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Methods for Analyzing the Economic Value of Concentrating Solar Power with Thermal Energy Storage

Concentrating solar power with thermal energy storage (CSP-TES) provides multiple quantifiable benefits compared to CSP without storage or to solar photovoltaic (PV) technology, including higher energy value, ancillary services value, and capacity value. This report describes modeling approaches to quantifying these benefits that have emerged through state-level policymaking in the United States as well as the potential applicability of these methods in China. The technical potential for CSP-TES in China is significant, but deployment has not yet achieved the targets established by the Chinese government. According to the 12th Five Year Plan for Renewable Energy (2011-2015), CSP was expected to reach 1 GW by 2015 and 3 GW by 2020 in China, yet as of December 2014, deployment totaled only 13.8 MW. One barrier to more rapid deployment is the lack of an incentive specific to CSP, such as a feed-in tariff. The 13th Five Year Plan for Solar Generation (2016-2020), which is under development, presents an opportunity to establish a feed-in tariff specific to CSP. This report, produced under the auspices of the U.S.-China Renewable Energy Partnership, aims to support the development of Chinese incentives that advance CSP deployment goals.

47 OTHER INSTRUMENTATION↗

Economic Analysis Case Studies of Battery Energy Storage with SAM

Interest in energy storage has continued to increase as states like California have introduced mandates and subsidies to spur adoption. This energy storage includes customer sited behind-the-meter storage coupled with photovoltaics (PV). This paper presents case study results from California and Tennessee, which were performed to assess the economic benefit of customer-installed systems. Different dispatch strategies, including manual scheduling and automated peak-shaving were explored to determine ideal ways to use the storage system to increase the system value and mitigate demand charges. Incentives, complex electric tariffs, and site specific load and PV data were used to perform detailed analysis. The analysis was performed using the free, publically available System Advisor Model (SAM) tool. We find that installation of photovoltaics with a lithium-ion battery system priced at $300/kWh in Los Angeles under a high demand charge utility rate structure and dispatched using perfect day-ahead forecasting yields a positive net-present value, while all other scenarios cost the customer more than the savings accrued. Different dispatch strategies, including manual scheduling and automated peak-shaving were explored to determine ideal ways to use the storage system to increase the system value and mitigate demand charges. Incentives, complex electric tariffs, and site specific load and PV data were used to perform detailed analysis. The analysis was performed using the free, publically available System Advisor Model (SAM) tool. We find that installation of photovoltaics with a lithium-ion battery system priced at $300/kWh in Los Angeles under a high demand charge utility rate structure and dispatched using perfect day-ahead forecasting yields a positive net-present value, while all other scenarios cost the customer more than the savings accrued.

14 SOLAR ENERGY↗

The Impacts of Changes to Nevada's Net Metering Policy on the Financial Performance and Adoption of Distributed Photovoltaics

As the adoption of distributed photovoltaics (DPV) has continued to rapidly increase, a national conversation has begun about the efficacy of full-retail net metering as a means of achieving the diverse objectives of electricity pricing. This conversation has prompted studies that have primarily focused on the total costs and benefits of DPV. To compliment those studies, we here characterize the potential impacts of tariff design on the customer-economics and adoption of DPV, where recent changes in Nevada are taken as a case study. We show that an increase in fixed charges more strongly impacts the payback period of small systems, and a decrease in credit for exported electricity more strongly impacts the payback period of large systems. We project that these combined changes will reduce DPV adoption in Nevada; total capacity in 2030 was projected to reach up to 363 MW, with 226 MW having already been installed at the end of the second quarter of 2016. In contrast, if full retail net metering had continued, DPV capacity was projected to reach up to 1,280 MW at the end of 2030, which would account for an estimated 6.5% of the total sales of electricity by NV Energy at that time. We project that the DPV systems will decrease the gross revenue from bill collection by $48 million per year under the new tariffs, whereas the decrease in gross revenue could have reached $255 million per year if full retail net metering had been continued. Although these results are given in the context of Nevada, the trends shown are intended to help information similar upcoming decisions in other states.

