6
Net Metering and Distributed Energy Technologies
Prior chapters of this report examined net metering and distributed generation from various angles. This chapter lays out the technology implications of increasing amounts of behind-the-meter (BTM) distributed generation (DG) for the larger electricity system and describes the ongoing technological advances that enable the integration of BTM DG/distributed energy resources (DER) into the electricity grid, followed by a discussion of new technologies that are needed to ensure that the integration of BTM DG/DER leads to a reliable and resilient grid. The chapter underscores the technical ability of BTM DG supported by net metering to provide tools not only to benefit the DG customer but also to benefit the grid at large, in terms of both reliability and resilience.
Briefly, this chapter provides an overview of the effect on the grid of BTM DG and related technologies influenced by net metering and supported by grid technologies to integrate, manage, or control them. It presents a discussion of:
- Grid modernization and the integration of renewables
- Power-physics-based constraints emerging from integrating BTM DG onto the grid
- Emerging advances in power electronics, storage, communications, and control technologies
- Cybersecurity and resilience considerations emerging from BTM DG and net metering
- Chapter summary and findings
GRID MODERNIZATION AND THE INTEGRATION OF RENEWABLES
Grid modernization1 is introducing innovative technologies and services to the electricity grid at an unprecedented rate. The focus of this chapter is distributed renewable
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1 Corresponding with the Department of Energy’s Grid Modernization Initiative (GMI), grid modernization can be defined as the development of the “concepts, tools, and technologies needed to measure, analyze, predict, protect, and control the grid of the future,” including those which “help integrate all sources of electricity better, improve the security of our nation’s grid, solve challenges of energy storage and distributed generation, and provide a critical platform for U.S. competitiveness and innovation in a global energy economy.” See DOE. 2022. “Grid Modernization Initiative.” https://www.energy.gov/gmi/grid-modernization-initiative.
sources of electricity such as solar, storage such as batteries, and demand response such as management of variable load. Collectively these technologies are denoted as DER; distributed generation is denoted as DG. A good portion of DG is BTM and is made up of rooftop or on-site solar. BTM DG poses a challenge to traditional top-down utility planning and grid operation, as they inject uncertainty into the electricity grid operations due to their variability, uncertainty, and location of adoption. They also pose challenges for traditional regulatory structures and utility business models.2
A shift in generation toward variable renewable energy, such as wind and solar, is a shift away from the traditional fossil-based generation that is dispatchable or readily available. The shift to cleaner and more distributed resources may reduce overall societal and system costs, taking into account the full costs of externalities, including greenhouse gas (GHG) emissions, pollution, and health impacts. However, addressing the challenge of decentralization and variability increases the cost of adding renewable electricity to the power grid due to investments in advanced communication, control, protection, and resilience needed to ensure an uninterrupted supply of generation to meet customer demand and for the grid to function reliably. As the share of renewables grows, which will be essential for deep decarbonization,3 accounting for and allowing recovery of these system-wide costs of integrating variable renewable resources will require regulatory attention (see Chapter 7) and possibly regulatory and utility business model innovation.
The following sections expand on the technology implications of increasing amounts of BTM DG for the larger electricity system, the ongoing technological advances that enable the integration of BTM DG/DER into the electricity grid, and new technologies that are needed to ensure that the integration of BTM DG and DER leads to a reliable and resilient grid.
TECHNOLOGY INTERSECTION 1: POWER PHYSICS-BASED CONSTRAINTS
BTM DG capacity is expected to increase significantly at the grid edge4 in the coming years, influenced by net metering compensation and other policies. Such DG and other DER may include increasing installation of solar and wind resources, stationary storage, mobile resources such as electric vehicles, and flexible consumption combined
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2NARUC. 2022. “Task Force Cohort Roadmaps.” https://www.naruc.org/taskforce/resources-for-action/roadmaps.
3NASEM (National Academies of Sciences, Engineering, and Medicine). 2021. Accelerating Decarbonization of the U.S. Energy System. Washington, DC: The National Academies Press. https://doi.org/10.17226/25932.
4Mai, T.T., P.H. Nguyen, Q-T Tran, A. Cagnano, G. De Carne, Y. Amirat, A-T. Le, and E. De Tuglie. 2021. “An Overview of Grid-Edge Control with the Digital Transformation.” Electrical Engineering 103:1989–2007.
with storage, enabled by advanced demand response or demand management tools. To the extent that variable DG capacity, such as solar and wind, grows, the challenges of maintaining the real-time balance of supply and demand on the system and the stable operation of power systems could increase. New economic models and distribution regulation technologies and tools will likely be required to address these challenges.
BTM DG Integration
The increase of DG is also significantly affecting the flow of electricity on both sides of the meter.5 The existing framework of power delivery and associated grid services, such as voltage control, frequency control, power quality, and outage management, are all affected by the changing technical conditions and requirements, which affect the underlying costs to deliver electricity in a reliable manner during normal operation and in a resilient manner following outages and disruptions.
