As part of the DISTRIBUTECH International digital offering, D-TECH Plus, Jennifer Runyon had a conversation with a panel of experts concerning appropriate tariff structures for the integration of microgrids.
The session was based on a recently-published whitepaper co-authored by two of the panelists, Jared Leader, Manager of Industry Strategy at SEPA, and Paul DeMartini, Managing Partner at Newport Consulting, exploring the strategic and practical considerations of microgrid tariff design.
The panel examined the importance of and necessity for a strategic guide to enable utilities to explore the scope, objectives, types of microgrids, as well as operational and tariff models available.
Most utilities have different perspectives on behind-the meter microgrid development or remote microgrids. It’s therefore important to ensure internal and external education for all stakeholders, so everyone is on the same page.
Jeremy Donnell, Microgrid Policy & Pricing Strategy at PGE, emphasised that definitions are vital, something PGE learned while working on a front of the meter multi customer microgrid in California.
The project highlighted the importance of using standarised definitions and employing internal change management to adapt to a new way of doing things.
Marc Asano, Director of Advance T&D Planning at HECO, elaborated on the importance of engaging stakeholders to define microgrids. “Once those definitions are established there are fewer misunderstandings.”
Microgrid terminology must be established, he said, even though it may differ across jurisdictions, especially as we move from behind the meter to multi customer scenarios.
Asano also stressed the importance of defining roles and responsibilities, especially as some utilities adopt a joint coordinating model or partnership model – ensuring resilience within communities.
Paul DeMartini, Managing Partner at Newport Consulting, spoke with the panel about key strategic considerations when formulating a microgrid tariff. These included:
- If the microgrid uses the utility assets, the utility should be in control of those assets, ensuring safety and compliance of operations;
- Tariff models will be determined by multi partner arrangements between the utility and for example third party microgrid developers;
- Multigrid scenarios will vary according to scenarios and jurisdictions;
- Understanding the relationship dynamics in island versus blue sky mode and what happens to customers existing tariffs or the transition back and forth between both modes;
- In terms of the resilience services that could impact the scenario, through contracts between the microgrid developer, customers and the utility.
For example, PGE is currently exploring different types of remote microgrid setups, especially as the utility moves to boost wildfire resiliency. The microgrids tend to include a single customer or a small cluster of customers, and the utility remains responsible to deliver energy to that customer even though they remain islanded. This type of system won’t need a wholly new tariff to support it.
These are the types of nuts and bolts issues to consider when structuring the tariff, as well as handling of interconnection processes, different types of service agreements, and compensation mechanisms.
As outlined in the whitepaper, there are perceived gaps in the multi user tariff structure and legislation is calling for this to be addressed, filling the gaps in existing rules and tariffs. To read the whitepaper visit the SEPA website.