California’s Distributed Energy Future Part 3
Can a New Distribution System Operator Help Expand Distributed Energy Resources in California?
Note: this blog is the third in a series of three digging into Vote Solar’s goals for the CPUC’s High Distributed Energy Future proceeding (R. 21-06-017). You can read Parts 1 and 2 here. The proceeding is hoping to prepare California’s grid for the swift evolution of grid capabilities and operations to integrate DERs, improve the distribution planning process, optimize grid infrastructure investments through community input, and to focus on how existing DER functions can be used to best meet stakeholder needs.
Alongside Vote Solar’s goals of increasing community engagement opportunities within the Distribution Planning Process and working to increase non-wires alternatives (NWAs) and prioritize ESJ communities in grid preparation for electrification, the proceeding’s Track 2 will also assess future models of the electric grid through Distribution System Operator models (DSO). Distribution System Operators are the entities that operate the distribution system between various types of generators and end users of the energy after it moves through the transmission system. An independent DSO (that is, one in which the owners of the distribution grid are separate from the operator of the grid) can provide a more open, transparent and flexible system in a way that traditional utility distribution has limited. We are glad the Commission is exploring different concepts for how DSOs can be structured and how an independent DSO could provide for a more democratized energy system. Ensuring that the models being discussed are focused on equitable access and ownership is something that I plan to pay attention to, in order to ensure we are not replicating systems that leave people and communities behind.
In Track 2 the CPUC is asking questions around how a DSO can unlock the potential of DERs and explore the values DERs can provide beyond just clean energy generation. We hope to advocate in Track 2 for a more open and accessible distribution system that will enable DER proliferation and a level playing field for third parties to own generation and storage. A more open system can also accelerate the valuation of DERs, beyond just adding load to the grid, through DER aggregation that can provide benefits for ratepayers and reduce grid stress and improve resiliency as climate change continues to add strain to the California grid. Improving the value of DERs to encompass and incentivize their potential value to reduce demand on the grid, smooth out peaks and provide resilience in the face of power shut offs, will enable an energy system that both expands access and protects ratepayers.
Some questions I’m looking to engage with alongside our partners and allies when it comes to DSO models are:
- What DSO model best removes the financial incentives that utilities currently have to oppose the growth of clean distributed generation in order to earn a return on investment in traditional distribution upgrades?
- What DSO model best prioritizes and takes into account equity and ensures community engagement in the distribution process? What resilience and California specific considerations for a DSO model would need to be taken into account to deal with wildfires, drought, and other climate impacts?
- How can we ensure a new DSO model will not put undue burden on ratepayers already paying increasingly high fees from the utilities, while still ensuring reliability? What would that transition look like and who would be deciding when and how it happens?
The CPUC has hired consulting firm Gridworks to help navigate this Track of the proceeding. Gridworks released a white paper in March that laid out a proposed work plan and insights from other countries who attempted a similar process. I look forward to digging into the issues of DSO models, and working to ensure that any version that emerges actively takes into account its impacts on the wider grid and our most disadvantaged communities, who want and need DERs alongside reduced electricity rates.
While this proceeding will stretch into 2024, CPUC could approve new policy within it as soon as early 2023. Rapid increases of DERs to the grid are already occurring, with new and innovative technologies and programs like Virtual Power Plants and other aggregators coming to market frequently. This proceeding is likely to help shape how we integrate these new systems and needs a critical eye to ensure equitable processes, planning and outcomes. We need to ensure communities can participate and plan for their own electrification, and that inequities of our current fossil fuel-based system don’t come forward with us into a new decarbonized one.