Download the business case for utility-scale power electronics

THE BUSINESS CASE
FOR UTILITY-SCALE
POWER ELECTRONICS
Reliable Integration of Solar PV into the Distribution Grid
With Cost-Effectiveness Framework Developed in Partnership with E3
January 2014
WHITE PAPER
THE BUSINESS CASE FOR UTILITY-SCALE POWER ELECTRONICS
CONTENTS
EXECUTIVE SUMMARY........................................................................................... 1
MULTI-FUNCTION HARDWARE SYSTEMS
AND ENABLED BENEFITS. . .................................................................................... 2
COST-EFFECTIVENESS OF THE ACTIVE GRID DEVICE
FOR PV INTEGRATION... ......................................................................................... 6
Establishing the Baseline..................................................................................... 8
Residential-Scale PV Integration Case Study — Single Device................... 9
Utility-Scale PV Integration Case Study — Multiple Devices..................... 12
SUMMARY. . ......................... ....................................................................................... 14
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EXECUTIVE SUMMARY
Recognizing the need for more active control of power in response to increasing penetration levels of distributed generation, increasing focus on energy efficiency, increasing
capacity constraints and increasing focus on reliability, distribution utilities are actively
searching for solutions that provide more functionality and long-term value than conventional distribution products and tools. Automation of existing electromechanical
apparatus, deployment of pure sensing/monitoring devices, and traditional grid reinforcement techniques such as reconductoring or
asset replacement are limited in their ability to
solve these new challenges and don’t provide the
THE CHALLENGES THAT UTILITIES FACE
necessary groundwork for a truly modernized grid
NECESSITATE THE USE OF NEW
that will provide the agility, flexibility and resiliency
POWER ELECTRONICS BASED
required for the next 50 years.
SOLUTIONS THAT COMBINE
SERIES-CONNECTED VOLTAGE
As described in our previous whitepapers, “IntelCONTROL AND SHUNTligent Power Management and the Future of the
CONNECTED CURRENT CONTROL TO
Distribution Grid” and “A New Era in Active Grid
ENABLE DYNAMIC, DISTRIBUTED AND
Infrastructure,” the characteristics of many of the
DECOUPLED CONTROL OF POWER.
challenges that utilities now and will increasingly
face necessitate the use of new power electronics
based solutions that combine series-connected
voltage control and shunt-connected current control to enable dynamic, distributed and
decoupled control of power throughout the distribution grid. In order for these solutions
to be adopted by utilities, however, they must be grounded in a sound business case with
a compelling benefit-to-cost ratio based on clearly quantifiable value streams, up-front
capital cost savings and recurring operational savings, and low costs of deployment,
system integration and maintenance. Moreover, for long-term sustainability, the business
cases for these new solutions must be subsidy-free and not rely on societal benefits.
Fortunately, a viable solution that addresses the technical challenges and meets utility business case requirements now exists. This white paper will describe that solution,
its functions, and its associated benefits. The solution will also be evaluated for costeffectiveness in addressing two PV integration scenarios1, residential- and utility-scale,
comparing it to conventional “baseline” alternatives using an industry-standard economic framework developed by Energy and Environmental Economics (E3).
1 While it is recognized that each utility’s costs and benefits differ, the cost-effectiveness examples included herein use representative numbers that
have been corroborated by specific utilities.
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THE BUSINESS CASE FOR UTILITY-SCALE POWER ELECTRONICS
MULTI-FUNCTION HARDWARE SYSTEMS
AND ENABLED BENEFITS
Until recently, power electronics devices exhibited the same single-function characteristics as conventional grid apparatus in that they were designed and used for a single
purpose. Just as a load tap changer (LTC) would only be used for voltage regulation, so a
D-STATCOM would only be used for reactive power compensation. Now, with the right
combination of power electronics, advanced software controls, on-board sensing, and
communications, more sophisticated hardware systems can deliver a range of valuable
functions, enabling utilities to address a number of applications and capture multiple
benefits all with a single solution.
As described in our second whitepaper “A New Era in Active Grid Infrastructure,” a
well-designed power electronics hardware system that leverages a combined series-connected voltage source and shunt-connected current source
architecture along with advanced software controls (herein
referred to as an “Active Grid Device” or “AGD”) can simultaONE CLEAR ADVANTAGE OF
neously provide a broad range of active power management
THE ACTIVE GRID DEVICE
functionality. The series-connected voltage source enables
IS THAT MULTIPLE VALUE
load voltage regulation and voltage harmonics mitigation
STREAMS CAN BE TAPPED
(as seen by downstream loads), while the shunt-connected
WITH THE DEPLOYMENT OF
current source enables reactive power compensation and
A SINGLE UNIT.
current harmonics mitigation (as seen upstream by the
grid). For three-phase systems, current and voltage phase
balancing can also be provided using these series- and
shunt-connected elements. Additionally, with on-board
sensing and communications, this Active Grid Device can locally monitor voltage, current and power, providing real-time input to software control loops, and share vital asset,
power quality and system performance data with upstream operational systems such as
SCADA, DMS, OMS, etc. in the utility operations center.
