Overview and Status of Distributed Energy Resources Policy Docket Jay Griffin, Chief of Policy and Research Hawaii Public Utilities Commission August 4, Hawaii Public Utilities Commission

2 Dr. James “Jay” Griffin is the Chief of Policy and Research at the Hawaii Public Utilities Commission. He leads the PUC’s team of researchers and economists that support Commission decision-making with energy policy research and analysis. Joining the PUC over two years ago through an intergovernmental agreement, Jay is on leave as a faculty member at the Hawaii Natural Energy Institute (HNEI) which is an independent research unit at the University of Hawaii supporting the state’s efforts to develop indigenous renewable energy sources and reduce dependence on imported fossil fuels. While at HNEI, Jay worked on the research team for several renewable grid integration studies and led a Department of Energy-funded smart grid demonstration project on Maui. Jay Griffin Chief of Policy and Research Hawaii Public Utilities Commission

Hawaii – Becoming World Leader in Solar PV Adoption Hawaii leads the nation in the penetration of residential rooftop solar PV systems and as a result, is at the forefront of the integration challenges associated with high solar PV penetration levels. At the same time, Hawaii is on track by 2017 to become a world leader in the utilization of solar PV resources – both distributed and utility-scale – with installed solar PV capacity penetration levels exceeding 75% of typical daytime gross system loads likely on several island electric grids. 3

Hawaii Electric Systems -- 4 Electric Utilities; 6 Separate Grids O ʻ ahu Moloka ʻ i Maui Hawai ʻ i Lana ʻ i Kauai Island Utility Cooperative 34 MW PV (12 MW in development) System Peak: 72 MW Customers: 32,700 Hawaiian Electric 283 MW PV / 100 MW Wind / 69 MW WTE System Peak: 1,144 MW Customers: 300,000 Maui Electric Maui: 52MW PV / 72MW Wind System Peak: Maui 190 MW Lana’i: 1MW PV System Peak: Lana’i: 5 MW Moloka’i: 2 MW PV System Peak: Moloka’i: 5.5 MW Customers: 68,000 Hawaii Electric Light 52 MW PV / 30 MW Wind / 34 MW Geothermal / 16 MW Hydro System Peak: 190 MW Customers: 81, % 15% 17% 47%

Hawaii’s Distributed Solar PV Growth has Pushed Interconnection and System Integration Boundaries 5 Hawaiian Electric Companies Cumulative Installed Capacity (MWs)

PUBLIC UTILITIES COMMISSION6 Growth of Distributed PV has Pushed Interconnection Boundaries Source: Hawaiian Electric Co.

PUBLIC UTILITIES COMMISSION7 Source: Hawaiian Electric Co. Over last 2 years utility has increased distribution circuit screen levels to interconnect additional PV Aggregate growth has raised system-level integration challenges Growth of Distributed PV has Pushed Interconnection Boundaries

Hawaii Public Utilities Commission8 Hawaii’s High Renewable Grids are Encountering New Technical, Economic, and Policy Challenges First Source: Maui Electric Co. “Renewable Watch”, August 1, 2015  60% Daytime Load supplied by Wind and DG

Hawaii Public Utilities Commission9  23% daytime load similar to Oahu today Maui, Hawaii Island, and Kauai regularly > 50% w/ Oahu to follow soon Hawaii’s High Renewable Grids are Encountering New Technical, Economic, and Policy Challenges First

March 31 PUC Orders Address DER Interconnection and New Customer Options Interconnection of Energy Storage Systems (Docket No ) Storage systems will be reviewed for safety and reliability Resolution of further technical issues moved to DER docket Distributed Energy Resources Policy Docket (Docket No ) Established to investigate technical, economic, and policy issues Opening order highlighted 3 key objectives: 1)Clear interconnection backlog 2)Enable DER market growth 3)Create new DER market choices Included Staff Paper and Proposal Continues work started by stakeholders in the Reliability Standards Working Group (RSWG) Hawaii Public Utilities Commission10

Overview of Staff Report and Proposal Focused discussion and collaboration among parties will resolve high priority issues more quickly Document divided into 3 sections: 1)Overview of Recent Trends in Hawaii Solar PV Market 2)Near-Term Technical and Economic Challenges and Proposed Solutions for the Evolution of Hawaii’s DER Market 3)Proposed DER Policy Docket Issues and Work Scope Summarizes near-term integration challenges Includes DER Advanced Technology Roadmap Proposes work scope for near-term and mid-term solutions Hawaii Public Utilities Commission11

Staff Paper Summarizes DER Priority Technical Challenges Examples of Technical Integration Challenges Steady State OperationsContingency Events System- level Over-generation and increasing variability in generation resulting in:  Curtailment of other renewable generation  Frequency regulation and ramping challenges for central generation Behavior of aggregate DER fleet may exacerbate grid instability during emergencies:  Need grid-supportive frequency and voltage trip and ride through settings Circuit- level Over-generation resulting in:  Approaching or exceeding distribution system equipment capacity limitations Behavior of DER systems during circuit-level contingencies may result in:  Unintentional islanding  Temporary load rejection overvoltage Hawaii Public Utilities Commission12 Source: Table 2, Staff Report and Proposal, Docket No , March 31, 2015

Proposed Market Options to Address Integration Challenges Hawaii Public Utilities Commission13 Customer DER Development Options Customer Self-Supply Option Customer Grid-Supply Option Non-participant customers held harmless, or benefit, from both customer solar PV development options Customer choice -- non-export option to serve customer energy requirements Grid power supply – export option to supply wholesale energy Source: Staff Report and Proposal, Docket No , March 31, 2015

Next Steps in DER Docket Phase 1: Collaborative process with focus on clearing interconnection backlog, enabling continued DER market growth, and creating new DER market choices Parties filed Final Statements of Position – June 29, 2015 Resolution of Phase 1 issues and Phase 2 scope currently under Commission consideration Hawaii Public Utilities Commission14

Mahalo! Please send any questions to me at Hawaii Public Utilities Commission15