While customers with BTM DG have the technological capability to provide valuable energy and flexibility services to the distribution grid, this DG needs to be integrated into the grid, not just interconnected to it.6 Successful BTM DG integration at high penetration rates and in ways that enable these resources to provide grid services will depend on addressing the operations challenges of the local distribution grid. In the absence of appropriate communications, control and other technologies, and a regulatory framework that supports investment in them, DG has the potential to disrupt distribution grid operation through reverse power flows, voltage violations, harmonics, phase unbalance power quality concerns, the mal/mis-operation of protection devices, as well as presenting grid bottlenecks and congestion.7 Avoiding these problematic outcomes is essential (see Box 6-1 for one example of how DG systems may support system security).
The following itemizes some of the main technological challenges in BTM DG integration. The first challenge due to increased BTM DG is ensuring the real-time balance of supply and demand. With increased rooftop solar, the net injection from and into the
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5Erdener, B.C., C. Feng, K. Doubleday, A. Florita, and B.M. Hodge. 2022. “A Review of Behind-the-Meter Solar Forecasting.” Renewable and Sustainable Energy Reviews 160:112224; Revuelta, P.S., P.L. Salvador, and J.P. Thomas. 2016. “8 - Distributed Generation,” pp. 285–322 in Active Power Line Conditioners: Design, Stimulation and Implementation for Improving Power Quality. Amsterdam: Elsevier Inc.
6 In theory, a cluster of microgrids and universal (or near universal) BTM DG, working together with storage, have the potential to provide a far more technically resilient grid than the current mostly centralized generation model used today. However, unlocking the value of that theoretical possibility depends on a number of enabling conditions, some of which are discussed in this chapter.
7Yazdani, H., M. Doostizadeh, and F. Aminifar. 2022. “Unlocking the Value of Flexibility of Behind-the-Meter Prosumers: An Overview of Mechanisms to Esteemed Trends.” The Electricity Journal 35(5):107126.
grid varies significantly with location and time (e.g., time of day, season of the year, and variability in cloud cover). As a result, ensuring that power is balanced, that is, where power generated equals power consumed, becomes technically complex, especially since this balance has to be ensured at all times and at all locations. If sufficient storage capacity is not available to address any imbalance, the challenge will be to develop and adopt alternative technologies that address these imbalances and/or pursue program and rate designs that can do so. For example, Hawaiian Electric’s Smart Export Program requires distributed solar systems to be paired with battery storage and only provides compensation for electricity exported during the hours of 4:00 pm to 9:00 am.8
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8 For more information see https://www.hawaiianelectric.com/products-and-services/customer-renewable-programs/rooftop-solar/smart-export.
In addition to addressing imbalance issues and reducing reliance on conventional backup generation from the grid as the integration of distributed (and grid-scale) wind and solar increases, storage can also provide benefits to conventional electric power generation by reducing the need for fossil-fuel-based power plants that only run at times of peak load. The traditional storage technology that has been used to address the challenge of variability is pumped storage hydropower (pumped hydro).9 Over the past few years, the technological landscape of storage has been changing rapidly, with battery storage as one of the DER options increasingly available to manage the variability of renewable energy.10 Storage is now economical at a level where it is being deployed in nearly every utility service territory. In addition, advances are being reported in multiple kinds of storage capability, including thermal, chemical, and mechanical energy.11 Encouraged by these technological advances, the improving economics of storage, and flexible loads that can provide grid support at an equal or lower cost than peaking power plants, utilities in many states are already starting to procure significant amounts of storage to address variability and balance real-time supply and demand.12
The second technological challenge is managing imbalances across the three phases (or wires)13of alternating current used to deliver power to customer locations. Imbalance occurs whenever loads (e.g., new houses) are added, which are often connected to the grid through a single phase (see Box 6-1). Imbalance can also occur with variable generation, such as BTM solar. The imbalance can grow with increased BTM DG, because not only does it cause two-way flows but two-way flows that keep changing. In other words, one customer could be buying from the grid while the other is selling, which can be difficult
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9 Pumped-hydro storage units are designed to pump water into a reservoir during times of low electricity demand and prices, and the stored water to be released for power generation at times of high demand and prices. However, these systems are very site specific and can be expensive. See EERE. 2022c. “What Is Pumped Storage Hydropower?” https://www.energy.gov/eere/water/pumped-storage-hydropower.
10EIA. 2021a. Battery Storage in the United States: An Update on Market Trends, pp. 5–12. Washington, DC: Department of Energy.
11Massachusetts Institute of Technology Energy Initiative. 2022. The Future of Energy Storage. Cambridge, MA: Massachusetts Institute of Technology. https://energy.mit.edu/publication/the-future-of-energy-storage.
