to understand how MRAs fit into the transmission planning process.
Transmission combined with the technologies provides the full range of services, the study found,. The MRA technologies, even with transmission, do not. To select between the options, a cost-benefit analysis is vital for planners. But a “least cost analysis” is insufficient. It must be comprehensive.
“One must consider the ability of a solution, be that MRAs or transmission, to provide benefits and services to various customer classes and over varying geographies and time dimensions," Frayer said.
“All technologies meet local needs,” she added. “If you are pairing local needs with the need for capacity, utility scale generation and transmission are similar. But for transmission to provide capacity, it needs to be paired with generation.”
All of the options also have a degree of “operational uncertainty” and “negative and positive externalities” that must be weighed in any cost-benefit analysis.
Energy efficiency and demand response are similar in providing capacity, Frayer explained, but each is limited in a different way. “Efficiency is expected to provide capacity for many hours whereas DR provides it only for a subset of hours—at peaks or when the system is under stress," she said.
Not choosing between A and B
The study concludes with a set of case studies that identify where planning methodologies and modeling techniques succeeded or failed. “Sometimes we predispose our modeling analysis so we only think of substitutes,” Frayer said. “Instead of choosing between A and B, we should be asking what amount of A and what amount of B will provide the best solution.”
When the Bonneville Power Administration (BPA) was planning for its I-5 Corridor Reinforcement Transmission Project, new lines—as well as energy efficiency, demand response, distributed generation, and re-dispatch of existing generation—were considered to meet a “reliability need.”
BPA concluded the MRAs alone were “potentially insufficient and too risky to meet the identified reliability needs over the long term.”
Despite operational uncertainties, BPA invested in energy efficiency and demand response as a complementary and interim measure “along with transmission to increase the net benefit to the system and customers.”
In another case study, the California Public Utilities Commission approved the Tehachapi Renewable Transmission Project (TRTP) to meet public policy goals, the paper reports, but “no economic analysis was performed.”
If a full cost-benefit analysis that included RPS goals or carbon reductions had been done by the commission or by the California Independent System Operator, it adds, “more transmission investments may have been appropriate… [and] the complementarity between transmission and generation would have spurred additional wind developments in the wind abundant regions, which may have created further benefits to customers.”
And in Texas, where there is nearly 13,000 MW of installed wind capacity, “transmission was used to promote the development of renewable resources,” the study notes.
Putting together the tools and techniques
“None of this is rocket science and we are not asking planners to change everything they do,” Frayer said. “These tools and techniques are not novel, untested, or experimental. They are all in use by planning departments. We just suggest they put them together in a different order so they are not looking at substitution only.”
“This is a new vision of how the electric system will work,” Hoecker said. “It says that MRAs, collectively and individually, as important as they are, are rarely a substitute for the investment in transmission we really need right now. If people defer that investment long enough, they are going to have reliability problems and life is going to get a little more expensive.”