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Massachusetts Restructuring Roundtable Distributed Generation

Massachusetts Restructuring Roundtable Distributed Generation. Opportunities to Enhance Value in Delivery of Electricity Peter Zschokke Vice President National Grid USA Service Company June 21, 2002. What are the Issues?. How to measure the value of service?

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Massachusetts Restructuring Roundtable Distributed Generation

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  1. Massachusetts Restructuring RoundtableDistributed Generation Opportunities to Enhance Value in Delivery of Electricity Peter Zschokke Vice President National Grid USA Service Company June 21, 2002

  2. What are the Issues? How to measure the value of service? • Opportunity to enhance distribution wires reliability • Opportunity to enhance customer service reliability • Expansion of customer opportunities

  3. Distribution Wires Reliability: Key to Success • Summer 2001: Keep Lights On • Distribution Engineers need to know system is highly reliable • Can DG or DR be relied upon when needed? • Can DG or Distributed Resources (DR) contribute to reliability? • What guarantees it will be there when necessary? • What happens with failure to respond? • Can it be controlled by LDC? • What back-up is necessary if customers fail to respond?

  4. Pete’s Simple Rule for Generator Interconnection at Distribution Voltage • Interconnection and reliability issues rise exponentially as generator capability increases relative to distribution capacity • Voltage regulation • Back-up capacity • Equipment costs

  5. Distribution Wires Reliability: Need to Test & Assess Brockton Load Management Pilot • Can distributed resources ensure reliability while deferring investment? • Site chosen where the time to invest is less critical • Pay 50% of deferral value as incentive to customers: 50¢/KWh • Pay for performance • Investment is deferred not eliminated • DG must find buyer of power, excluding PURPA QF

  6. Distribution Wires Reliability: Need to Test & Assess • Test risk parameters for distribution company • Level of customer performance • Frequency of customer performance • Steadfastness of customers • Level of demand by other customers • Test infrastructure • Price incentive • ISO coordination • Real-time metering

  7. Load Management Pilot • Need 950 kWs this summer • 1,800 in 2003 • 2,700 in 2004 • Projected 50 hours this summer • Deferral value is deferred cost of upgrade divided by energy needed from customers • 5-6% of initial costs • Customers can participate in ISO-NE programs also

  8. Customer Service Reliability • What is value of Grid Interconnection to customer • Additional source for reliable service to customer • Ability to size generation for efficient use with supplemental service • Back-up for unplanned or planned outages • Value of interconnection to customer with generation far greater than value of interconnection to low load factor customer

  9. Effect of DG on Load Factor and LDC

  10. Effect of DG on Load Shape

  11. Effect of DG on Load Profile Predictability (1)

  12. Effect of DG on Load Profile Predictability (2)

  13. Market Value Considerations for Customer with DG • Sell to market • Sell to affiliate • Sell to neighbor • Arbitrage electric prices vs. fuel cost • Trade ancillary services

  14. How should Interconnection for DG customers be valued? • Depends on reliability need & market need • Depends on level of service • On-demand service: Immediate reliability • Manual: Service connection within a specified response time • Requested service at previously agreed times • No interconnection requested: isolation • Depends on length of service agreement • Depends on amount of back-up requested

  15. Pricing Interconnection Value Under Regulation • Recognize: Value provision for DG changes obligation to serve • Immediate reliability = traditional obligation but at greater risk to LDC • Other options reflect a reduced obligation to serve • Customer accepts risk of less reliable service in exchange for lower price • Increased risk to company and its customers if customer returns to full service • Efficient choices are made when service is priced at full value and subsidies are not created

  16. Conclusion • Brockton pilot allows assessment of short-term system reliability enhancement from DR(G) • High load factor customers with generation put more risk on distribution reliability than low load factor customers without generation load • Value assessment provides opportunities to recover costs to serve customers with DG as well as promote DG

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