One clear advantage of the Active Grid Device, as compared to a conventional single
function device, is that multiple value streams can be tapped with the deployment of
a single unit. For example, an Active Grid Device deployed on the secondary side of a
distribution transformer to mitigate high voltage excursions caused by rooftop PV will
not only ensure ANSI compliance with voltage delivery, even in the presence of relatively
large sags/swells, but can also be used to deliver energy conservation and peak demand
improvements locally, by controlling voltage at or near 0.95 pu, the lower voltage limit of
ANSI C84.1 Range A, for customer loads subtending the device. The same device will also
provide local reactive power compensation for power factor control, current and voltage
harmonic mitigation for improved power quality, a monitoring point at the edge of the
grid and, with communications and networking infrastructure, connectivity to the utility
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SCADA system. By supporting a wide range of features, the Active Grid Device can be
used to simultaneously address a number of applications and enable multiple benefits for
distribution utilities.
An important aspect of the new approach to power regulation provided by the Active Grid Device is the indirect relief
AT THE SAME TIME THAT THE
provided to MV feeder-level devices and the resulting
ACTIVE GRID DEVICE CAN BE
benefits this enables. At the same time that the device
USED TO IMPROVE A LOCAL
can be used to improve the power quality, efficiency and
AREA, ONE OR MORE DEVICES
reliability for a local area, one or more devices can unlock
CAN UNLOCK SIGNIFICANT
significant systemic benefits. Consider a scenario with a
SYSTEM BENEFITS.
relatively small number of loads constraining the utility’s
ability to achieve desired feeder-level energy efficiency or
peak demand reduction targets. Conventional, centralized
VVO approaches that rely on substation and MV equipment cannot effectively address those loads. This situation could very well be driven by
PV-induced voltage rise caused by residential PV systems scattered throughout a number
of neighborhoods on the same feeder. By allocating a small quantity of Active Grid Devices
at the appropriate locations, the utility can effectively decouple the constraining nodes
from the feeder, ‘removing’ them from a voltage management perspective, to achieve
the broader operational objectives. In practical terms, this means unlocking the stranded
energy efficiency and peak demand savings of several percent annually, which can be
up to twice that achievable by any other presently-available method. This also results
in a cost-effective way to augment the legacy system capability, avoiding and extending
the life of more expensive mechanically actuated devices such as load tap changers, line
regulators and switched capacitor banks.
For utilities that are challenged by the increasing penetration of distributed renewable
generation, meeting energy efficiency goals, managing peak demand and system capacity, increasing system reliability, or modernizing their grid infrastructure, this Active Grid
Device serves as a necessary building block for success. This holistic approach is unique
in the industry – currently, no other solution, power electronics or otherwise, provides this
integration of series voltage control, shunt current control, advanced controls, sensing
and communications. Quantifying these localized value streams is an important step in
understanding the longer-term total value paradigm shift enabled by Active Grid Devices
for the distribution grid.
The value streams and benefits that are unlocked by each of the system’s functions vary
by application. Moreover, certain functions are more valuable in some applications than
others. For example, in the case of renewable integration, voltage regulation is the most
critical function. By dynamically, continuously and precisely providing a wide range of
load voltage regulation (boost and buck up to 10%), the Active Grid Device can coun-
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THE BUSINESS CASE FOR UTILITY-SCALE POWER ELECTRONICS
teract the fast voltage rise and drops caused by variable PV generation. This enables a
number of benefits: ensuring that voltage delivered to end customers remains within
ANSI limits without needing to reconductor or replace existing equipment; ensuring that
CVR and peak period voltage targets can be maintained to meet energy efficiency goals
and system capacity limits; avoiding CBEMA/ITIC violations and end customer equipment failures; insulating existing electro-mechanical devices (LTCs, line regulators and
switched capacitor banks) from undesirable actuations and avoiding increased wear-andtear and premature equipment failure. However, voltage regulation is less critical for other
applications such as asset management, energy theft detection, and outage detection,
which primarily rely on the on-board sensing, monitoring and communications functionality of the Active Grid Device. Other applications, such as fault detection, isolation and
restoration (FDIR), benefit from both voltage regulation, during circuit reconfiguration, as
well as on-board sensing. Similarly, power factor correction
for the purposes of distribution system loss reduction, and
power quality optimization respectively rely on the reactive
OF ALL THE FUNCTIONS AVAILABLE
power compensation and harmonic cancelation capabilities
IN THE ACTIVE GRID DEVICE,
of the Active Grid Device.
