the challenge of distributed energy resources

A. David StipplerUtility Consumer Counselor

7th Annual Spring ForumRichard G. Lugar Center for Renewable Energy

Indianapolis, IndianaMay 6, 2014

The Challenge of Distributed Energy Resources

Under Indiana Code 8-1-1.1-3, the Utility Consumer Counselor (UCC):◦ Serves at the will and pleasure of the Governor

(4 year term)◦ Shall be a practicing attorney, and qualified by

knowledge and experience to practice in regulatory proceedings

Utility Consumer Counselor

Indiana Code 8-1-1.1-5.1◦ “(e) In all proceedings before the

commission,…and in a court in which the consumer counselor shall appear, the consumer counselor shall have charge of the interests of the ratepayers and consumers of the utility…”

Consumer Counselor Powers and Duties

The Office of Utility Consumer Counselor (OUCC) has a current staff of 52 utility professionals

◦ 10-person legal team-over 190 years of combined experience in utility law

◦ Technical staff of accountants, economists, engineers and environmental/fiscal analysts-nearly 850 years of professional and utility industry experience.

OUCC

DER include distributed generation, which are non-centralized sources of electricity generation, typically interconnected to a utility’s distribution system and located at or near customers’ homes or businesses.

What are “Distributed Energy Resources (DER)?”

Distributed generation refers to energy sources located behind a retail meter or connected to a microgrid where the intent is to remove some load or demand from the generation, transmission, and distribution facilities that comprise the incumbent utility’s “grid.”

What is “Distributed Generation?”

Solar panels Energy storage

devices Fuel cells Micro turbines Reciprocating

engines Small wind

Examples of DER

Backup generation Combined heat and

power (CHP) systems

Hydro Biomass Landfill methane

A “microgrid” is a small self-contained electricity network that sometimes includes a district energy system. The microgrid coordinates and distributes energy from one or more generation resources to multiple users in a spatially defined area.

What Precisely is a “Microgrid?”

Another Definition of a Microgrid

A microgrid is a group of interconnected loads and distributed energy resources within clearly defined boundaries that acts as a single controllable entity with respect to the grid and that connects and disconnects from such grid to enable it to operate in both grid-connected or “island” mode.

2014 Report-U.N. Intergovernmental Panel on Climate Change (IPCC)

Expected EPA proposed carbon pollution standards for existing power plants by June 1, 2014

State Utility Forecasting Group (SUFG) 2013 report to IURC: projected 32% increase in Indiana electric rates by 2023 (reliance on coal for power generation and increasing federal environmental mandates)

U.S. Supreme Court’s reinstatement of the Cross-State Air Pollution Rule-CSAPR- April 29, 2014.

Compelling Reasons for Promoting DER, Especially Renewables

Electric ServiceTerritories

Source: Indiana Energy Association 2012 Edition

Indiana Utility Activity-Net Metering

2009 2010 2011 2012 20130

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

0

100

200

300

400

500

600

Indiana Net Metering Activity

Solar kW Wind kW Customers

Capacit

y k

W

Custo

mers

A feed-in tariff reimburses entities that produce excess electricity and sell it back to the utility at certain rates per kWh instead of receiving credits as is the case with net metering.

Indiana Utility Activity-Feed-In Tariffs

In a recent filing with the IURC, NIPSCO presented its 3rd annual feed-in tariff report, depicting total metered generation that had interconnected and begun selling energy to NIPSCO to be 73,898,289 kWh from various renewable resources:

Feed-In Tariffs

Generation (kwh)Technology 2011 2012 2013 Total % Total

Small Solar - 118,895 471,806 590,701 0.8%

Large Solar - 433,758 15,789,457 16,223,214 22.0%Small Wind - 3,588 15,721 19,310 0.0%Large Wind - - 90,113 90,113 0.1%

Biomass 6,219,791 19,152,432 31,602,728 56,974,951 77.1%Total 6,219,791 19,708,672 47,969,825 73,898,289 100.0%

Source: NIPSCO 3rd Annual FIT Report (Cause No. 43922) pg. 7

Feed-In Tariffs

Source: NIPSCO 3rd Annual FIT Report(Cause No. 43922) pg. 36

1200 kW Biomass

Feed-In Tariffs

Source: NIPSCO 3rd Annual FIT Report(Cause No. 43922) pg. 36

Small Wind Turbine

Promise of Renewables

Source: 2013 IURC Annual Report to the Regulatory Flexibility Committee

Provide a diversity of power supply resources Promote environmental benefits and

stewardship – pollutant free Reduce power system emissions Defer or eliminate need for capacity upgrades

for generation, transmission and/or distribution systems – economic attributes

Improve power system resiliency (robustness) – support distribution system during outages; sustain building services (“keeps the lights on”)

Some “Pros” to Renewable Energy Resources

Wind/Solar power: weather driven and intermittent (variable output)

Difficulty to produce the energy quantity equivalent to that produced by non-renewable fuels – capability to perform when called upon

Technology required to trap renewable energy is costly (energy storage)

Questions arise as to cost effectiveness Alterations to landscape – use of technologies

to harness resources not “natural” to landscape

Some “Cons” to Renewable Energy Resources

Better Energy Storage Technologies

Source: “Energy 2020 - A Vision For America's Energy Future” – U.S. Senator Lisa Murkowski 113th Congress

Significance of Microgrids

Economic Aspects of DER

Source: Electric Power Research Institute (EPRI), Inc. - The Integrated Grid: Realizing the Full Value of Central and Distributed Energy Resources

The Economics of DER

Source: Electric Power Research Institute (EPRI), Inc. - The Integrated Grid: Realizing the Full Value of Central and Distributed Energy Resources

Germany’s deployment of solar and wind – a cautionary tale:◦ Energiewende (“Energy Transformation”) –

German Renewable Energy Act of 2000◦ Distributed PV was deployed with little time for

effective integration◦ Resources located without attention to grid design

and power flow limitations◦ Dramatic effect on electricity prices

The Economics of DER

U.S. Homeowners do care about clean energy, but economics rule.

2014 Poll Results – national survey commissioned by Solar City and Clean Edge [Zogby Analytics Polling Firm]◦ Homeowners want energy options◦ Support for renewables are widespread◦ Homeowners weigh environmental impact on

their car, home and other major purchases◦ BUT, Economics rule!

The Economics of DER

The Economics of DER

Source: Electric Power Research Institute (EPRI), Inc. - The Integrated Grid: Realizing the Full Value of Central and Distributed Energy Resources pg. 16

David StipplerUtility Consumer Counselor

www.in.gov/ouccPhone: 317.232.2494Direct: 317.233.3232

Toll Free: 1.888.441.2494

Contact Information