IEEE Power & Energy Magazine - March/April 2022 - 25

Of the projects, SCE has procured DER solutions for
seven proposed deferral projects totaling 35 MW of capacity,
and PG&E has offered contracts for 13 DER-based
deferral projects with 30 MW of capacity. SDG&E did not
award any deferral contracts or identify an eligible distribution
investment project in either 2019 or 2020 DIDF cycles.
Further details on the results of the DIDF solicitation are
shown in Table 1.
As demonstrated by the limited number of procured
projects and the lack of implemented solutions, the existing
DIDF process has been slow to result in NWAs effectively
replacing traditional grid investments. Some stakeholders
maintain that the limited efficacy is attributable to several
factors. For one, the framework directs utilities to take
action counter to the incentives established for regulated
utilities. In the regulated context, utilities are incentivized
to make traditional investments designed to improve system
reliability because these investments allow them a guaranteed
rate of return.
A 2020 Greentech Media article states, " NWAs, by contrast,
ask utilities to rely on third-party DER providers or
aggregators to deliver the same level of reliability, and they
offer no clear path to recovering costs involved, even if they're
lower than a traditional upgrade. " However, NWAs can benefit
a utility by providing opportunities to distribute the risks of a
project across both the utility and the DER provider. The utility
internalizes the risk associated with overloading lines if the
DER does not perform, while the DER provider is at risk of
not getting paid if the DER is unable to perform.
As a result of the slow progress of the DIDF RFO process,
the CPUC developed two more procurement mechanisms to
encourage NWA deployment: 1) the IOU Partnership Pilot
and 2) the Standard Offer Contract
(SOC) Pilot. The IOU pilot creates
a new tariff for IOUs to support
DER procurement. It requires that
the utilities prescreen energy solutions
providers (ESPs) to help customers
in targeted locations enroll
their DERs into the program. The
budget cap for each project will be
85% of the estimated conventional
wires-based upgrade cost, ensuring
at least 15% savings to ratepayers
when projects are implemented.
Of this budget, ESPs will
receive 20% of the budget allocation
for new DER installations,
30% as a capacity reservation payment,
and the remaining 50% for
event-based performance when
dispatched by the utility.
The second proposed pilot
the SOC pilot, is
Investor-Owned
Utility
PG&E
SCE
SDG&E
mechanism,
a three-year program focused
march/april 2022
on securing larger-scale front-of-the-meter solutions that
address a distribution need identified in the DIDF. The SOC
pilot differs from the existing RFO mechanism as it requires
the utility to select one Tier 1 candidate project each year to
enter into the standard offer process. The utility will document
the set of DER services necessary to defer investment
and produce a price sheet indicating the utility's willingness
to pay for DER products. When 90% of the project need is
met by DER provider offers, the utility has enough confidence
in achieving 100% or better that they will enter into a
contract with the providers that submitted conforming bids
and move forward with the deferral.
SCE has implemented two DER projects for NWA
applications that have successfully deferred distribution
investment. In 2015, SCE procured a 2.4 MW/3.9 MWh
in-front-of-the-meter battery to avoid a distribution update
of a new circuit management system. The battery is maintained
by a third party but is owned and operated by the
utility. In addition, SCE procured 85 MW of behind-themeter
energy storage that offers flexible capacity throughout
the Western Los Angeles Basin. This capacity allows
SCE to balance the grid in local reliability subareas during
critical peak times.
Regulatory Frameworks for Incentivizing
Resiliency and Microgrid Installations
In support of the need for increased resilience in the California
electric grid, NWA solutions and microgrids are being
proposed as a strategy by regulatory authorities. In 2019,
the CPUC launched the " Order Instituting Rulemaking " to
formally initiate the Resiliency and Microgrid Proceeding.
The proceeding aims to facilitate microgrid deployment and
table 1. DIDF solicitation results.
Advice
Letter Year
2017
2018
2019
2020
2017
2018
2019
2020
2017
2018
2019
2020
Proposed
Capacity (MW)
4
12.6
>14.5
>19.2
>12.7
35.4
9.6
not disclosed
Number of
Proposed
Deferral
Projects
1
4
4
7
4
6
2
1
Number
of Projects
Awarded
4
2
7
6
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IEEE Power & Energy Magazine - March/April 2022

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