14 SOLAR ENERGY↗

Standard Inverter Interface and Compliance Framework

Electric Power Research Institute, Inc. (EPRI) and Sandia National Laboratories (SNL) collaborated to develop and demonstrate a standard communication interface for solar inverters as well as a compliance framework to verify proper product operation via that interface. This activity filled a key void in the needs of California in relation to revisions to California’s Electric Tariff Rule 21 interconnection guidelines. Rule 21 is a CPUC-approved tariff based on IEEE 1547 technical requirements that describes the interconnection, operating, and metering requirements for generation facilities to be connected to a utility’s distribution system, over which the CPUC has jurisdiction. These guidelines, as presently being developed, anticipate a requirement for future inverters to have a standard communication interface and to be testable to verify their proper operation prior to deployment.

14 SOLAR ENERGY↗

Virtual Net Metering Market Development Project Final Technical Report

Virtual net metering (VNEM) is a policy and billing arrangement that allows energy generation credits from a single solar system to be shared virtually among multiple subscribers. In California, VNEM is limited to onsite installations, meaning that the subscribers to that system must be located on the same property as the installation. Subscriber accounts will belong to those living or working in an onsite multi-tenant building, such as tenants within an apartment complex. VNEM enables the expansion of photovoltaic (PV) adoption beyond traditional commercial and single-family roof top systems to those who live in multitenant housing, which is an essential pathway for ensuring equal solar access for all consumers. Since 2008, VNEM has been available in the territories of California’s three large investor-owned utilities (IOUs), including San Diego Gas and Electric (SDG&E), Southern California Edison (SCE), and Pacific Gas and Electric (PG&E), and since then, has evolved into several sub-tariffs, each of which is applicable to specific building types and customer sectors. For instance, from 2008 - 2012, VNEM was only available for the affordable housing sector. In 2012, VNEM was expanded to the general market and was available to any multi-tenant, multi-metered building. It should also be noted that in 2018, an affordable-housing VNEM tariff was expanded to customers within the Liberty Utility and PacifiCorp Utility territories. The use of VNEM for market-rate buildings, since 2012, has been limited, reasons for which our project sought to address.

14 SOLAR ENERGY↗

Non-residential Electricity Prices: A Review of Data Sources and Estimation Methods

This paper presents a review of electricity price data sources and estimation methods for non-residential consumers, including a detailed empirical study of tariff-based prices collected as part of Lawrence Berkeley Lab's Tariff Analysis Project (TAP). We compare the TAP data to two other data sources: utility-level annual sales, revenues and consumer counts published by the Energy Information Administration (EIA), and the Typical Bills reports published by the Edison Electric Institute. A brief overview of the types of rate structures included in the TAP database illustrates the often complex relationship between the consumer's energy use and the costs they see on their electricity bills. We provide mathematical definitions of the different types of electricity price that are useful in cost-benefit analysis, construct estimation methods appropriate to each data set, compare the results, and evaluate the relative strengths and weaknesses of each approach. We also examine how price variation is driven by differences in season, region, industry business model, and variables characterizing consumer energy use. Tables of regional price estimates for each data source, based on 2015 data, are included in the Appendix to this paper.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗

Regulatory Mechanisms to Enable Investments in Electric Utility Resilience

In 2019, Sandia National Laboratories contracted Synapse Energy Economics (Synapse) to research the integration of community and electric utility resilience investment planning as part of the Designing Resilient Communities: A Consequence-Based Approach for Grid Investment (DRC) project. Synapse produced a series of reports to explore the challenges and opportunities in several key areas, including benefit-cost analysis, performance metrics, microgrids, and regulatory mechanisms to promote investments in electric system resilience. This report focuses on regulatory mechanisms to improve resilience. Regulatory mechanisms that improve resilience are approaches that electric utility regulators can use to align utility, customer, and third-party investments with regulatory, ratepayer, community, and other important stakeholder interests and priorities for resilience. Cost-of-service regulation may fail to provide utilities with adequate guidance or incentives regarding community priorities for infrastructure hardening and disaster recovery. The application of other types of regulatory mechanisms to resilience investments can help. This report: characterizes regulatory objective as they apply to resilience; identifies several regulatory mechanisms that are used or can be adapted to improve the resilience of the electric system--including performance-based regulation, integrated planning, tariffs and programs to leverage private investment, alternative lines of business for utilities, enhanced cost recovery, and securitization; provides a case study of each regulatory mechanism; summarizes findings across the case studies; and suggests how these regulatory mechanisms might be improved and applied to resilience moving forward. In this report, we assess the effectiveness of a range of utility regulatory mechanisms at evaluating and prioritizing utility investments in grid resilience. First, we characterize regulatory objectives which underly all regulatory mechanisms. We then describe seven types of regulatory mechanisms that can be used to improve resilience--including performance-based regulation, integrated planning, tariffs and programs to leverage private investment, alternative lines of business for utilities, enhanced cost recovery, and securitization--and provide a case study for each one. We summarize our findings on the extent to which these regulatory mechanisms have supported resilience to date. We conclude with suggestions on how these regulatory mechanisms might be improved and applied to resilience moving forward.