12 Center for Sustainable Systems. 2021. U.S. Grid Energy Storage Factsheet. No. CSS15-17. Ann Arbor, MI: University of Michigan. https://css.umich.edu/publications/factsheets/energy/us-grid-energy-storage-factsheet; DOE Global Energy Storage Database. 2021. “Search Projects.” https://sandia.gov/ess-ssl/gesdb/public/projects.html; Edison Electric Institute. 2021. “Leading the Way: U.S. Electric Company Investment and Innovation in Energy Storage.” https://www.eei.org/-/media/Project/EEI/Documents/Issues-and-Policy/Energy-Storage/Energy_Storage_Case_Studies-062021.pdf; SEPA (Smart Electric Power Alliance). 2019. “2019 Utility Energy Storage Market Snapshot.” https://sepapower.org/resource/2019-utility-energy-storage-market-snapshot.
13 Or four, including the neutral return. See Peterson, D. 2021. “The Importance of Neutral Wire in 3-Phase Systems.” Control Automation, March 21. https://control.com/technical-articles/the-importance-of-neutral-wire-in-3-phase-systems.
to forecast and therefore difficult to manage. As a result, BTM supply and demand on all three phases could vary in real time. Any imbalances across the phases should be kept in check—left unchecked, imbalances can lead to increases in grid losses. Grid operation and planning complexity also increase as it becomes more difficult for grid operators to manage efficient power system operation. Because power flows in different directions across the three phases, it also directly affects the protection of the distribution system. Variable two-way flows could have a profound impact on relay settings14 and cause outages to occur. Microgrids may be useful in mitigating such imbalances as they can manage them within their footprint for the larger grid.
A third technological challenge is due to the shift in generation from large synchronous generators connected to transmission to increasing numbers of smaller distributed wind and solar generation sources. This shift poses a challenge in the following manner. It is important to maintain alternating current (AC) supplied by the grid at a constant frequency of 60 Hz in order to have a reliable power grid to which millions of appliances that require this constant frequency are connected.15 Large synchronous fossil-fueled generators help maintain this frequency and restore any deviations that occur because of an imbalance between supply and demand, through the rotating inertia present in these generators. As more generation moves from the transmission side to the distribution side and the type of generation changes, this rotating inertia, which solar and wind generation do not possess, is lost.16 If not addressed and mitigated, there may be significant frequency oscillations. Solutions can be found through the integration of power electronics,17 and significant advances are occurring on this front, including the
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14 Relays are devices utilized in a grid to regulate voltages. The latter rise or fall depending on the amount of electricity drawn by each household. Often there can be a large variation and therefore grid operators have to exercise control through these devices to ensure a reliable grid operation. See Horowitz, S.H., A.G. Phadke, and C.F. Henville. 2022. Power System Relaying. 5th ed. Hoboken, NJ: John Wiley and Sons; Palmintier, B., R. Broderick, B. Mather, M. Coddington, K. Baker, F. Ding, M. Reno, M. Lave, and A. Bharatkumar. 2016. “On the Path to SunShot: Emerging Issues and Challenges in Integrating Solar with the Distribution System.” NREL/TP-5D00-65331. Golden, CO: National Renewable Energy Laboratory. http://www.nrel.gov/docs/fy16osti/65331.pdf.
15NERC (North American Electric Reliability Corporation). 2011. Balancing and Frequency Control: A Technical Document Prepared by the NERC Resources Subcommittee. Princeton, NJ: NERC. https://www.nerc.com/comm/OC/BAL0031_Supporting_Documents_2017_DL/NERC%20Balancing%20and%20Frequency%20Control%20040520111.pdf.
16 This challenge is associated with wind and solar technologies whether they are connected to BTM or to higher voltage elements of the delivery system.
17Matevosyan, J., B. Badrzadeh, T. Prevost, E. Quitmann, D. Ramasubramanian, H. Urdal, S. Achilles, J. MacDowell, S.H. Huang, V. Vital, and J. O’Sullivan. 2019. “Grid-Forming Inverters: Are They the Key for High Renewable Penetration?” IEEE Power and Energy Magazine 17(6):89–98.
development, installation, and maintenance of grid-forming and grid-following inverters18 for individual applications and in microgrids (see Box 6-2 for further description). Because these investments support the system as a whole, the additional costs for these technologies at the distribution level may be borne by all customers—those with BTM DG and those without—which could have economic, equity, and regulatory implications related to the design of net-metering and its variants.