VOLTAGE REGULATION IS BY
FAR THE MOST IMPORTANT
AS IT ENABLES THE
LARGEST NUMBER OF VALUE
STREAMS AND BENEFITS.
As mentioned, voltage regulation is also a critical function
for energy efficiency and peak demand management. The
dynamic, continuous and precise nature of voltage regulation enabled by the Active Grid Device allows the utility to
effectively decouple source voltage from load voltage, allowing the utility to directly control the voltage being delivered
to subtending customers, irrespective of the voltage profile on the medium voltage feeder.
Similarly, for peak demand management, the Active Grid Device can serve as a utilitycontrolled DR asset that precisely delivers a desired voltage to minimize consumption of
end customers during peak periods to alleviate highly stressed distribution, transmission
or generation capacity constraints. Rather than relying entirely on end customer behavior,
the utility now has direct control over the consumption on their system.
Of all the functions available in the Active Grid Device, voltage regulation is by far the most
important as it enables the largest number of value streams and benefits. This highlights
the need for a series-connected voltage source element in the system architecture; a
shunt-connected current source alone is not sufficient. Table 1 summarizes some of the
key benefits enabled by this Active Grid Device.
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Table 1 — Applications Addressed by Active Grid Device and Associated Benefits
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FEATURE
APPLICATIONS
BENEFITS
VOLTAGE REGULATION
ANSI COMPLIANCE
• Avoid costly reconductoring or transformer replacement
• Avoid CBEMA/ITIC violations and customer equipment
damage/failure
• Avoid increased operation (wear-and-tear) of mechanical
LTCs, line regulators and switched capacitor banks
• Enable greater PV hosting capacity
ENERGY EFFICIENCY
• Local Benefit: Ensure compliance with CVR targets at
all times; optimize local consumption based on load
characteristics
• Feeder-Level: Decouple limiting loads from feeder, unlocking
energy savings that would otherwise be stranded by
centralized (MV-only) CVR schemes
PEAK DEMAND
MANAGEMENT
• Local & Feeder-Level: Dynamically adjust voltage during peak
periods to reduce consumption, effectively increasing system
capacity and/or reducing congestion, enabling deferment and
reduction of G, T and D capacity investments
• Avoid demand charges
• Utility-controlled DR asset — no dependency on third parties
or end customer participation
POWER QUALITY — SAG
/ SWELL MITIGATION
• Prevent motors from stalling due to system disturbances, e.g.
air conditioners
• Prevent DG from nuisance tripping
• Fewer momentary outages
REACTIVE POWER
COMPENSATION
DISTRIBUTED POWER
FACTOR CORRECTION
• Maintain desired power factor where it is most effective — as
close to the loads as possible, reducing line losses and the
amount of reactive power required in the system thereby
freeing up distribution system capacity
HARMONIC
CANCELATION
POWER QUALITY — REDUCED HARMONIC
DISTORTION
• Cancel current harmonics as seen by the grid caused by
non-linear loads and PV inverters; prevent accumulation of
3rd order harmonics, high neutral currents and protect utility
equipment from damage
• Cancel voltage harmonics from the grid to the customer to
protect customer equipment from damage
VOLTAGE AND
CURRENT SENSING
RELIABILITY — DISTRIBUTION TRANSFORMER MONITORING
• Monitor the load, environment and health of the distribution
transformer asset in support of condition-based maintenance
resulting in lower maintenance costs and fewer equipment
failures
• Support for electricity theft detection
POWER QUALITY — POWER FLOW AND
QUALITY MONITORING
• Improved monitoring and forecasting of load and grid
performance, enabling a more efficient mix of generation and
ancillary services that could be optimized to reduce cost
• Monitor flow of power to determine presence of undesired
reverse flow for lineman safety
• Monitor and capture power quality throughout the
distribution grid and being delivered to end customers
RELIABILITY — FAULT
DETECTION, ISOLATION
AND RESTORATION
(FDIR) / OUTAGE
MANAGEMENT
• Reduce momentary and sustained outages, improving SAIDI/
SAIFI/MAIFI metrics
• Detect and provide notifications/alerts on fault currents,
outages and service restorations
• Ensure CVR compliance during feeder isolation events
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THE BUSINESS CASE FOR UTILITY-SCALE POWER ELECTRONICS
COST-EFFECTIVENESS OF THE ACTIVE GRID DEVICE
FOR PV INTEGRATION
One of the first-order problems associated with high-penetration PV is fast voltage fluctuation caused by variable power output. During times of high PV output, excess power that
is not locally consumed is pumped back onto the grid causing voltage rise. Even at today’s
relatively low penetration levels, U.S. utilities are beginning to see undesirable voltage
fluctuations along the MV primary, caused by utility-scale PV systems, and LV secondary,
caused by either large residential- and commercial-scale or clusters of smaller residentialscale PV systems. These distributed and dynamic voltage fluctuations, among other power,
reliability and protection problems, are giving rise to the need for voltage regulation by a
power electronics based device such as the Active Grid Device. With its series-connected
voltage source, the Active Grid Device is highly effective at regulating load voltage and
mitigating these voltage fluctuations, enabling more reliable integration of distributed PV.
