IEEE Power & Energy Magazine - March/April 2022 - 84

Paul Centolella
distributed energy
resources
transitioning to a clean energy future
I
84
IN MY 40-YEAR CAREER AS A
utility consumer advocate, regulator, and
consultant, I have participated in key
power industry transitions, including
✔ in the 1980s, advocating integrated
resource planning and
collaborating with utilities to design
energy efficiency programs.
✔ as a proponent of the acid rain cap
and trade program in the 1990
Clean Air Act amendments and
helping the U.S. Environmental
Protection Agency develop the
SO2 allowance trading program.
✔ leading modeling on the benefits
of locational marginal pricing
in the 1990s and later supporting
the development of the Midcontinent
Independent System
Operator's energy and ancillary
service markets.
✔ encouraging smart grid investments
as a commissioner on
the Public Utilities Commission
of Ohio from 2007 to 2012 and
helping guide standards development
on the Board of the Smart
Grid Interoperability Panel and
Federal Advisory Committees
for the Department of Energy
and National Institute of Standards
and Technology.
✔ as a consultant, advising clients
on aligning utility business and
regulatory models with the transition
to a clean energy economy.
Digital Object Identifier 10.1109/MPE.2021.3134153
Date of current version: 21 February 2022
ieee power & energy magazine
Each transition began by asking simple
questions. What is needed to achieve a
more affordable, reliable, and environmentally
sustainable energy future?
What are the gaps between current
practice, and what is needed? In what
areas will new learning and innovation
be required? Asking these questions
inevitably led to valuable collaborations,
systems thinking, detailed
analysis, innovation, and often marketbased
solutions.
A 2016 white paper for New York's
Renewing the Energy Vision initiative,
which I coauthored with several colleagues,
addresses how to efficiently
integrate distributed energy resources
(DERs). It describes the design of distribution-level
markets and proposes distributed
locational marginal pricing for
real and reactive power, a digital platform
market to facilitate financial transactions
and animate development of retail products
combining energy and smart technology,
and auctions to procure DER option
contracts for the purpose of deferring distribution
investments. Two of the articles
in this issue of IEEE Power & Energy
Magazine (Golriz et al. and Paaso et al.)
examine applications of these concepts.
It is often asked: why aren't DERs
more widely used as nonwires alternatives?
The answer may be that identifying
DER value requires a wider lens. Not
all DERs provide energy when needed
to avoid distribution investments, e.g.,
solar photovoltaics (PVs) on an evening
peaking circuit. A nonwires alternative's
value is also location specific. As stated
in the Illinois Future Energy Jobs Act,
the relevant value of DERs is " to the distribution
system at the location at which
it is interconnected .... " Environmental
benefits also are time and location specific
and vary based on the marginal
generators displaced. Moreover, economies
of scale can outweigh the benefits
of being distributed, e.g., unsubsidized
utility-scale PV costs are one-fourth
residential PV costs. Generic DER incentives,
using area averages to value
distribution benefits (e.g., California's
Avoided Cost Calculator), capitalizing
estimated value streams more accurately
represented by market prices, and
kilowatt-hour rates that exceed marginal
costs can induce DER investments that
fail to provide net value.
Understanding the true value of
DERs requires starting with the question:
what is needed to achieve an affordable,
reliable, resilient, and environmentally
sustainable future? Only
as the road map to this future emerges,
will it become evident where DERs
can contribute.
The pursuit of the following three
necessary conditions for achieving an
affordable, reliable, resilient, clean energy
future will help shape and expand
opportunities for DERs:
1) power system flexibility, including
flexible demand
2) resilience: preparation for extreme
weather
3) alignment of utility regulatory
and business models with environmental
goals.
(continued on p. 78)
march/april 2022
in my view
IEEE Power & Energy Magazine - March/April 2022

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