1. LNBA to Integrate and Optimize DERs for Maximum Value DRP--LNBA Methodology and Demonstration Workshop Dr. Eric Woychik, Strategy Integration, LLC 1 February 2016 1

2. LNBA History & Future, to Integrate & Optimize  Developed a 4-step method to integrate resources, with Duke Energy, NVE, AVISTA… 1)Customer targeting & consumer engagement 2)Distribution location (load-flow & DMCs) 3)Covariance/option value 4)Optimize DER packages @ locations  Found Net-present-value benefits from DER to be 2x to 5X greater compared to prior expectations => We must do this!  LNBA defines the basis to integrate power-flow control, but requires grid security analysis as DER percentage increases 2

3. Five Ideas Surrounding LNBA 1.LNBA is economic DER integration and optimization 2.LNBA is about management of big-data to achieve vastly superior DER results (2x to 5x greater) 3.Granularity matters hugely to maximize benefits 4.*LNBA compares Distribution marginal costs (DMCs) to create outcomes from least-cost to most-cost 5.Steps in LNBA are looped; iteration is required 3

4. How LNBA Will Be Used  Estimate changes in value (NPV) from ICA scenarios with/without DER integration/optimization  Connect each DER to a circuit/line-segment  Calculate with/without distribution marginal costs (DMCs)  Hosting can increase with optimal DER packages  Calculate value/cost-effectiveness of DER packages  Select packages of DERs for customer sites (delta of DMCs)  Provide short-term DMCs to dispatch DERs

5. Basic Data Flow – Day Ahead Integrated Valuation of DERs Based on CYME/Synergi Load Flow to define Distribution Marginal Costs Historical Data Loads Prices System Cond. DER Assets Static Data Weather Forecast Near Real- Time Data Loads Prices System Cond. Generate Forecasts DER, Gen LMPDMC RMCP Load DERMS { Control Signals DER Controllers  AMI data (loads, volts, VAR…)  SCADA data  Distribution cost data  Electric market data  Weather data  Planning/demographic data  Other big data  CAISO market prices  Distribution marginal costs @ each DER/ customer location  Distribution losses  Covariance of forecasts, DMCs; weather, loads, prices…

6. LNBA Leverages Data and Analytics  LNBA enables maximum DERs based on economics to increase DER hosting -- ICA alone is WRONG without LNBA  LNBA defines which DER resources, where, and sizing => least-cost DER hosting  A DER “loading order” based on LNBA will “max value”  Use of “all-in” DMCs simplify and clarify resource tradeoffs  LNBA results can be automated, based on DMC engine 6

7. How Granular? Depends on the Markets Where Value is Captured  Distribution/transmission power flows => at least hourly data  CAISO real-time/ancillary services markets => 5 minute data  CAISO frequency regulation and Reg-up/Reg-down markets => 1 minute to 4 second data (?)  Locational distribution benefits => at customer line-segment  Use at least 576 custom load shapes, with covariance analysis (weather, prices, loads, demographics) 7

8. Rough Breakdown of 2x to 5x Greater Value  Increased granularity alone can add 1x (100%) – CA’s 16 average load shapes (in CE calculator), data limit, compared to 576 custom load shapes, plus…  Customer targeting with grid constraints (load-flow) can add another 1x to 2x (100% - 200%) to benefits  Covariance of weather, loads, prices… nets at least another.6x (60%) just for DR  Distributed optimization of grid and customer benefits can add another 1x to 2x (100% - 200%) + to benefits 8

9. Forecast Integration (simulated data) 9 Red = Target EE/DR/PV/ST Green = Load Building is Least Cost for EV Charging or New Economic Development

10. Four Dimensions of Distribution Marginal Costs 10

11. Steps to Integrate DERs – 1 st Stage LNBA  Develop acre-level, customer-based hourly load-forecast  Define base-case build-out (supply/distribution) without DERs – calculate DMCs @ customer line segments.  Assess DER program implementation input, by location  Define where DER value is increasing and costs incurred based on DMCs (and need for distribution assets)  Measure value added, capital/variable costs reduced  Define number of DER installs/circuit for each measure 11

12. Optimize DER Dispatching as Well Customers Market Price $0 StorageStorage Energy Market Market Price Regulation Market Storage “Grid” PV Array

13. Optimize Location DER Packages and Portfolio – 2nd Stage LNBA  Optimize operations to minimize DMCs (kW, kWh, kVAR)  Apply look-up table of expected costs, define $ impacts and show DMC “stack” (based on SPM Tests)  Overvoltage, exceed thermal limit, phase imbalance, reactive power limit, grid security  Review/refine pivot tables/interfaces to large data => Optimize the locational operation of DERs based on DMC engine that acts as a cost-control algorithm 13

14. Using DMC to Define the Optimal Mix of DERs by Local Zone (service transformer) Integrate & Optimize

15. Red = DR reduction Blue = Battery Charging Yellow = Fed to Grid Use of DR+Battery Storage @ Customer

16. LNBA for Distributed Optimization with DMCs  Distributed optimization captures customer and utility value from all aspects of the grid (wholesale/distribution) and DER resources  Utility optimization (minimize costs, improve reliability, integrate renewables)  Load and DER optimization (maximize customer comfort and minimize costs)  Deploy the flexible virtual power plant – two-way power flows  Optimization is based on continuous comparison of DMCs…  Alter load shapes, choreograph DERs -- maximize portfolio benefits

17. Final Notes on LNBA  Need granularity beyond day-ahead to max DER value  Power flow controls/smart inverters need more granularity  DMCs, (“with and without” DERs/new technologies) will require confidentiality, to avoid gaming/manipulation  Will need grid security analysis, before DER dispatch  We have the tools – models & data – to proceed now… 17