IEEE Power & Energy Magazine - March/April 2022 - 15

The United States' Alternatives Today
around expanding the role of outside parties beyond
what has been traditionally considered within utility
planning frameworks.
Summary of States' NWA Activities
Several states have ongoing activities to mandate and incentivize
DERs as NWAs to defer and avoid grid investments as
part of utility capital planning processes. These activities align
with the regulatory objectives of fair rates, reliable service,
societal and environmental benefits, and public safety. While
some U.S. utilities are choosing to explore NWA opportunities
on their own, a significant number of projects result from
state-level regulatory processes and activities. In many states,
NWA initiatives are targeted at deploying energy storage for
grid services among other applications that incorporate power
storage as part of routine utility planning. The activities summarized
here are shown in Figure 1 and classified as investigation,
initiative, and legislation. Investigation refers to states
with proceedings to gather information and seek stakeholders'
inputs. Initiative represents states with orders requiring utilities
to make proposals and gather stakeholders' comments.
Legislation denotes states with specific mandates from legislatures
and utility commissions. The benefit streams that are
" counted " in different state NWA frameworks vary to some
extent. Table 1 summarizes this situation.
California
California is one of the pioneers in establishing formal
NWA programs. In 2013, it was the first state to set an
aggressive energy storage procurement or deployment target
of 1,325 MW (with a maximum of 50% utility ownership)
by 2024. In 2016, a bill (AB 2868) was signed
into law, allowing 500 MW of energy storage to be rate
based by the three investor-owned utilities (IOUs) in the
state. The law also permits utility ownership of behindthe-meter
storage as long as that does not unreasonably
limit or impair the ability of nonutility enterprises to
market and deploy energy storage systems.
Also in 2013, the California Public Utilities Commission
(CPUC) instituted section 769 of the California
Public Utilities Code, requiring electrical corporations
to file distribution resources plan proposals. The objective
was to identify optimal locations for the deployment
of DERs. The code further instructs the CPUC to review
plan proposals submitted for approval and modification
to maximize ratepayer benefits from utilities' investments
in distributed resources. Another important activity
was conducted by a locational net benefits analysis
working group examining the locational value of DERs,
considering various value streams, such as transmission
and distribution capacity deferral, wholesale energy
market participation, and environmental benefits.
To further promote the deployment of distributed
resources, the CPUC approved a pilot regulatory incentive
mechanism that awards a 3-4% pretax incentive to utilities
deploying cost-effective DERs that defer and displace
traditional distribution investments. In addition, the body
directed IOUs to procure at least 150 MW of preferred
resources (e.g., energy efficiency, solar photovoltaic, and
power storage resources). In 2018, it instructed IOUs to
submit distribution deferral opportunity reports identifying
prospects for DERs to cost effectively postpone and
avoid traditional IOU investments to mitigate forecast distribution
system deficiencies. These opportunities should
be identified by using a set of screening criteria to ensure
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