As with all solutions, however, it is necessary to determine the cost-effectiveness of the
Active Grid Device for the PV integration application in order to facilitate utility adoption. To
be robust for all utility types, the cost-effectiveness test must use an industry-standard
framework with a clearly defined baseline, a counterfactual against which any new
solution should be compared. The cost-effectiveness test must also support single and
multiple Active Grid Device deployment scenarios so that they can be evaluated equally
using the same standard framework.
To develop the economic framework, Gridco Systems has partnered with E3
(Energy+Environmental Economics), a consulting and advisory firm based in San Francisco, CA that specializes in North American electricity markets, obtaining a third-party
perspective on valuing the attributes of a multi-function power electronics device, such as
the Active Grid Device, and categorizing its associated benefits. Leveraging the Standard
Practice Manual (SPM) economic framework, costeffectiveness tests that were originally developed for
energy efficiency and demand-side programs, and now
THE DISTRIBUTED AND DYNAMIC
frequently used to evaluate potential grid investments,
VOLTAGE FLUCTUATIONS, AMONG
were adopted and tailored for the Active Grid Device.
OTHER POWER, RELIABILITY
Table
2 summarizes some of the key benefits enabled
AND PROTECTION
by the Active Grid Device and categorizes them in the
PROBLEMS, ARE GIVING RISE
industry-standard
cost-effectiveness test categories.
TO THE NEED FOR VOLTAGE
REGULATION BY A POWER
ELECTRONICS BASED DEVICE SUCH
AS THE ACTIVE GRID DEVICE.
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THE BUSINESS CASE FOR UTILITY-SCALE POWER ELECTRONICS
Table 2 — Summary of Cost-Effectiveness Tests
LOCALIZED DEPLOYMENT
SINGLE AGD DEVICE
USE
CASE
COSTS
LIFECYCLE REVENUE
REQUIREMENT TEST
TOTAL RESOURCE
COST TEST
SOCIETAL COST TEST
CAPEX
OPEX
AVOIDED CAPEX
AVOIDED OPEX
FURTHER BENEFITS
FURTHER BENEFITS
LV AGD
AGD
POWER
LOSSES
Avoided baseline
solution distribution
equipment
CVR - EE (limited to
customers behind
AGD)
Sag/Swell Mitigation
Improved customer
satisfaction
Avoided need
for transformer
monitoring equipment
Avoided increase
in distribution
transformer losses
Better performance of
customer sited DG
Uncapped emissions
reductions (NOx)
CVR - system capacity
(limited to customers
behind AGD)
Power factor
correction
Harmonic cancelation
FEEDER LEVEL
MULTIPLE AGD DEVICES
ALL OF THE ABOVE
LV
AGDS
AGD
POWER
LOSSES
New substation
transformers
Reduced Wear on
MV device(s)
New capacitors
Decreased
distribution
maintenance
(outage detection)*
New relays and
switches
CVR - EE (OLTC
derived benefit)*
Lower SAIDI/SAIFI
Reduced land use*
Expedited DG
interconnection*
CVR - system capacity Increased sensing
(OLTC derived benefit)* on secondary*
PV-INDUCED VOLTAGE PROBLEMS
• Outside ANSI range
-- Nominal voltage +/-5%
• Conservation reduction voltage program operates between
nominal voltage and -5%
-- Not CVR compliant
-- Today 70% of load CVR compliant
-- Adding PV decreasing CVR compliance
• Computer and Business Equipment Manufacturer’s Association
design voltage criteria
-- Numerous violations noted
-- Equipment failure over time
• Electrical mechanical voltage regulation changes single tap
setting in 45 seconds
-- Cannot respond quickly enough
-- O&M issue
-- A voltage regulator designed to operate for 10 to 15 years now
needs to be replaced every few years
-- Regulator controls change required
SOURCE: SAN DIEGO GAS & ELECTRIC
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E3 RECOMMENDED COST TESTS
The primary metric of cost-effectiveness for capital improvements to utility distribution systems is the
“minimum lifecycle revenue requirement.” This is the industry standard for comparing between alternative
investment plans. In many jurisdictions, if a distribution investment satisfies this criterion, there would not
be a need to get additional authorization from the utility regulator. However, this metric is the most restrictive and only includes those costs and benefits that must be collected from customers to pay for utility
equipment. Benefits for utility customers would not be included, such as fewer and shorter outages, better
power quality and other aspects of improvement of utility services.
