Locational Net Benefit Analysis Working Group October 19, 2016 Webinar drpwg.org

Agenda Time Topic 9:00-9:15 9:15-9:30 9:30-9:45 9:45-12:00 12:00-12:30 Introductions 9:15-9:30 B. Schedule of Reports 9:30-9:45 C. Update on deferability criteria Grid services (6.1.b) 9:45-12:00 E. Long-term refinement topics and interim report 12:00-12:30 F. Summarize/wrap-up

ICA and LNBA Working Group Background ICA and LNBA WG Purpose - Pursuant to the May 2, 2016, Assigned Commissioner’s Ruling (ACR) in DRP proceeding (R.14-08-013), the Joint Utilities are required to convene the ICA WG to: Refine ICA and LNBA Methodologies and Requirements Authorize Demonstration Project A and Project B CPUC Energy Division role Oversight to ensure balance and achievement of State objective (ensure adequate stakeholder representation in consensus statements, keeping WG activities on track with Commission expectations/needs, demonstration project results review, quality control on deliverables) Coordination with both related CPUC activities and activities in other agencies (IDER CSF WG, CEC and CAISO interagency matters, interconnection/Rule 21/SIWG, other proceedings that may impact or be impacted by locational value calculation such as AB 350/IRP and LTPP/TPP/RPS) Steward WG agreements into CPUC decisions when necessary More Than Smart role Engaged by Joint Utilities to facilitate both the ICA & LBNA working groups. This leverages the previous work of MTS facilitating stakeholder discussions on ICA and LBNA topics.

Schedule – tracking progress   May June July Aug Sep Oct Nov Dec Jan Feb Mar Apr Jun CPUC DELIVERABLES Demo B Report x Draft Final WG Report Long Term Refinement Report SHORT TERM DELIVERABLES 6.1.a LNBA Maps X 6.1.b Grid services X IDER LONG TERM REFINEMENT 6.2.1 (A) long-term location-specific benefits 6.2.1 (B) Smart inverters 6.2.1 (C) Alternatives to avoided cost method 6.2.1 (D) DER avoided cost in same substation OTHER: data

Schedule of reports LNBA & Demo B Category Report Oct Nov Dec Deadline Lead Author LNBA & Demo B Short-term IOU Final Report for Demo B 11/15-11/16 (tentative) – Final WG meeting to discuss issues before Dec. report 12/16: final report submitted Dec. 31* Each IOU, individually (3 reports) WG Final Report on LNBA / Demo B “short term” topics 11/30-Draft to WG 12/8: final stakeholder comments due MTS on behalf of WG Long-term Refinement WG Interim Status Report on LNBA “long-term refinement” topics 10/26: comments on scope due 10/31: draft to WG 11/7: final comments due 11/10: final report submitted Nov. 10 WG Final Report on LNBA “long-term refinement” topics Jun. 30

5. Interim Report Process 10/12: Initial Scoping Documents Submitted for four topics 10/19: WG Meeting Present Initial Scoping Documents Present Comments on Initial Scoping Documents 10/26: Stakeholder Written Comments on Initial Scoping Documents 11/1: Draft Interim Status Report Shared with WG 11/10 Interim Status Report Submitted

Update on deferability criteria and grid services (6.1.b)

Long-Term Refinements LNBA Working Group Meeting October 19, 2016

Agenda 6.2(1)(A): Locational Benefits Over Long-Term Horizon 6.2(1)(B): Locational Grid Services Provided By Advanced Smart Inverter Capabilities 6.2(1)(C): Alternatives Avoided Cost Method 6.2(1)(D): Effect on Avoided Cost of DER Working “in Concert”

6.2(1)(A): Locational Benefits Over Long-Term Horizon Based on experience, explore whether/how probability estimates could be made that undetected needs will arise the during distribution planning period procurement of DERs will avoid future upgrades beyond the distribution planning period Key questions: What is uncertainty within 10 year planning window and what are key drivers of uncertainty? What are “undetected needs”? Is it appropriate to estimate system needs/projects/costs beyond 10 year planning window? Can DER deployment mitigate these costs? What is the possible magnitude of these costs What are possible approaches to this issue? How should these be reflected in LNBA refinement?

6.2(1)(B): Locational Grid Services Provided By Advanced Smart Inverter Capabilities Examples of seven functions identified by SIWG: (i) Disconnect/Reconnect, (ii) Limit Max Real Power, (iii) Set Real Power, (iv) Freq-Watt Mode, (v) Volt-Watt Mode, (vi) Dynamic Reactive Current Support, (vii) Schedule Power Values and Modes Key questions: Any additions/subtractions to the seven functions? Which grid services enabled by each function? Which grid services enabled by smart inverter functions are included in LNBA and which are not? What new methodologies are needed?

6.2(1)(C): Alternatives Avoided Cost Method Key questions: What are alternative methods? “Deferral Value” based on Long-Run Incremental Costing? “Present Value” of alternative expansion plans including cost of customer interruptions “Reliability Differentiated Rates” “Annual Deferral Value” What are strengths/weaknesses/typical applications for each? What are data needs for each? What are some improvements to LNBA? Include full set of costs and benefits Use dynamic models Use marginal distribution costs Link ICA/LNBA and DER procurement and load forecasting Optimize subject to GHG constraints and minimizing ratepayer cost Test cost-causation hypothesis

Process to Achieve LNBA The process of determining the locational impacts of a DER (or portfolio of DERs) requires three steps: (1) determining the impact of the DER on the electric grid [using ICA]; (2) translating that impact into cost—whether an avoided cost (i.e., a reduction in overall cost of providing electricity via the electric grid) or an increased cost—for each of the components listed above; and (3) aggregating, into a single present value of locational net benefit impact, the identified costs across all value components, for the life of the DER being evaluated.

PG&E Distribution Resources Plan: Chapter 2 – Distribution Resources Planning Page 64

Example of Substation Capacity Deferral EE?

6.2(1)(D): Effect on Avoided Cost of DER Working “in Concert” Determine method for evaluating effect on avoided cost of DER working “in concert” (e.g. using a DERMS) in the same electrical footprint of a substation. Key questions: What are upgrades can be avoided/deferred? If requirements for avoiding/deferring DERs are technology neutral, DER working in concert don’t require modification in avoided cost methodology itself. Enhancement is required in determining how aggregation/coordination of resource changes which costs are avoided and to what degree. DERs working in concert will perform differently than the same DERs without coordination (e.g. increased reliability/diversity). Fewer resources may be needed if working in concert DERs in concert may complement each other such that avoided costs are greater than the sum of their independent avoided costs LNBA WG should review assumptions on how DERs interact, including through DERMS, and the impacts on benefits/costs to ratepayers