The New York State Public Service Commission (NYS PSC) took the bold step of launching the “Reforming the Energy Vision” (REV) proceeding in April 2014. They mapped an ambitious vision of the future for the state’s electricity system, giving more than 200 stakeholders the opportunity to participate in a collaborative process charting the “rules of the road” for the path forward.
It’s been nine months, and REV, at its core, is still focused: The goal is to develop distributed energy markets that will help our industry keep pace with rapid technological innovation, customers’ changing energy-service expectations, and more expansive federal and state environmental goals.
How are utilities navigating this? By advancing change, utilities will need to invest in the infrastructure and systems that will become the backbone of future markets. But more importantly, utilities will invest in people, industry knowledge, brainpower and application skills that come into work each day. Say what you will, but the architecture of our energy future still involves keeping our lights on and our devices running. And the utilities’ system remains analogous to the architectural features that guarantee a building’s strength, without which the integrity of its ability to reliably stand is compromised.
At Con Edison, we see REV as an opportunity to get the rules right for the changing business; to learn from and embrace technological innovation brought to the table by new partners; and ultimately, to find new and better ways to meet our customers’ expectations.
An important goal is to innovate—including finding new ways for utilities and other businesses to work together to provide customers with the products and services they want, while providing value that will benefit the system as a whole.
This is truly one of the most dynamic times our industry has seen. Technology is putting the customer in charge, and the traditional utility must adapt. If it doesn’t, whether in state or nationally, the razor-sharp competitive edge that American enterprise so often defines will find itself at a rough and ruddy nexus.
Markets change and redefine themselves: AT&T was broken up, and competition blossomed; some companies prospered, some disappeared. Look at the new, unexpected markets, and some of the players: AirBNB, Uber, and LendingClub. In New York, we even have peer-to-peer bike sharing programs.
Bringing this organic innovation to the utility sector is going to require new approaches to customer engagement and investment in foundational technologies that enhance service for all customers. A modernized grid will enable customer choice, and also fairly distribute the cost of operating and maintaining the infrastructure across all markets in an equitable way.
It also will involve creating opportunities so that all sectors of the economy, and perhaps society, can meaningfully participate in and benefit from new technologies, thus truly playing an active role in our energy future. The digital divide so often mentioned cannot become an energy divide, and therein lies perhaps the most meaningful challenge on our journey: Making reform viable while keeping energy affordable and reliable for all of us.
So what are we doing to get there, and where does the distribution system platform (DSP) fit into this? Ultimately, the DSP will synthesize system planning, grid operations, and market operations to promote the efficient and effective adoption of distributed energy resources (DER) on the distribution system, with the goal of enhancing system efficiency, reducing long-term infrastructure costs, and engaging private capital in meeting customer energy goals.
Truly integrating resources will mean enhancing grid operators’ visibility of DER, and their ability to control and dispatch those resources as part of day-to-day grid operations. Until DER can be “counted upon” as a reliability resource, its relative value in deferring or reducing long-term infrastructure costs will be reduced.
Think of the lessons learned at the wholesale level as more renewable resources came online in the 2000s—incorporating wind forecasting into the control room, assigning non-zero capacity factors based on location, and learning the attributes of how these new resources performed.
In reality, we’re already on our way to achieving this goal. Con Edison has partnered with customers, technology providers, and aggregators to develop an early-stage platform that allows distributed resources to be monitored and dispatched during system events. We are one of the few utilities in the nation that currently operates demand response programs to relieve distribution-level constraints.
Con Edison’s targeted demand-side programs have saved customers $200 million in T&D expenses over the past decade. More than 2,000 new solar installations are going online in 2014, a number greater than the cumulative solar projects installed in the company’s entire history. In the future, the company will integrate more systems with battery controls, smart inverters, community solar projects, or with western-facing solar panels.
Just recently, Con Edison’s innovative Brooklyn-Queens Demand Management program was approved by the PSC. Through the program, we aim to defer $1 billion of traditional capital expenditures through targeted customer and utility-sited distributed resources.
Working in concert with the New York State’s PSC, Con Edison is actively engaged with the technology community, thinking creatively about innovative solutions. Every tool is on the table, including community engagement, basic energy efficiency, demand response, storage, fuel cells, solar arrays—you name it, we’re considering it. The program helps us understand how utilities can rely on and value a portfolio of customer resources to manage the grid.
We believe utilities will be crucial in developing distributed-energy-resource markets even further. Study after study shows the trust customers have in their utility. And utilities are well positioned to bundle various DER solutions with innovative rate structures to meet customer needs. In partnership with third-parties, utilities can help connect customers with technologies that will best meet their energy needs.
The New York City metropolitan area is a key test area for REV, with unique operational challenges. Our customers demand world-class reliability and resilience. Con Edison customers generate more than 9 percent of the US GDP here in the world’s acknowledged financial capital; 50 percent of all commercial office space under construction in the U.S. is located in New York City. The city is home to nearly two million businesses, some of the most complex infrastructure in the world; the influx of those who want to be here and the city’s recent growth are leading us to plan for a New York accommodating another million residents. We can’t get it wrong.
“Reforming the Energy Vision” means seeing and defining ways and creating opportunities to use energy wisely. It’s a balance of technology, opportunity, economics, perseverance, and policy. It’s a great challenge, but one we approach knowing we are moving to a better future.
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