The recommended approach to value those attributes of the Active Grid Device that benefit customers, is
the Total Resource Cost (TRC) test. The TRC includes monetized costs and benefits to customers, as well
as monetized benefits that do not impact revenue requirements such as sag/swell mitigation and reduced
outage frequency and duration.
When appropriate, the recommended approach to non-monetized benefits such as improved customer
satisfaction, is the Societal Cost Test (SCT).
TEST
MINIMUM LIFECYCLE
REVENUE REQUIREMENT
TOTAL RESOURCE
COST TEST
SOCIETAL COST TEST
DESCRIPTION
Measures the change
in revenue requirement
required of customers
Measures the
change in total costs
including both utility
and customer costs
Measures the change in the
societal costs including both
direct utility and customer costs
and indirect or non-monetized
costs or benefits
COSTS
Include all costs paid
directly by the utility
Include all costs
paid directly by the
utility, and all direct
customer costs
Include all costs paid by the
utility, all direct costs, and any
indirect costs and benefits
BENEFITS
Include any avoided costs
saved by the utility
Include all avoided
costs saved by the
utility and all saved
direct customer costs
Include all avoided costs saved
by the utility, all saved direct
customer costs, and any indirect
or non-monetized savings
*ENABLED BENEFIT
ESTABLISHING THE BASELINE
Distribution engineers traditionally have had limited options available to address solar
PV-induced voltage fluctuations. Depending on where the PV systems are deployed, the
utility may reconductor all or part of the medium voltage primary for large utility-scale
PV deployments, or upgrade the distribution transformer to a higher power rating and/
or reconductor the low voltage secondary for residential or commercial-scale PV deployments. Despite the fact that there are drawbacks to all of these approaches, in the
absence of the Active Grid Device, it is assumed that these approaches would be used
to solve the PV-induced voltage rise problem and therefore form the baseline of the
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economic framework.
Reconductoring the primary is typically very expensive, costing on the order of many tens
of thousands of dollars per mile, and is likely to be disruptive to many other customers
on the system. It is also the most time consuming and, by definition, it is not a localized
solution. Upgrading the local distribution transformer is less expensive, but also decommissions an asset with remaining service life, taking it out of service for re-purposing or
storage, making the process complicated and costly to administer. Reconductoring the
secondary is also possible but depends on easy access to wires, which generally limits
this approach to overhead or conduit-buried secondary. A more significant drawback for
all of these approaches is that they may only provide limited relief, requiring the utility to
revisit the issue as more PV is added to the feeder. Furthermore, the baseline approaches
do not add any additional intelligence or active control to the distribution system.
The cost-effectiveness tests for investing in and deploying AGDs will compare the costs
and benefits of the Active Grid Device against the costs and benefits of the baseline
approach. Table 3 outlines the key considerations for this exercise, according to the
combined Minimum Lifecycle Revenue Requirement and TRC framework.
Table 3 — Cost-Effectiveness Test Baseline and Solution Case Summaries
UTILITY
INVESTS TO
ALLOW
DISTRIBUTED
GENERATION
ADOPTION
NO AGD DEPLOYMENT
AGD DEPLOYED
Utility must replace transformer and
reconductor the service drop or entire
distribution feeder. The cost of the capital
upgrades allows for additional distributed
generation. It also bestows some energy
savings from the larger conductor, though
some are offset from the losses of the
larger transformer
Utility deploys AGD and avoids/defers
reconductoring and transformer
upgrades. The AGD enables telemetry
and increased control, improving
customer service and decreasing
average and peak power consumption
RESIDENTIAL-SCALE PV INTEGRATION CASE STUDY — SINGLE DEVICE
The following case study illustrates the value proposition and range of acceptable costs
for a single Active Grid Device within the context of the industry-standard cost-effectiveness tests. In this example, the utility is experiencing voltage rise on the low voltage
secondary as a result of a cluster of 30 kW of residential PV systems, all installed behind
the same 50 kVA distribution transformer. In order to maintain delivered voltage within
ANSI limits, the utility had initially planned to pursue the baseline approach, replacing
the distribution transformer and reconductoring a portion of the secondary. However, an
alternative approach, deploying an Active Grid Device on the LV side of the distribution
transformer, was evaluated and shown to provide a significant number of benefits as
compared to the baseline option.
Using costs and assumptions provided by the utility, the potential benefits enabled by
the Active Grid Device were quantified over a 40-year lifetime. It is important to note that
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truck rolls are a major cost to distribution utilities, so high reliability and a long device
lifetime are fundamental requirements for any new grid infrastructure, especially when
comparing to a baseline alternatives such as distribution transformers and conductors
which in many cases have a longevity of over 30 years. For this particular utility, the
ability to control voltage dynamically and precisely was also of value since it also desired
to optimize energy consumption and peak system capacity via a distributed and localized VVO approach. For the purposes of this analysis, soft and societal benefits, such as
better performance of customer-sited DG, improved customer satisfaction and uncapped
emissions reductions, were ignored since, as mentioned previously, it is critical for utility
business cases to be grounded in tangible value.