24 POWER TRANSMISSION AND DISTRIBUTION↗

Combined Cycle Integrated Thermal Energy Storage “CiTES” (Final Scientific/Technical Report)

The Phase I of this project confirmed the technical feasibility of a Combined Cycle integrated Thermal Energy Storage “CiTES” system, calculated the key performance parameters like power efficiency and costs, and proved its commercial value with full-year simulations for several US electricity markets with high degree of variable renewable generation and volatile hourly electricity prices. The core element of this project is the Electro Thermal Energy Storage (ETES) technology from Siemens Gamesa Renewable Energy GmbH, using thermally stable and inexpensive volcanic rocks as storage material and air as heat transfer medium. This technology is backed by more than 10 years of experience and a 440MMBTU (130MWh-th) pilot plant in Hamburg, Germany, which is in operation since 2019. The integration of this thermal storage in an existing combined cycle power plant (CCPP) is typical power plant technology without any major technology risks. It allows the storage of inexpensive renewable energy during times of surplus renewable generation and the discharge of this energy in times of high energy demand when the fossil plant is in operation. This supplements the fossil power generation with CO2-emission-free energy. The secondary effect of the CiTES system is that a small part of the stored thermal energy is used to keep the heat recovery steam generator (HRSG) and steam turbine (ST) of the combined cycle power plant in hot and ready-to-start condition. This enables the plant to start rapidly when fossil generation is required to satisfy demand as soon variable generation drops off in the evenings or during cloud cover and calm wind periods. Without pre-warming of the HRSG and ST, the CCPP would need several hours for a cold or warm start, burn a lot of gas and release high NOx emissions during start and wouldn’t be able to use the short times of high energy prices in an efficient or economical manner. The economic parameters of CiTES were determined by a full year “8760” simulation using a data set calculation for each of the hours of the year, and historical electricity and gas prices. For consistency, the simulations were focused on the pre-COVID year 2019. The financially most attractive markets were in the Energy Reliability Council of Texas (ERCOT) region, which allowed substantial value generation with arbitrage (charge with cheap energy during renewable surplus times and discharge when energy is needed and expensive). The improvement of flexibility with the CiTES system by pre-heating and warm-keeping of the CCPP allowed for additional power generation during short time periods when demand is high but renewable generation is down; when the hourly energy prices are highest in these markets. The simulations are based on 2019 data, when ERCOT had 27GW of installed photovoltaic (PV) and wind generation. They showed that the created revenue with the prototypically sized CiTES system of 1,000MMBTU (300MWh-th) falls a little bit short of what is expected from a commercially viable investment. The system has optimization opportunities for cost reduction and increased effectiveness which will be realized during a potential Phase II Pre-FEED study following this project. Furthermore, it is safe to assume that a lot of renewable generation capacity will be added all over the US in the coming years. As an example, ERCOT is predicting to more than double its renewable generation from 27GW in 2019 to a forecasted 63GW in 2023. This will increase the amount of renewable overproduction exponentially. This rapid increase of local overproduction and the need to curtail renewable generation is well documented by the California ISO (www.CAISO.com / managing oversupply). However, the simulations also revealed a weakness in the structure of the electricity markets in the US. More specifically, when electricity prices are very low and approaching negative levels, the owners of Variable Renewable Energy (VRE) will curtail a part of their facility to stabilize the price by reducing supply. This results in a situation in which storage facilities, which are integrated in existing fossil assets and don’t have the behind-the-meter benefit of a VRE, won’t be able to purchase low cost – otherwise curtailed – renewable energy off the grid. A special tariff, which motivates VRE owners to sell otherwise curtailed renewable energy to storage facilities (Hydrogen, thermal, pumped hydro, etc.) can solve this issue. The implementation of such a regulating tariff by Independent System Operators, thus avoiding renewable curtailment, is a pre condition for successful commercialization for renewable energy storage technologies. With this advancement of design and technology and improvements in the market environment, it can be expected that the Combined Cycle integrated Thermal Energy Storage proves itself as an important innovation to keep highly efficient, natural gas-based power generation economically successful and relevant for the power industry in the United States of America.