Increasing Complexity of Operations, Planning, and Forecasting
In addition to technological challenges, the growth of BTM DG increases the complexity of operations, planning, and forecasting. Based on past experience, grid operators have historically held certain expectations about how different types of customers will use electricity from the grid during different times of day, days of the week, and seasons of the year. It is the utility’s obligation to ensure that the grid and all interconnected equipment operates safely to prevent injuries to the users. For this purpose, the patterns of electricity usage by customers need to be predictable. As BTM generation and storage increase—in part enabled by net metering and other policies more generally—a number of uncertainties arise with respect to customer demand shapes and the timing and size of any BTM DG exports to the grid. These uncertainties pertain to (1) variable generation and load patterns on both sides of the meter; (2) unpredictable customer behavior related to individuals’ habits and personal satisfaction affecting consumption and net BTM DG production (e.g., when these customers run water-heater and air conditioning devices, and operate kitchen appliances, and charge their electric vehicles [see Box 6-3 for a further discussion of these uncertainties]); and (3) random component outages at both sides of the meter. The net variable generation and load at the power distribution level, which would largely stem from BTM DG variabilities, could make the system difficult for the grid operator to manage, particularly under extreme conditions (severe weather and outages due to operator errors, accidents, or intentional physical attacks). Random outages of electrical components at both sides of the meter could also alter BTM DG operation, as any outages could constrain the flow of electricity and affect the system’s reliability and resilience. This could have implications for net metering policy
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18 Inverters are important components based on power-electronics and are necessary in converting direct current (DC) power (which comes from PV used in roof-top solars) to AC power. Two broad categories of inverters are grid-following (GFL) and grid-forming (GFM) inverters, with the latter providing more precise control over the AC power. GFM inverters are increasingly needed as more and more large synchronous machines that provide power at transmission get replaced with variable renewables, as they provide more precise control over the delivery of reliable AC power. Song, G., B. Cao, and L. Chang. 2022. “Review of Grid-Forming Inverters in Support of Power System Operation.” Chinese Journal of Electrical Engineering 8(1):1–15.
related to the predictability of customer response to the price signals sent by the compensation levels provided.
Over the past several decades, the design of the distribution grid has been dominated by a top-down approach—one in which the utility plans to respond to whatever happens due to customers’ withdrawals of electricity from the grid—in terms of the primary and secondary feeders and their interconnections, and the location and type of voltage control devices including transformers, load-tap changers, and capacitor-banks. Through appropriate design and management of these voltage control devices, utilities have operated the power grid and ensured its reliability and power quality.
The growth of BTM DG fundamentally challenges this top-down planning and operations approach, as users may behave in ways operators do not expect. Because users do not exist in a vacuum when it comes to their control and operation of DG, careful coordination between operators and users will be important to ensure appropriate reconciliation between what the users want to do and what the operators need or will allow them to do.
In particular, the impact of BTM on grid operations can be summarized as follows: grid operation will be more challenging because there will be less net load available under the control of grid operators as BTM load increases. A higher BTM load will make it more difficult for grid operators to forecast the net load, as BTM load is quite variable and the BTM load data are mostly unavailable to grid operators. This, in turn, is due to customers exercising their own habits and preferences to charge their cars, discharge their batteries, use their appliances, and participate in programs such as net metering. Complexity could also increase for grid operators with the proliferation of EVs and BTM charging devices.
As a result, updating data collection and analysis, demand forecasting, and other tools are becoming increasingly important to more accurately quantify BTM DG adoption and interactions of customer demand and supply with the local distribution system. Conducting accurate forecasts of BTM DG can help to envisage BTM flexibility requirements, reducing the operational costs of centralized generation and improving the system’s efficiency while maintaining its security. To this end, time series forecasting models have gained prominence.19 Grid operators have leveraged forecasting models for estimating BTM load, generation, and market prices, and for estimating time-horizons for predicting BTM load and generation for quantifying risks and reducing uncertainties to lead to better planning operational strategies.
TECHNOLOGY INTERSECTION 2: EMERGING ADVANCES IN POWER ELECTRONICS, STORAGE, COMMUNICATIONS, AND CONTROLS
The seamless integration of significant amounts of DG and flexible loads and exports necessitates advances in technologies at multiple levels to ensure reliable grid operation. Some technologies can be specifically encouraged or addressed directly as part of net metering compensation structures and levels so that, for example, they encourage types, locations, and timelines for DG adoption and operation that enhance or do not
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19 Time series models account for internal structural relationships within data, often employed for the purposes of forecasting future outcomes. See NIST. 2022. Engineering Statistics Handbook: 6.4. Introduction to Time Series Analysis. Washington, DC: NIST. https://www.itl.nist.gov/div898/handbook/pmc/section4/pmc4.htm.
adversely affect the reliability of the grid. Whether or not net metering compensation approaches require such technologies, the distribution utility may need to add them to assure reliable operations of the grid.