As shown in Table 4, the benefits calculated under the Minimum Lifecycle Revenue
Requirement and Total Resource Cost tests result in $16,007 and $2,988, respectively
for a total of $18,995. The relatively large benefits under the Minimum Lifecycle Revenue
Requirement test are not surprising since significant capital expenditures can be avoided
by installing an Active Grid Device instead of pursuing the baseline approach. Since the
baseline approach tends to be fairly expensive, particularly for underground distribution
where many new clusters of residential PV are found, it is not uncommon for devices
such as the Active Grid Device to require the same or slightly lower initial capital outlay. To
first order, this upfront capital “cost parity” serves as a good leading indicator for cost-effectiveness. In addition, the ability of the Active Grid Device to precisely regulate voltage
has significant implications for energy efficiency and peak demand management. Since
PV causes voltage rise, it is very difficult for utilities to maintain their CVR and peak demand voltage targets at the point
of common coupling, particularly if they are relying solely on
SIGNIFICANT CAPITAL
bulk compensation devices at the MV level, such as load tap
EXPENDITURES CAN BE
changers, line regulators and capacitor banks. As a result,
AVOIDED BY INSTALLING
the Active Grid Device provides a distributed and localized
AN ACTIVE GRID DEVICE
voltage regulation capability that can effectively guarantee
INSTEAD OF PURSUING THE
energy and peak capacity savings, even in the presence of
BASELINE APPROACH.
local PV generation.
This example suggests that in order for the Active Grid Device
to be cost-effective, it should cost the utility no more than
~$19,000 to support this residential segment downstream of the distribution transformer
in order to result in a positive benefit-to-cost ratio. Given that utilities make investments
based on the Minimum Lifecycle Revenue Requirement test, however, a solution that has
the potential to cost less than ~$16,000 would also be desirable, so that the utility can
avoid relying on the TRC test entirely.
Other significant value streams that are not captured in this analysis but worth mentioning are the ease of deployment and future readiness that the Active Grid Device provides.
Compared to the baseline approach, the Active Grid Device is fast and easy to deploy,
allowing the utility to address the problem quickly while minimizing the impact to its operations and its customers. The Active Grid Device could also provide more system margin
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THE BUSINESS CASE FOR UTILITY-SCALE POWER ELECTRONICS
and awareness for future PV deployments compared to the baseline approaches.
Table 4 — Benefits and Value of a Single Active Grid Device
GRIDCO SYSTEMS
COST-EFFECTIVENESS
TEST
BENEFITS
NPV
DESCRIPTION
Minimum
Lifecycle Revenue
Requirement —CAPEX
Avoided Baseline
Solution
$8,750
The utility is able to avoid the cost of the larger
transformer, the larger conductor and the labor
associated with the replacement/reconductoring
Avoided Need for
Transformer Monitoring
$675
Since the AGD has on-board voltage and current
sensors, the utility can avoid the cost of additional
distribution transformer monitoring equipment
CVR —System Capacity
(limited to customers
behind AGD)
$1,306
The customers behind the AGD can be precisely
regulated to a low voltage target to minimize energy
consumption during peak periods, even with the
presence of local PV generation
SUB-TOTAL MINIMUM LIFECYCLE
REVENUE REQUIREMENT — CAPEX
$10,731
Minimum
Lifecycle Revenue
Requirement —OPEX
CVR —Energy Efficiency
(limited to customers
behind AGD)
$4,462
The customers behind the AGD can be precisely
regulated to a CVR voltage target to minimize energy
consumption throughout the day, while still leaving
margin for peak demand reduction, even with the
presence of local PV generation
Avoided Increase
of Distribution
Transformer Losses
$525
The additional losses of the larger distribution
transformer are avoided since the device is never
installed
Power Factor Correction
$290
By providing reactive power closer to the loads, the
utility is able to reduce the amount of reactive power
needed at the MV level and also reduce the amount
of losses through the distribution system
SUB-TOTAL MINIMUM LIFECYCLE
REVENUE REQUIREMENT — OPEX
$5,277
Total Resource
Cost Test
Sag/Swell Mitigation