Wolf, Thorsten↗

Near-Term Electricity Requirement and Emission Implications for Sustainable Aviation Fuel Production with CO 2 -to-Fuels Technologies

Aviation contributed approximately 10% of the U.S. transportation sector's greenhouse gas (GHG) emissions and about 3% of the nation's total GHG production before the coronavirus disease (COVID-19) pandemic (EPA 2022). Unlike the ground transportation sector, which can be decarbonized by using batteries and hydrogen fuel cell powertrain technologies, the technical and economic challenges of aviation electrification open the opportunity for CO 2 utilization (CO2U) using clean power sources. The U.S. government set a goal to produce 3 billion gallons per year of sustainable aviation fuels (SAF) by 2030 and scale up the production to 35 billion gallons per year by 2050 (Bioenergy Technologies Office 2022). In this report, we examine three potential locations, in California, Iowa, and Louisiana, for SAF production using two production pathways that are expected to be available by 2030. We analyze the electricity cost to satisfy 10% of the SAF production potential for the select locations. Specifically, we consider (1) retail electricity cost from the default local utility in each location; (2) physical power purchase agreement (PPA) for renewable power and battery storage hybrid systems with preset prices; (3) financial PPA from a dedicated renewable plant; and (4) estimated real-time pricing (RTP) from the wholesale power market with utility delivery adders. Retail rates are available for the three potential locations; however, the developer should negotiate with the local utility in Iowa for new tariff riders, because the load of the proposed SAF plant (1.4 GW) is significantly higher than the current industrial tariff structure requirement (200 kW). The developers are not able to claim federal credits (i.e., the Inflation Reduction Act of 2022) when sourcing electricity from local utilities. Developers could consider prioritizing physical and financial PPAs as purchase options. While physical PPAs can be imported out of state, this structure imposes availability issues as developers must locate in the same electricity grid regions. Financial PPAs do not have the same location restrictions and provide the same cost savings as physical PPAs, but financial PPAs impose financial risks in the event of system curtailment and grid interruption. RTPs are available for customers in California with flexible load and hourly load management capability; however, utilities in our studied regions in Louisiana and Iowa only offer time-of-use and curtailment programs to incentivize lower energy usage in peak hours. These utilities do not currently offer RTP programs, and the developer may need to have further negotiations with the local utilities to access RTP programs. The results show that purchased electricity prices may range from 2.6 cents/kWh to 7.1 cents/kWh for the three studied plants.

