DG-IV Process and Outcome Overview
Gary Brinkworth August 31, 2015
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“Value of the Grid”
“Value of Solar”
DG – IV (solar focus)
v To develop a methodology that is applicable to value any DG resource
v Immediate focus was on small-scale solar (up to 50kW)
v Develop a methodology with transparency, fairness, adaptability, and versatility
v Uniquely includes the Value/Cost of the Grid
Distributed Generation Integrated Value (DG-IV) Purpose
Project Goals
Objective • Develop a distributed generation & system value assessment • Create a foundation for possible transaction models and programs
Framework • Leverage the concepts identified in existing “Value of Solar” processes • Identify the discrete value streams that apply in the Valley • Create a clear, transparent, and repeatable process • Ensure stakeholder input and support throughout the process
Applies to solar, but methodological framework will be replicated for other distributed resources
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DG-IV Process
Value of Solar
Cost of Solar
Integration
DG-IV
Distributed Generation –
Integrated Value
TVA Program Design
Delivery Vehicle Methodology, Analytics, & Calculation
Stakeholder Group Input
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DG-IV Process - Success Metrics
Transparency • Accessibility to the information, data, assumptions, calculations • Clear and well-defined • Information provided in a timely manner with sufficient time for engagement
Fairness • Views all stakeholders on an equal footing • Compromise in process • Inventory and consider all variables
Adaptability • Broadly applicable to multiple forms of distributed resources • Continuous learning process • Evolving in a positive way over time
Versatility
• Continues to work in a changing technology and business environment • Ensures implementation to a widespread, robust set of markets • Provides potential for differentiation so it works for a wide array of customers,
locations, and environments
We will develop a quality, actionable process that accomplishes:
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Project Overview • Process – what did we do?
– Held six in-person workshops over about 16 months – Conducted two additional webinars on content related to EPRI’s
work
• Result – what did we decide? – General consensus reached on the methodology and calculation for
the DG-IV
• Outcome – how do we know what we did and what we decided? – TVA created first draft of DG-IV methodology report
• Was reviewed by stakeholders and modifications made – TVA is working to finalize the report for public release.
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Value Stream Components
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DG-IV Categories & Components
Included in DG-IV Methodology
Program Design Considerations
Placeholder Topics
Generation Deferral (Capital & Fixed Operations &
Maintenance)
Local Power Company (LPC) Costs & Benefits System Integration/ Ancillary Services
Avoided Energy (Fuel, Variable Operations &
Maintenance, Start-up) Economic Development Additional Environmental Considerations
Environmental (Compliance & Market) Customer Satisfaction Market Price Response
Transmission System Impact Local Differentiation Security Enhancement
Distribution System Impact Disaster Recovery Losses
(Trans. & Distr.) Technology Innovation
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Generation Deferral & Avoided Energy • Values determined using TVA’s
resource planning tools • Generation (capacity) deferral
includes capital and fixed cost components
• Avoided energy includes fuel, variable O&M and start-up costs
• Analysis approach compares two cases to identify value
– Base case excluding any solar PV additions
– Alternative case assumed installation of 2,000 MW of solar PV
– Cost differences determined on a present value basis for total plan costs
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Environmental Component
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Primarily CO2 compliance (other embedded items – coal ash waste, cooling water, mercury, air effluent guidelines)
The Environmental component was heavily discussed
Renewable Energy Credits (RECs)
Social Cost of Carbon Common Pollutants Water Impacts
Consensus reached on green items (compliance and market values) 10
Transmission & Distribution Impacts • Transmission: Primary impact is
transmission spending deferral by reducing localized peaks. Varies by location.
• Distribution: Primary impact is effect of DG on distribution system capacity, voltage, and protection
– TVA partnering with Electric Power Research Institute (EPRI) to develop a methodology to compute this value
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EPRI Distribution Analysis • Distribution planning requires a detailed
look at characteristics and behaviors of each feeder
• To quantify PV as a distribution resource, it must be considered in the same detailed manner.
• Research provides insights on PV hosting capacity and help understand issues
• Acknowledges that location matters; and that utilities required to maintain service quality and reliability
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Getting to an Example Value
1. The example value is intended to be representative not definitive. 2. Some values required further analysis. 3. The example value only reflects the DG-IV methodology components. 4. The example value is presented as both an average and first year
value. 5. Transmission and distribution losses impact most – but not all –
components of the DG-IV. 6. The example value (solar specific) is less than the current retail rate
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DG-IV Methodology
DG-‐IV Calculation (G + E + ENVC + T + D) * (1 + TL + DL) + ENVM
Generation Deferral
Avoided Energy Distribution Impacts
Environmental (Compliance)
Transmission Impacts
Transmission & Distribution Losses
Environmental (Market)
Illustrative Only
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• Developed a robust methodology to calculate the value of DG (<50kW sized systems)
• Gained a better understanding of :
• Distribution level challenges • Environmental concerns
• Engaged key stakeholders in the process
• Established that the DG value for solar, which represents the solar-specific avoided cost to TVA, is less than retail
• Provided common understanding for future programs 15
Key Takeaways
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Next Steps • Publish the final DG-IV document around the end of September • Charter new stakeholder group to provide input on demand side
resource strategy • Emphasis in program design phase will include more engagement
with local power companies
• TVA Board has approved the 2015 IRP and FY16 budget including budget for renewables – IRP sets direction for large scale renewables – Signposts on renewable cost and performance will also be monitored
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