Regulatory Considerations for Deploying Distributed Energy Storage Sky Stanfield, Of Counsel Keyes, Fox & Wiedman LLP July 9, 2015 MA Stakeholder Conference on Energy Storage, D.P.U. 15-ESC-1

501(c)(3) non-profit working to improve consumer access to renewable energy since 1982 Funded by government and private foundations, no renewable energy industry funding Current projects include: – Net metering rules and interconnection standards – Third-party ownership of renewable energy resources – Shared renewable energy policies – Smart Grid, intersection of PEVs and renewables, and integration of storage – Workforce training and development for the renewables industry 2

Near-Term Regulatory Considerations to Maximize Benefits in Colorado Conscious regulatory approach to deployment is likely to result in greatest value for all stakeholders Critical to identify the desired services and values clearly and provide regulatory and market mechanisms to support provision of those services Costs and benefits do not all travel in the same direction with energy storage Certain foundational policies will be necessary and should be tackled first 3 Deploying Distributed Energy Storage to Capture Greatest Value

Near-Term Regulatory Considerations to Maximize Benefits in Colorado 1.Design rate structures that send DES customers appropriate economic signals 2.Open up markets for ancillary services and demand response 3.Ensure DES systems have a clear path to fair and efficient interconnection 4 Key Near-Term Regulatory Considerations 1 to 3

Near-Term Regulatory Considerations to Maximize Benefits in Colorado 4.Address net energy metering opportunities for storage systems 5.Consider DES solutions in the context of broad distribution planning efforts 6.Ensure sufficient, but not duplicative, oversight of DES safety 5 Key Near-Term Regulatory Considerations 4 to 6

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Near-Term Regulatory Considerations to Maximize Benefits in Colorado Consider Time of Use Rates with sufficiently high differentials, both for residential and commercial customers Consider how Demand Charges are structured to enable DES customers to beneficially lower system demand while also lowering their bills 7 ① Design Rate Structures That Send DES Customers Appropriate Economic Signals

Near-Term Regulatory Considerations to Maximize Benefits in Colorado Critical to enable economic “stacking” of services Consider market or contractual mechanisms that enable customer sited storage to provide ancillary services. Increase access to demand response programs, including allowing participation by residential and other small customers through aggregation of those services 8 ②Open up Markets for Ancillary Services and Demand Response

Near-Term Regulatory Considerations to Maximize Benefits in Colorado Explicitly apply to energy storage Additional considerations: – Establish a methodology to determine the size/output of energy storage systems – Determine the extent and level of interconnection review required – Storage-specific screens – Evaluate the loading function of a storage system in a non-discriminatory way 9 ③Ensure DES Systems Have a Clear Path to Fair and Efficient Interconnection

Near-Term Regulatory Considerations to Maximize Benefits in Colorado Clarify NEM program rules – Address metering requirements without increasing costs unnecessarily – Consider policies that could encourage more NEM customers to use co-located storage to benefit the system as a whole – Enable customer-sited storage systems to help manage peak loads and smooth variability from renewables – Consider allowing netting even outside of renewables NEM programs 10 ④Address Net Energy Metering Opportunities for Storage Systems

Near-Term Regulatory Considerations to Maximize Benefits in Colorado Storage as a tool to integrate more renewables Identify where distributed energy storage (and other DERs) may be most valuable, share information – Remember customer sited systems can offer same benefits but need access to information to do so Develop a methodology to evaluate DES benefits to develop rates/tariffs/incentives/market tools to facilitate installation 11 ⑤Consider DES Solutions in the Context of Broad Distribution Planning Efforts

Near-Term Regulatory Considerations to Maximize Benefits in Colorado Safety should be a priority Avoid overreacting to fears of a new technology Identify the relevant codes & standards Ensure the agencies responsible for compliance are clearly identified Coordinate with state and local bodies 12 ⑥Ensure Sufficient, but not Duplicative, Oversight of DES Safety