02 PETROLEUM↗

Potential State Regulatory Pathways to Facilitate Low-Carbon Fuels

States and the federal government are increasingly engaged in the challenges around decarbonizing the electric grid. In particular, regulators, consumers, stakeholders, and utilities recognize the need to carefully consider the role natural gas will play in a decarbonized future. A variety of technology and policy options to reduce greenhouse gas emissions associated with natural gas use are available, including energy efficiency programs, demand reduction tools, strategic electrification, and strategies to reduce emissions from natural gas production, transportation, and consumption. Low-carbon fuels – mainly renewable natural gas (RNG) and clean hydrogen – are being considered an important component of decarbonization goals. RNG and hydrogen may be able to meaningfully reduce emissions from processes independent of geologic natural gas, displacing emissions of methane, a powerful greenhouse gas. Although RNG and hydrogen are not cost-competitive today with geologic natural gas and are smaller in scale and potential than other decarbonization options, they can be explored as potential critical tools to decarbonize sectors that are difficult to electrify or shift off of natural gas entirely, such as air travel, industrial processes, maritime transport, long-distance trucking, space heating on cold days, and railroads (Nadel, 2022). The role of this report is to provide informational context for state utility regulators to understand the impacts of and challenges associated with broader integration of low-carbon fuels, followed by examples of state regulatory actions taken to date to facilitate the development of low-carbon fuels. Setting clear guidance to calculate the environmental benefits of low-carbon fuels and continuing federal and state investments in research and development to reduce costs relative to fossil fuels will be important steps to take to signal the desire to grow the market for these fuels. State public utility commissions may play a key role in setting regulatory frameworks for low-carbon fuels and ensuring that ratepayer funds, if utilized, are done so to further the public interest. This report is intended to summarize decisions that states have made to date on low-carbon fuels. In the spirit of understanding the current market and sharing information, this report provides success stories, and lessons learned across states as regulators implement varying strategies to achieve decarbonization objectives while maintaining their focus on affordability, safety, and reliability of the energy system. The report begins with an introduction of the role of natural gas in the U.S. economy (Section I) and background information on natural gas use, decarbonization, and low-carbon fuels (Section II). Next, the report describes the current market by discussing the scale of current production, emissions intensity, resource potential, and costs of low-carbon fuels compared to geologic natural gas (Section III). Following these sections, the report describes four strategies states have employed to facilitate low-carbon fuels: opening exploratory dockets, approving voluntary tariffs for customers, approving interconnection tariffs for producers, and considering portfolio-wide procurement targets (Section IV). This section lists states that have taken actions in each category, citing utility filings, commission decisions, stakeholder comments, and other relevant sources. Finally, the report concludes with suggested questions regulators may wish to consider regarding low-carbon fuels, in the interest of preparing to make decisions in the future (Section V). These questions include: Are there existing regulatory or technical barriers to voluntary purchases of low-carbon fuels? Can customers work with utilities to procure low-carbon fuels; are producers able to interconnect projects without significant barriers to entry? Should the infrastructure and/or commodity costs of low-carbon fuels be socialized among all ratepayers, or borne solely by the large commercial and industrial (C&I) customers currently driving the market? Should regulated natural gas and/or electric utilities own and operate low-carbon fuel production? How should regulators consider the unique decarbonization potential of low-carbon fuels, particularly for hard-to-abate sectors, in decision-making? Is additional direction or clarity from state policymakers needed? What no-regrets approaches can help facilitate both near-term RNG development and long-term development of hydrogen and other zero-carbon fuels? We collectively wish to express our gratitude to the U.S. Department of Energy, Office of Fossil Energy and Carbon Management, for supporting this report and other technical assistance resources for state regulators on natural gas topics. State regulators operate under a variety of policy environments, and states have vastly different types of energy resources, infrastructure, and customers. While there is no optimal regulatory, policy, or technological solution that will be successful in every state, state regulators can benefit by exchanging lessons learned with their peers across the country. We look forward to continued engagement with our fellow commissioners, commission staff, NARUC, the U.S. Department of Energy, and other stakeholders to develop sound regulation in the public interest.

03 NATURAL GAS↗

Bill Savings vs. Backup Power: Evaluating operational tradeoffs for home solar+storage systems [Slides]

This study explores tradeoffs between the use of home solar+storage systems for backup power versus day-to-day utility bill savings. The study focuses specifically on the “reserve setting” available with most home battery storage systems, which allow the customer to maintain some minimum level of storage in reserve in case of an unforeseen power interruption. The more capacity that is held in reserve, the greater the customer’s ability to ride-through possible power interruptions, but less capacity is then available to manage utility bills on a day-to-day basis. This study evaluates this operational tradeoff across a diverse set of locations and residential electricity tariff structures, relying on Berkeley Lab’s PRESTO model to stochastically simulate power interruption events, and exploring a range of sensitivities, including variations in customer value of lost load (VoLL), interruption frequency, and other key drivers. The results show that, in most circumstances, the opportunity cost of holding storage capacity in reserve, in terms of foregone bill saving, tends to outweigh any gains in reliability value associated with mitigated power interruptions. This finding is robust across tariff structures and across most of the sensitivities considered, including those related to rate level, customer load level, and storage sizing. There are a limited set of circumstances where raising the reserve setting improves the overall customer value (comprised of bill savings plus reliability value). Specifically, that exception occurs when all of the following conditions apply: (a) the customer resides in a location with exceptionally poor reliability, (b) the customer has exceptionally high VoLL; (c) the customer is on a net billing rate or on a TOU rate that allows grid discharging but not grid charging; and (d), depending on the location, the price arbitrage differential on that rate is relatively small. In all other circumstances analyzed, total customer value declines with reserve level.