The first technology relates to power electronics that allow the transformation from DC to AC through the use of inverters. “Smart” inverters that operate autonomously, both in grid-following and grid-forming modes, and which coordinate with each other and the grid, are being required in certain jurisdictions for solar (and other BTM DG) to be eligible for net metering.20
Storage is another technology and, as discussed earlier, perhaps the most attractive option for addressing the variability and uncertainties associated with increasing DG and DER penetration. Advanced batteries, thermal storage devices, and emerging
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20CPUC. 2021c. “Rule 21 Interconnection.” https://www.cpuc.ca.gov/rule21.
technologies based on hydrogen are all options that are seeing exponential advances.21 The rapid growth of electric vehicle adoption provides another opportunity for potentially cost-effective storage that could be integrated into grid services and/or supply if technically enabled to do so. Advances are being reported, both in V1G (also known as managed charging and/or smart charging) and vehicle-to-grid (V2G) technologies, where the former consists of uni-directional control of electric vehicles that switches off charging on demand and the latter consists of bi-directional control of the vehicles by switching between a charging and a discharging mode.22 With a concerted push by decarbonization advocates, policymakers, and stakeholder groups toward Electrify Everything,23 there is a significant opportunity to make use of these mobile storage assets for grid reliability, security, and resilience.
While such technological advances support the availability of resources for ensuring power balance, and therefore grid reliability, utilities and grid operators may only be able to leverage them if there exists a strong communications backbone and a SCADA system24 to enable the coordination needed between these critical assets and control rooms located at appropriate locations in the distribution grid. The increasing growth of DER, accompanied by growth in advanced metering infrastructure (AMI), automation
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21Mongird, K., V. Viswanathan, J. Alam, C. Vartanian, V. Sprenkle, and R. Baxter. 2020. 2020 Grid Energy Storage Technology Cost and Performance Assessment. Publication No. DOE/PA-0204. Richland, WA: Pacific Northwest National Laboratory, and Somerville, MA: Mustang Prairie Energy. https://www.pnnl.gov/sites/default/files/media/file/Final%20-%20ESGC%20Cost%20Performance%20Report%2012-11-2020.pdf.
22Markiewicz, D., B. Wechtenhiser, J. Brendlinger, M. Campbell, M. Tims, and J. Yanuck. 2018. “Vehicle-to-Grid Testing and Demonstration Final Report.” CEC-500-2018-024. Prepared for California Energy Commission by Concurrent Technologies Corporation. https://www.energy.ca.gov/sites/default/files/2021-06/CEC-500-2018-024.pdf.
23Regeneration. 2022. “Electrify Everything.” https://regeneration.org/nexus/electrify-everything; Roberts, D. 2017. “The Key to Tackling Climate Change: Electrify Everything.” Vox, October 27. https://www.vox.com/2016/9/19/12938086/electrify-everything.
24 SCADA stands for Supervisory Control and Data Acquisition. It corresponds to information system architecture that consists of computers, networked data communications, and graphical user interfaces so that it can receive real time data on power system processes and related equipment, which are in turn used by grid operators and supervisors to control, mitigate contingencies, and optimize power system operations. Barnes, K., B. Johnson, and R. Nickelson. 2004. Review of Supervisory Control and Data Acquisition (SCADA) Systems. Idaho Falls, ID: Idaho National Engineering and Environmental Laboratory. https://inldigitallibrary.inl.gov/sites/sti/sti/3310858.pdf.
devices such as reclosers, controllable capacitor banks, and voltage regulators, and smart inverters, necessitate the deployment of advanced communication technologies.25,26
In addition, a distributed decision-making architecture is needed to manage power injections, load reductions, and storage in this distributed environment. Utilities and grid operators have to make decisions with significant and varying uncertainties in the knowledge of the system state (due to latencies in communications or faults and outages in equipment). Moreover, as DG grows in scale, whether behind the meter or otherwise, the amount of data grows exponentially, leading to a need for data management at scales to which utilities are not accustomed. There are significant advances being made in the requisite distributed control technologies that may allow robust and accurate decisions at the appropriate level of granularity and across all locations, and the opportunity for reliable and resilient integration of DER, including DG, across the grid. However, such technical solutions must be implemented in conjunction with (or even in anticipation of) rapid deployment of DG for local systems to perform reliably over time.
These advances introduce new challenges as well. First, cybersecurity poses a real and growing challenge, as discussed further below. Another issue is control of BTM DG with disparate ownership. Net metering policies can be shaped to encourage customer flexibility with respect to DG, as well as DER, operation, and consumption in general. Policies can also be developed with opportunities for demand response (e.g., direct load control) and transactive energy in mind.27 For example, an internal price (through net
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25 Over the past two decades, communication technologies have evolved at a rapid pace, with new generations of technologies continually evolving. Notable ones are wireless technologies which have evolved through four generations leading to current exploration of 5G networks, and discussions of 6G not far behind. Internet of Things (IoT)-enabled devices have provided a new platform for grid operators to facilitate flexible consumption. A compelling demonstration is the synchronous reduction of load by 700 MW through an IoT-coordinated control of a large number ofsmart thermostats during a total solar eclipse in 2017. It should be noted that this occurred during a solar eclipse. See Tsao, S. 2017. “PJM, CAISO Detail Load Changes During Solar Eclipse.” S&P Global Market Intelligence, September 13. https://www.spglobal.com/marketintelligence/en/news-insights/trending/h-gQiWXabDmfyAvghazbsw2.
