Wants Versus Needs: The Struggle to Realize New York’s Energy Vision

In 2009, National Grid chose ABB for a SCADA/EMS system that would allow for more modern and integrated visibility into its electric transmission and distribution networks in Massachusetts and New York. Earlier this year, the system went into service. An outage management system that was expected to be operational in New York in 2013 is now slated for early 2016.

That sort of timeline might not fly in New York’s utility future.

New York’s Reforming the Energy Vision (REV) proposal calls for distribution utilities, like National Grid, to transform from the role they play today into functioning as distributed service platform providers (DSPP) that will manage all of the assets at the grid edge. That will require entirely new backend systems at many utilities, not to mention a wholesale rethinking of the business structure, in order to succeed.

During a discussion around this topic on Thursday night in New York City, Jon Poor, director of strategy at National Grid, expressed a clear understanding of the vision behind the project, including the need for advanced analytics and cloud computing. Vision, however, might not be enough to be a successful DSPP.

“It really lends itself to service-oriented architecture and some big data, and it’s going to take some heavy lifting to get there,” Poor said of becoming a DSPP during a Clean Energy Connections panel, “Architecting Energy’s Future: Grid-Edge Technologies Underpinning an Intelligent, Distributed Utility System.”

Heavy lifting, indeed. Not only will technology have to be overhauled in the coming decade, but utility business processes will also have to change substantially. “The concern about the complexity keeps me up at night,” Audrey Zibelman, chair of the New York Public Service Commission, said earlier this year.

In the short term, there will need to be definition as to which services distributed energy resources can deliver as the more robust platforms are built out. The utilities are required to file their distributed system implementation plans by December 15.

“I would like a clear expression of needs and not just a vision,” said H.G. Chissell, SVP of strategic accounts at demand response startup Viridity Energy. “We need to separate wants from needs.”

He pointed to projects such as Consolidated Edison’s Brooklyn/Queens Demand Management Program, which will defer the cost of a $1 billion substation using demand-side management, as a good example of a specific issue a utility is looking to solve using many third-party resources.

To move the process along, New York is taking submissions by July 1 for REV demonstration projects that will “test innovative business models that create new revenue streams outside of the traditional rate base and motivate the utility to partner with and support third-party clean energy providers.”

It’s not just third-party providers that utilities should be thinking about, argued Chissell. “Con Edison, NYISO and others need to see the owners of these buildings as the real partners,” he said, referring to large real estate portfolios. “There’s a huge education opportunity right now.”

The issue so far is a bit of a chicken-and-egg problem. There are some models for how to move forward; the New York Public Service Commission is looking at the performance-based regulation scheme that is used in the U.K., for instance. But New York is also trying to open a market that is not dictated by regulators at all. “The pace of change and innovation will be driven by consumers and markets, instead of utilities and regulators,” said Zibelman.

But that’s the future. For now, some New York utilities are waiting for regulatory clarity before moving forward. “A lot of that work needs to be done before you talk about devices on the grid or on a customer’s home,” said Poor. “For all the talk about hardware, what do you need behind the scenes? It’s at that inflection point right now. We’re making smart decisions, but they’re measured decisions.”

The mindset of utilities that want to craft a vision, wait for regulators, then pilot small, is exactly what will need to change. On the regulatory side at least, it looks as though they are moving at lightning speed so far. Both tracks of the REV proceeding are underway, and a white paper that examines the costs and benefits of distributed energy and energy efficiency as they relate to utility expenditures is due soon.

There are also changes that can come as the REV proceeding is worked through. Poor, while discussing challenges, alluded to an opportunity just waiting to be plucked by rethinking how energy can be delivered. “For our electric companies, there’s still a significant momentum around replacing aging infrastructure and meeting reliability needs,” he said of National Grid.

Chissell pointed to small changes, such as Con Edison going beyond its three-year demand response program and doubling that, which could have a big impact in the short term to opening up more demand-side resources and helping with utility reliability and planning. In Hawaii, HECO has started working with Enphase to leverage its microinverters to collect data at the grid edge to help identify where more rooftop solar PV can be installed.

For the utilities that can move fastest to be transparent about their immediate pain points and are committed to overhauling everything from their business processes to distribution engineering plans, the market will come calling, at least in New York.

“If I can solve Con Edison’s needs,” said Chissell, “then I understand there’s something in it for me.”

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