By Suzanne Herel
CAMBRIDGE, Md. — Three experts examined the challenges of integrating distributed energy resources into electricity markets at the general session of PJM’s Annual Meeting last week.
Richard Tabors, co-director of the Utility of the Future Study at the Massachusetts Institute of Technology, envisioned a platform market structure akin to the sharing economy of services such as Uber and Airbnb.
Such a construct, enabling multiple participants to buy and sell energy from each other, requires accurately valuing generation and demand response resources — including real energy, reactive power and reserves, he said.
“How far and how deeply can I take that pricing question? I can take the arithmetic all the way to the meter,” he said.
Tabors called the method distributed locational marginal price (DLMP). Tabors called the method distributed locational marginal price (DLMP). “There’s a huge number of hours when there’s a material difference between the nodal transmission prices and the nodal prices occurring on the attached distribution feeder,” he said.
It is a model that Tabors’ consulting firm presented for the New York State Energy Research and Development Authority under the state’s Reforming the Energy Vision initiative. (See related story, NY REV Order Revamps Utility Business Model.)
Gridwise Alliance CEO Steve Hauser focused on the challenge of encouraging technology while furthering the public good in developing the grid of the future.
The industry is moving from being utility-centric to customer-focused, he said, sparking an evolving business model to accommodate two-way power flow. The model must be adaptable and allow customers to provide services back to the grid, he said.
He noted that D.C. and PJM states Illinois, Maryland, Delaware and Pennsylvania ranked in the top 10 in the alliance’s annual Grid Modernization Index.
Like Tabors, Hauser said the industry must properly value, integrate and optimize DER — and provide better information to decision-makers.
Will Agate, senior vice president of energy operations and initiatives at the Philadelphia Navy Yard, outlined how the former military base has become a “Smart Energy Campus” with its own microgrid. Agate said the yard is one of the most successful Base Realignment and Closure (BRAC) projects in the U.S., with industrial and office tenants including the Aker Philadelphia Shipyard, a Tastykake bakery, Urban Outfitters and GlaxoSmithKline.
The Navy Yard invested $33 million in grid modernization to create what Agate called “one of the largest nonmilitary, unregulated electric systems on the East Coast.”
As part of its energy master plan, the Navy Yard is reducing demand while adding supply independence.
In addition to its 10-MW substation with a PECO Energy tie-in, the Navy Yard has on-site generation: a 6-MW natural gas peak shaver and 1 MW of solar generation.
Although the Navy Yard project is somewhat unique, Agate said it can provide “lessons learned” for other communities considering microgrid and smart grid solutions. Agate said it is important to bring stakeholders together to agree on a master plan and to not be afraid of getting something started.