26Zhou, Q., M. Shahidehpour, A. Paaso, S. Bahramirad, A. Alabdulwahab, and A. Abusorrah. 2020. “Distributed Control and Communication Strategies in Networked Microgrids.” IEEE Communications Surveys and Tutorials 22(4):2586–2633.
27Hammerstrom, D.J., R. Ambrosio, T.A. Carlon, J.G. DeSteese, G.R. Horst, R. Kajfasz, L.L. Kiesling, et al. 2007. Pacific Northwest GridWise Testbed Demonstration Projects: Part I. Olympic Peninsula Project. Richland, WA: Pacific Northwest National Laboratory. https://www.pnnl.gov/main/publications/external/technical_reports/PNNL-17167.pdf.
metering compensation) can be used as a control signal to consumers to adjust their consumption.28
Several transactive energy studies have been published in the past few years29,30 identifying advantageous grid-wise benefits such as reduced demand volatility, reduction of peak demand, lower electricity prices, and improved capacity utilization. Transactive energy systems create revenue opportunities for residential DG and DER owners, and do so in a way that can more accurately reflect the true value of DG and DER operation at that time, and as it changes over time. Transactive energy systems also provide a platform to incorporate equity considerations, for example, by coupling a transactive offering with targeted or means-tested financing and education for technology purchases. A NARUC report,31 discussing electric system digitalization talks about transactive energy and other approaches that can serve similar objectives as those underlying net metering. Transactive energy is also adaptable to many use cases, from a utility using it to help it achieve its operational objectives, to a microgrid operator or building operator using it to manage and balance production and consumption, to a retail energy provider using it to enable its risk management across its customer portfolio, and in light of its wholesale long-term contracts and prices in wholesale power markets. Significantly more studies need to be carried out to understand issues related to tariff, interconnection, and ownership considerations related to who manages or who has technical control over
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28 Demand response programs offer models that may be applied to BTM distributed generation through NEM compensation design. A typical illustration of this project demonstrated peak load reduction and energy cost saving through the coordination of multiple water pumps, diesel generators, and heating loads of several residential houses. Kangping L., F. Wang, Z. Mi, M. Fotuhi-Firuzabad, N. Duić, and T. Wang. 2019. “Capacity and Output Power Estimation Approach of Individual Behind-the-Meter Distributed Photovoltaic System for Demand Response Baseline Estimation.” Applied Energy 253:113595.
29Cazalet, E.G, M. Kohanim, and O. Hasidim. 2020. Complete and Low-Cost Retail Automated Transactive Energy System (RATES). CEC 500-2020-038. Prepared for the California Energy Commission. Encino, CA: Universal Devices, Inc. https://www.energy.ca.gov/sites/default/files/2021-05/CEC-500-2020-038.pdf. Appendix B provides information on the participants and the nature of their uses of the technologies and degree of active participation.
30 PNNL (Pacific Northwest National Laboratory). The Distribution System Operator with Transactive (DSO+T) Study: Executive Summary. Richland, WA: PNNL. https://www.pnnl.gov/sites/default/files/media/file/EED_1574_BROCH_DSOT-ExecSumm_v11.pdf.
31Kiesling, L. 2022. Digitalization in Electric Power System and Regulation: A Primer. Knowledge Problem LLC. https://pubs.naruc.org/pub/17AB6931-1866-DAAC-99FB-8D696CC1944A.
such resources under different circumstances,32 in order to evaluate the scalability of transactive energy to help realize the full benefit of DG for the customer and the grid.
The above discussion illustrates that many of the engineering challenges of increasing BTM DER can be addressed through the deployment of appropriate advanced technologies. Customer deployment of some of these technologies related to DG could be encouraged through net metering compensation.
TECHNOLOGY INTERSECTION 3: CYBERSECURITY AND RESILIENCE
Cybersecurity and Privacy Considerations
As the number of cyber-attacks aimed at disrupting electric power supplies increases globally,33 electricity system operators face a new frontier for managing resilience.34 Cyber-attacks can further magnify the impacts of physical disruptions. While cyber-secure BTM DG systems could offer a significant potential to sustain power grid services under extreme operating conditions, particularly those with highly reliable and resilient power supplies, they too are also subject to cyber incidents. Moreover, cyber vulnerabilities in
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32 In its September 2020 “Order 2222, “The Federal Energy Regulatory Commission (FERC) enabled distributed energy resources to compete in all regional wholesale electric markets. When fully implemented, DER will participate in wholesale markets, providing “capacity, energy, and ancillary services alongside traditional resources.” FERC explains, “[m]ultiple DERs can aggregate to satisfy minimum size and performance requirements that they might not meet individually.” FERC states Order 2222 is intended to “empower new technologies to come online and participate in wholesale markets on a level playing field to further enhance competition, encourage innovation and drive down costs for consumers.” In June 2022 FERC issued a first order regarding compliance with Order 2222. See FERC. 2020b. “FERC Opens Wholesale Markets to Distributed Resources: Landmark Action Breaks Down Barriers to Emerging Technologies, Boosts Competition.” September 17. https://www.ferc.gov/news-events/news/ferc-opens-wholesale-markets-distributed-resources-landmark-action-breaks-down; and FERC. 2022. “FERC Acts on First of Order No. 2222 Compliance Filings.” June 16. https://ferc.gov/news-events/news/ferc-acts-first-order-no-2222-compliance-filings.
