New York state's electric grid is facing the challenges of aging infrastructure, minimal overall load growth, and fast-growing peak demand. Armed with the promise of emerging technologies, the state's regulators are crafting a plan that envisions new roles for traditional utilities delivering power from a widening range of sources.
The New York Department of Public Service first proposed its Reforming the Energy Vision (REV) initiative in April and, last month, staff released a straw proposal outlining the basic framework of this brave new utility world. Calling it a "customer-oriented regulatory reform," the plan calls for a broad range of distributed energy resources (DER) to be run in a coordinated manner, with market and incentive structures designed to enable customers to optimize their energy usage.
"By systematizing the cost-effective use of distributed resources, REV will establish New York as a leader in enabling DER resources and innovating around new market structures for the benefit of its electricity customers," staff wrote.
What's in the plan
The plan contains about 12 individual proposals, but the overarching vision is one of a "distributed system platform" (DSP) that would integrate and manage distributed energy resources across the distribution grid. Distributed system platform providers (DSPP) would initially be the utilities of today, but the plan leaves the possibility of opening the role up to competition.
And with proper oversight, the plan would also consider allowing utilities to own distributed energy resources. But, the plan acknowledges, "with the recommendation that the utilities fulfill the platform functions comes a range of concerns about the potential for various misuses" of their monopoly position.
Despite the radical ideas under discussion, not everything is changing, says the commission.
"The notion of the power grid as a public good available to everybody at just and reasonable prices does not change," James Denn, spokesman for the Department of Public Service, told Utility Dive. "What is changing is the way the grid functions."
Under the REV proposal, distributed energy resources will be "coordinated to manage load, optimize system operations, and enable clean distributed power generation," he said. "Markets and tariffs will empower customers to optimize their energy usage and reduce electric bills."
Why New York is Reforming the Energy Vision
Staff's proposal stacks the REV vision up against a "business as usual case," which it said faces projected load growth of 0.16% annually through 2024, but with peak load growing at an estimated 0.83% per year, resulting in declining system efficiency as measured by load factors.
New York is also dealing with the problem of aging infrastructure, including 14,000 MW of non-hydro generation facilities over 40 years old and approximately $30 billion needed to support transmission and distribution systems over the next 10 years (excluding the New York Power Authority and Long Island Power Authority).
Meanwhile, the state is growing more dependent on natural gas for generation, and seeing a surge in customer adoption of distributed generation and other distributed resources.
The REV plan would seek to harness those distributed resources — including end-use efficiency, demand response, energy storage and distributed generation — and envisions a marketplace where a diverse group of energy stakeholders could work to develop them.
How the grid of the future might work
"DER providers may include a broad range of entities that have the potential to reach multiple end use customers, have the technical capacity to manage installation or financing of DER assets, and the ability to aggregate DER services and plans for purposes of market participation," staff said.
Those providers could include energy management companies, regulated utilities subject to market power restrictions, solar providers, local governments entities, not-for-profit corporations, housing associations, banks and registered financial institutions, telecommunications companies, real estate developers, and others.
Distributed system platforms will manage bids from distributed energy resources. These bids are "subject to market power protections in the case of affiliate bids," staff said, with a goal of creating a more efficient system load profile.
In addition to benefits from distribution system efficiencies, the system "will have direct and immediate benefits at the wholesale market level," staff said. "Specifically, the aggregate effect of reduction in peak loads will drive down [installed capacity] requirements at the wholesale level and reduce peak energy production needs."
The result, according to the proposal, will be reduced installed capacity obligations and energy costs for the DSPs as the need for the NYISO to run expensive peaking generation will decrease. The latter can result in a reduction in energy cost and airborne emissions if DERs are not fossil-fueled.
What utilities think
Utilities are still examining the plan and its implications, and are developing comments for the commission, due September 22.
Allan Drury, a spokesman for Consolidated Edison, told Utility Dive it "is clear that our industry is changing dramatically."
"More than ever, customers want simple pricing, resiliency, faster outage restoration, and more information during outages," said Drury. "They want clean energy options, such as energy efficiency, distributed generation and renewables. And they want simple interactive tools to manage their usage. We must modernize the state’s grid to provide customers with the products and services they want."
ConEd customers have installed 3,000 solar projects, producing almost 50 MW of power. But a utility’s ability to meet customer needs "must be supported by a regulatory system that encourages efficient investment in all technologies," Drury said, cautioning that utilities must be able to recover costs associated with the grid.
National Grid told Utility Dive it had no comment at the time — but did have a lot of questions.
Editor's Note: Utility Dive will follow up and examine comments on the straw proposal after they are filed September 22.