$1,543
The utility is able to avoid outage costs associated
with voltage sags and swells
Better Performance of
Customer-Sited DG
N/A
Quantification of this benefit was not performed for
this analysis
Harmonic Cancelation
$1,444
The utility is able to avoid system-side equipment
damage and failure caused by harmonics generated
by the customers’ PV equipment
SUB-TOTAL TOTAL RESOURCE COST TEST
$2,988
Societal Cost Test
Improved Customer
Satisfaction
N/A
Quantification of this benefit was not performed for
this analysis
Uncapped Emissions
Reductions (NOx)
N/A
Quantification of this benefit was not performed for
this analysis
MINIMUM LIFECYCLE
REVENUE REQUIREMENT
$16,007
TOTAL RESOURCE COST TEST
$2,988
SOCIETAL COST TEST
N/A
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THE BUSINESS CASE FOR UTILITY-SCALE POWER ELECTRONICS
TOTAL BENEFITS ENABLED
$18,995
UTILITY-SCALE PV INTEGRATION CASE STUDY — MULTIPLE DEVICES
This case study describes the value proposition and range of acceptable costs for multiple Active Grid Devices, again using the industry-standard cost-effectiveness tests. In
this example, the utility is experiencing voltage rise on the primary feeder as a result of
a large 1.5 MW utility-scale PV system connected directly to medium voltage. The PV
system is causing over-voltage for 16 distribution transformers that are located in close
proximity to the PV system. In order to maintain voltage within ANSI limits, the utility
has the choice between reconductoring more than 1.5 miles of the primary feeder, the
baseline approach which forms the baseline of this analysis, or augmenting the over-voltaged distribution transformers with Active Grid Devices, which would buck the voltage
and ensure that voltage delivered to customers will be within regulated ANSI ranges. It is
important to note that the utility investigated solutions involving its existing MV devices
(load tap changers and capacitor banks) but ruled them out since they are not able to
respond fast enough to the PV variability.
Using costs and assumptions provided by the utility, and applying the cost-effectiveness
framework in a similar fashion and over the same timeframe as the single device scenario,
the benefits summarized in Table 5 (rounded) were calculated. This study also included a
detailed power systems analysis which incorporated a utility-supplied feeder model, load
profile and PV generation output. Steady-state, load flow
and quasi-dynamic analyses were performed using industry-standard modeling tools and techniques to validate and
GIVEN THE HIGH COST OF THE
compare both approaches, baseline and Active Grid Devices,
BASELINE APPROACH AS WELL
and their respective ability to maintain adequate voltage
AS THE FEEDER-WIDE ENERGY
within ANSI ranges.
EFFICIENCY AND PEAK
DEMAND LEVERAGE ENABLED
BY THE DISTRIBUTED ACTIVE
GRID DEVICES, THE RANGE OF VALUE
FOR THE ACTIVE GRID DEVICES IS HIGH.
As shown in Table 5, the benefits calculated under the
Minimum Lifecycle Revenue Requirement and Total Resource Cost tests result in approximately $551,000 and
$50,000 of value, respectively, for a total of $601,000.
Much like the single-device scenario, the baseline approach
of reconductoring is very costly, particularly since it involves
reconductoring the MV primary. This gives rise to the opportunity to deploy multiple
Active Grid Devices to address the voltage rise problem in a distributed and more cost-effective fashion, while also providing additional benefits derived from feeder-wide energy
efficiency and peak demand management. For this particular utility, greater emphasis
was placed on energy efficiency and lowering feeder voltage, and thereby energy consumption, on an ongoing basis. For other utilities, however, peak demand management is
of greater importance, for which distributed Active Grid Devices are also highly effective.
Given the high cost of the baseline approach as well as the feeder-wide energy efficiency
and peak demand leverage enabled by the distributed Active Grid Devices, the range of
potential costs (and associated value) for the 16 Active Grid Devices is relatively high, up
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THE BUSINESS CASE FOR UTILITY-SCALE POWER ELECTRONICS
to approximately $35,000 per device. This illustrates the potential for value creation
resulting from Active Grid Devices when deployed at appropriate locations across the
distribution system.