33 For instance, cyber attackers switched off breakers remotely in the Ukrainian electric power system with the help of a malware named BlackEnergy malware on December 23, 2015, which left approximately 30 substations disconnected and approximately 225,000 customers without power for several hours. Cybersecurity & Infrastructure Security Agency. 2021. “Cyber-Attack Against Ukrainian Critical Infrastructure.” https://www.cisa.gov/news-events/ics-alerts/ir-alert-h-16-056-01; E-ISAC (Electricity Information Share and Analysis Center). 2016. Analysis ofthe Cyber Attackon the Ukrainian Power Grid: Defense Use Case. Washington, DC: E-ISAC.
34 Pp. 4, 9, and 56–60 in NASEM. 2021. The Future of Electric Power in the United States. Washington, DC: The National Academies Press. https://doi.org/10.17226/25968. See also NASEM. 2017. Enhancing the Resilience of the Nation’s Electricity System. Washington, DC: The National Academies Press. https://doi.org/10.17226/24836.
BTM DG operations can potentially trigger a widespread outage in electric power systems. It is thus important to identify these vulnerabilities and deploy effective measures to address cyber threats.
The focus of BTM DG cyber security is to retain the quality and continuity of supplied power. BTM device malfunction may occur when the device is reconfigured and manipulated in an unauthorized manner. If a BTM device is compromised, attackers can leverage control over the device and hinder normal functions of the associated sensors and/or actuators (e.g., altering the data that will be reported to the grid control center, and denying the implementation of supervisory control commands). In addition to operators’ unintended errors, software applications are potentially corrupted and modified by viruses hidden in the BTM DER servers’ operating systems. Hence, it is critical to strengthen BTM DER cyber security capabilities for sustaining DER (including DG) services in the event of cyber incidents to protect the grid and BTM DER customers.
As more and more devices are connected to the grid, they pose correspondingly increasing cyber risks that need to be addressed by local grid operators. Failure to address such considerations will weaken the reliability of the grid, potentially offsetting to some degree the other grid and customer-specific resilience benefits of deployment of DG. Overcoming the cybersecurity risks and ensuring a reliable operation of the grid will entail investments in secure communication and control technologies.
Increased penetration of rooftop solar also implies increased communication, which implies that personal information that can identify an individual directly or indirectly may be revealed, that is, privacy may be compromised. As increased communication is essential to ensure grid reliability, particular attention has to be paid to ensure that sensitive lifestyle information is protected regarding when the home is occupied or when the occupants are awake, or how and when they use various appliances. Related information about billing history, account information, and DER information has to be protected at various levels of security. Fraud protection has to be ensured; this includes energy consumption that is attributed to a different location, and also that any customer data collected must be kept secure and not revealed to any third party.35
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35NIST (National Institute of Standards and Technology). 2010. Guidelines for Smart Grid Cyber Security, pp. 1–3. NISTIR-7628. Washington, DC: NIST. https://nvlpubs.nist.gov/nistpubs/ir/2010/NIST.IR.7628.pdf.
Resilience Considerations
As the amount of capacity and installations of BTM DG grow, many utilities and the federal government are addressing how the grid can remain resilient,36 not only in the face of cyber-attacks but also related to extreme weather (tornados, hurricanes, winter storms, etc.). Depending on how DG installations are integrated into the grid, the electric system may become more resilient to widespread power outages as consumers produce and have better access to on-site power. If DG is configured so that it can provide resilience, not only to the consumer but also to the distribution grid, the corresponding net metering compensation should reflect this value.
Various DG technologies can be utilized to provide resilience, the most common of which is backup generation. There are however more complex scenarios, which include a combination of DG and storage.37 For example, DG, backup generation, storage, or reduction of demand need not be located at the same house or building. A well-thought-out design in a supporting cyber-layer of smart digital devices that monitor, process, communicate, and alert other devices (e.g., in a different location, in the form of a microgrid, or a community solar device, or even rooftop solar at a neighboring house) that are connected to the overall network can allow all of these technologies to step in, alleviate peak loads, supply critical nodes such as hospitals and fire stations, and help with the overall grid resilience.38 Policies and regulations may need to be modernized to allow the most advanced applications to enable the highest level of resilience.39
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36DOE Office of Electricity. 2019. “North American Energy Resilience Model.” https://www.energy.gov/sites/prod/files/2019/07/f65/NAERM_Report_public_version_072219_508.pdf. This report defines a resilient grid as one that has the ability to anticipate, withstand, and recover critical loss-of-supply resulting from low-probability, high-impact threats. NASEM. 2017. Enhancing the Resilience of the Nation’s Electricity System. Washington, DC: The National Academies Press. https://doi.org/10.17226/24836.
