“Globally, New York is one of the most advanced regions in thinking about how to get to a market-based, functioning transactive grid,” says Chris King, responsible for global policy and regulatory affairs for the Siemens digital grid business. In a trans-active grid, electrons flow both ways – not just from the service provider to the end-user, but also from the prosumer – the modern term for a pro-active energy consumer – to the electric distribution platform.
New York’s energy vision
NY’s REV – the engine that drives innovation
The State of New York has been “Reforming the Energy Vision” (NY REV). The goal is to engage and empower customers, improve system efficiency and contribute to decarbonizing the economy and to animate the market for renewable energy and distributed resources.
King attributes New York’s leading position in this matter to strong policy leadership from Governor Andrew Cuomo and the State’s Public Service Commission. “They started with a vision and figured out that the utilities need to have the technical capability to support such a trans-active grid,” King explains.
Scott Weiner, Scott Weiner, today a partner at law firm Florio Perrucci Steinhardt & Cappelli LLC, was leading the team that was responsible for the implementation of NY REV policies in his former position as Deputy for Markets and Innovation for the New York State Department of Public Service. He was one of the main forces in bringing all stakeholders from the energy business to the table. “An essential element of our work is collaboration. It’s not like we as regulators are oracles from some regulatory power,” Weiner said.
Distributed Energy Resources DER
With a series of regulatory orders under New York REV, the New York Public Service Commission has created a regulatory framework that entices utilities – the five major ones in the Metropolitan Area – to work with a rapidly evolving network of such distributed and mainly renewable energy sources – from solar to wind, from community storage grids to smart building technology.
“With respect to valuing and compensating DER, the Commission’s recent order regarding the Value of DER initiated a paradigm shift in collaborative decision-making by asking the diverse stakeholders to look for what we agree about, and to begin to build there. It became clear that everybody agreed that more precise pricing was needed,” Weiner said. For different reasons, though: Some people thought they were being undercompensated, other people believed DERs were being overcompensated. “But everybody could agree on more precise pricing as a goal, and we could avoid all the arguments of the past,” added Weiner. He anticipates that the market will be animated, in part, through these better price signals. “With more precise compensation, there will be investment in distributed energy resources and in distributed generation, which will then create the infrastructure for this trans-active market.”
Chris King supports this opinion. “An important part is sending the market prices to the end customers so they can decide when to use electricity, because the prices vary by the time of day.” Customers thus can use less energy when it’s more expensive or use more when it’s when it’s cheap, say when there’s plentiful wind energy available.
King also points to the regulatory policies that needed to be implemented to animate the market, through both financial incentives, as well as appropriate rules. By working with all stakeholders, the Commission arrived at a framework that, according to King, is facilitating the transition from central production to distributed energy generation. The utilities economic interests some years ago were to resist the deployment of distributed resources. Now with such resources as a foundational element of New York’s energy future, it’s their job to facilitate the deployment of DERs, and that will be the basis upon which they get compensated.
“There will be rates, but as the Commission looks at how that rate structure is devised, it will look to incentives that will be available to the utility,” stated Weiner. “The utilities are now seen as a platform operator. They are still going to be tasked with reliability and security, but they have to do that within the context of a highly distributed system,” he said. In his opinion, the utilities are central for the State to be able to reach its ambitious energy goals: By 2030, for example, half of the electricity used in New York will have to come from renewable resources.
The utilities have submitted their initial Distributed System Implementation Plans (DSIPs) to the commission, in which they lay out how they will evolve from being a one-way producer and provider to becoming a platform, to make it easier, cheaper and faster for prosumers and independent energy companies to interconnect to the grid. The commission in a recent decision has accepted these initial DSIPs, and the utilities and stakeholders continue to advance and evolve the DSIPs.
Meter data management
According to Weiner, New York is now beginning to deploy advanced metering in various forms, and that will unlock yet other capabilities in a home or business. Some of the smart meter data will be provided to customers and to market participants for free, as part of the cost-recovery for installing the smart meters, says Chris King. The utility will be able to sell other parts of that data for a profit.
Siemens offers various solutions for meter data management, such as analytic software that runs on EnergyIP and, soon, MindSphere, to produce enhanced data. “Another product we have is called DERMS, distributed energy resource management software,” King points out. That software was designed specifically for the utilities in their new role as Distributed System Providers, or DSPs, to connect to distributed resources. DERMS is able to monitor the resources and can control them where the customer gives permission to do that – and of course, customers get paid when the utility gets access to these resources.
“If we think of REV as the engine that drives innovation, right now there is the opportunity to join a community of distributed generation projects,” said Weiner. “People who improve their building systems, their energy systems; increase the efficiency of their home, or their businesses, are participating in REV.”