Table 5 — Benefits and Value of Multiple Active Grid Devices
GRIDCO SYSTEMS
COST-EFFECTIVENESS
TEST
BENEFITS
NPV
(ROUNDED)
DESCRIPTION
Minimum
Lifecycle Revenue
Requirement — CAPEX
Avoided Baseline Solution
$150,000
The utility is able to avoid the cost of
reconductoring a section of the MV primary
Avoided Need for Transformer
Monitoring
$11,000
The utility can avoid the cost of additional
distribution transformer monitoring equipment
at the locations where the AGD is deployed
CVR —System Capacity (All
customers on feeder)
$75,000
The customers behind the AGD can be precisely
regulated to a low voltage target to minimize
energy consumption during peak periods, even
with the presence of local PV generation; Peak
demand target for the entire feeder can also
be lowered as a result of the AGDs decoupling
loads
New Substation Transformers
N/A
Quantification of this benefit was not performed
for this analysis
New Capacitors
N/A
Quantification of this benefit was not performed
for this analysis
New Relays and Switches
N/A
Quantification of this benefit was not performed
for this analysis
SUB-TOTAL MINIMUM LIFECYCLE
REVENUE REQUIREMENT — CAPEX
$236,000
Minimum
Lifecycle Revenue
Requirement — OPEX
CVR – Energy Efficiency (All
customers on feeder)
$150,000
The customers behind the AGD can be precisely
regulated to a CVR voltage target to minimize
energy consumption throughout the day, while
still leaving margin for peak demand reduction,
even with the presence of PV generation; CVR
target for the entire feeder can also be lowered
as a result of AGDs decoupling loads
Avoided Increase of Distribution
Transformer Losses
N/A
Quantification of this benefit does not apply for
the baseline assumed
Power Factor Correction
$15,000
By providing reactive power closer to the
loads, the utility is able to reduce the amount
of reactive power needed at the MV level and
also reduce the amount of losses through the
distribution system
Reduced Wear on MV Device(s)
$100,000
By deploying AGDs to address the voltage
fluctuations, the MV devices (LTC, line
regulators and switched capacitor banks)
experience fewer operations resulting in reduced
maintenance over their lifetime
Decreased Distribution
Maintenance (Outage Detection)
$50,000
AGDs with on-board sensing and
communications enable improved outage
and service restoration detection resulting in
improved distribution system maintenance
Increased Sensing on Secondary
N/A
13
THE BUSINESS CASE FOR UTILITY-SCALE POWER ELECTRONICS
SUB-TOTAL MINIMUM LIFECYCLE
REVENUE REQUIREMENT — OPEX
$315,000
Total Resource
Cost Test
Sag/Swell Mitigation
$25,000
The utility is able to avoid outage costs
associated with voltage sags and swells
Better Performance of
Customer-Sited DG
N/A
Quantification of this benefit was not performed
for this analysis
Harmonic Cancelation
$25,000
The utility is able to avoid system-side
equipment damage and failure caused by
harmonics generated by the customers’
PV equipment
Lower SAIDI/SAIFI
N/A
Quantification of this benefit was not performed
for this analysis
SUB-TOTAL TOTAL RESOURCE COST TEST
$50,000
Societal Cost Test
Improved Customer Satisfaction
N/A
Quantification of this benefit was not performed
for this analysis
Uncapped Emissions
Reductions (NOx)
N/A
Quantification of this benefit was not performed
for this analysis
Reduced Land Use
N/A
Quantification of this benefit was not performed
for this analysis
Expedited DG Interconnection
N/A
Quantification of this benefit was not performed
for this analysis
MINIMUM LIFECYCLE REVENUE REQUIREMENT
$551,000
TOTAL RESOURCE COST TEST
$50,000
SOCIETAL COST TEST
N/A
TOTAL BENEFITS ENABLED
$601,000
SUMMARY
The availability of a new class of Active Grid Device that is based on a series-connected
voltage source combined with a shunt-connected current source presents an attractive
option for solving both residential and utility-scale PV-induced voltage rise, particularly
if it can be made available within the cost ranges identified. Based on the cost-effectiveness framework developed by E3, these utility-scale, multi-function power electronics
devices offer compelling value when deployed locally and throughout the distribution
system, as compared with conventional baseline approaches such as reconductoring and
asset replacement. While the details of these example studies apply to certain utilities
with specific feeder parameters and economic inputs, the local- and feeder-level benefits
enabled by this new class of Active Grid Device are applicable to any utility that is currently
experiencing high PV penetration or expecting to see an increase in PV penetration in the
future. In many cases, the high cost of baseline approaches alone can justify investment
in AGDs, based solely on the Minimum Lifecycle Revenue Requirement test. Not all power
electronics solutions are created equal — when evaluating these types of solutions it is
important to select the appropriate architecture that can effectively address the current
and emerging applications that utilities currently face, while establishing a foundation for a
truly modern grid.
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THE BUSINESS CASE FOR UTILITY-SCALE POWER ELECTRONICS
In May 2012, SCE released a report that outlined key “localized energy resource” (LER) or distributed generation
(DG) challenges and estimated that the cost of meeting California’s goal of 20 GW of renewable energy resources by
2020, 12 GW of which should be “localized electricity generation” resources (projects sized 20 MW or less), would be
between $2.1 billion (if “guided”) to $4.5 billion in transmission and distribution system upgrades (not including the
cost of the LER systems and their installation). This study was validated by a November 2013 Navigant study that was
commissioned by the California Energy Commission to validate SCE’s approach to evaluating distributed generation
impacts. The Navigant study also validated SCE’s finding that costs vary widely depending on locational factors for
both distribution and transmission systems. AGDs will provide a new tool to both lower costs and enable more flexibility in the implementation of LER and DG.
GRIDCO SYSTEMS
15
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