37 For example, in northern regions during the winter, heavy snows and low solar illumination can make providing a household’s electric power solely with a solar + storage system cost prohibitive unless other backup generation is installed. Currently, for short term power outages, the least capital-intensive solution is to provide backup to the DG + storage with a fossil-fired generator. (Generators are widely commercially available that can power either key loads in a building [e.g., refrigerator] or the entire building from several sources of fuel [e.g., diesel, propane or natural gas].) However, a generator may not be economic for extended use because of the relatively high cost of both the generator and fossil fuels.
38 Grid-level resilience corresponds to a basic restoration of electricity over a large area (such as a street, a township, or a district), whereas local resilience corresponds to restoration of electricity within a building such as a hospital using alternate electrical supply. See NASEM. 2017. Enhancing the Resilience of the Nation’s Electricity System. Washington, DC: The National Academies Press. https://doi.org/10.17226/24836.
39 See NASEM. 2017. Enhancing the Resilience of the Nation’s Electricity System. Washington, DC: The National Academies Press. https://doi.org/10.17226/24836.
SUMMARY
Public policy, including net metering, supporting distributed renewable generation, declining costs in solar and storage, and exponential advances in technologies related to metering, communication, computation, and power electronics, has led to a steady increase in DER in general and DG in particular. This chapter outlined the challenges in the integration of BTM DG and other DER, the technological advances that provide tools for effectively addressing these challenges, and various ways in which these technologies can support the grid, including improving reliability and resilience while ensuring distributed renewable integration.
With advances in various DER technologies, it can be expected that DG costs due to solar PV installation and associated storage will continue to decline, making it more attractive for consumers to adopt renewable generation, especially rooftop solar. Correspondingly, DG adoption with net metering compensation can be expected to increase. To simultaneously address the accompanying challenges of variable demand, grid reliability, and cyber-physical security, investment in technology on the distribution system is essential to, among other things, provide visibility to grid operators so that they can assure the stable operation of the system while also unlocking the potential of DG and DER to provide grid services and value to the system.40 Without investment in such grid technologies, not only might the potential for BTM DG to provide grid services be stymied, but also deeper deployment might have negative consequences on grid reliability. Policymakers and regulators need to understand the importance of such grid investments in conjunction with increasing deployment of DG as they consider the framework for allowing utilities to recover these costs.
FINDINGS
Finding 6-1: Physical constraints that govern electricity flow introduce several challenges as BTM DG increases: reverse flow of electricity, significant uncertainties in load, and variations in load. These in turn can lead to voltage fluctuations and stress grid equipment, causing outages. As DER penetration, especially that of DG, increases, the need for investments in the distribution grid in order to ensure reliability and resilience becomes imperative.
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40 Net metering rules and rate structures can also include, encourage, or require transparency to grid operators, which will enhance the value of BTM DG and enable grid operators to address any potential negative consequences for the electricity system.
Finding 6-2: In addition to direct investments to integrate BTM DG and other DER, investments in communications, visibility, security, and digital power electronics are essential to capture the value of DER and DG for all customers and the system as a whole.
Finding 6-3: Investments in technologies to integrate BTM DG and other DER can lead to a reliable and resilient grid-edge, easing the burden on future investments in distribution and transmission expansion.
RECOMMENDATIONS
Recommendation 6-1: There need to be direct investments in the distribution system to integrate increasing amounts of BTM DG such as rooftop solar, as well as other DER, including smart buildings management systems, electric vehicles, and charging infrastructure, to ensure the continued safe and reliable operation of the grid and provision of grid services. Investments will also be required to improve grid visibility to suitably site and operate BTM DG, as well as provide efficient price signals, such that the DG can provide system benefits, particularly local and grid resilience when normal service is disrupted. These investments in the distribution grid have to occur simultaneously with BTM DG deployment.
Recommendation 6-2: In order to make the best use of DG and DER, utilities must make investments to integrate, increase the visibility of, manage (either directly or indirectly through price signals), and reduce barriers to customer and DG provider management of these technologies. With utility or non-utility control or intelligent management, DG can provide more value. The corresponding compensation through net metering and its variants could reflect this higher value. Overall, democratization of the grid, with increased public and private partnerships, can be very valuable.
Recommendation 6-3: Investments in distribution system technologies toward integration of DG and DER have to be accompanied by revisions in policies and state and federal utility regulations to facilitate cost recovery of these investments.