14 SOLAR ENERGY↗

Modeling Distributed Generation in California

In support of analysis for the biennial Integrated Energy Policy Report, the California Energy Commission and the National Renewable Energy Laboratory have partnered to study the growth of distributed energy resources in California. This study involves the use of National Renewable Energy Laboratory's Distributed Generation Market Demand model, available at https://www.nrel.gov/analysis/dgen/, to project statewide adoption of distributed photovoltaics and paired storage. Key outcomes of the collaboration include: • Improved representation of California building stock, load profiles, historical adoption, and tariffs, including the net billing tariff, in the dGen model; • Trained CEC staff members to use and adapt the dGen model for their specific needs; • Developed a methodology for representing emerging consumer segments to potentially adopt distributed energy resources, including low-income, multifamily, and renter-occupied buildings; • Forecasted solar photovoltaic and paired storage growth in California using a common set of modeling parameters. This report describes the multiyear effort, which includes a discussion of: • Methodology and data employed in adapting the Distributed Generation Market Demand model for California to forecast solar photovoltaic and storage statewide through 2040; • Steps taken to modify the base model to forecast solar photovoltaic adoption in emerging market segments such as multifamily or renter-occupied homes or both; • Future enhancements of the model.

14 SOLAR ENERGY↗

A Review of Value of Solar Studies In Theory and In Practice

This brief summarizes a collection of state- and utility-commissioned value-of-solar (VoS) studies and related literature, with a focus on who commissioned the study, which value and cost categories were discussed and/or quantified, and the methods used. Our objective is to compile information on prior VoS studies to inform state regulators and other stakeholders that may pursue related studies or integrate findings into rate design. The brief is organized into three parts: 1) an introduction to distributed solar photovoltaic (DPV) compensation; 2) a review of theoretical research on VoS; and 3) a review of VoS studies. The vast majority of VoS studies have served an informational role of quantifying the net benefits of PV. Three studies were commissioned in states or utility service territories that subsequently implemented VoS tariffs in California, New York, and Austin, Texas. When applied as a tariff, VoS aims to compensate PV output as efficiently as possible by doing so at rates that reflect the marginal benefits and costs of PV through value and cost categories that may vary temporally and/or geographically. This could lead to higher compensation in locations and times where more PV output is more valuable and consequently drive adoption in those locations to provide more societal benefits. Value and cost factors can be broadly grouped into five categories: generation, transmission, distribution, other utility, and other social categories. Those conducting VoS studies must weigh various tradeoffs when deciding which categories to include and quantify. Tradeoffs include prioritizing values based on their magnitude of value or cost impact, as well as taking into account the feasibility of data collection and accurate quantification. Values of higher magnitude and estimation feasibility are quantified in the majority of studies, including the earliest of studies conducted in the 2000s and 2010s. Additionally, some values of higher magnitude but low feasibility in the earliest of studies have become quantifiable in recent years. There are some values with low average system-wide levels but very high magnitude in specific locations or hours. The value magnitude in some cases can be tied to DPV penetration with low value in areas with little congestion and/or low penetration and vice versa. In these cases, values that are easier to quantify are often incorporated, while those that are more difficult are often addressed via a placeholder value. The placeholder value is paired with a discussion around data needs and methods to improve future estimates, as well as a conversation about when these value categories may increase in magnitude and necessitate more rigorous quantification. This brief summarizes findings from two meta-analyses of VoS studies that took place between 2005 and 2018, as well as findings from four additional studies published from 2018 to 2023. Table ES-1 summarizes the various value and cost categories included in each respective study and whether they were quantified, discussed, or omitted. Values such as avoided energy, capacity, transmission capacity, line losses, and avoided environmental costs are quantified in every study. Some categories were deemed harder to quantify and less impactful at the time of the study, so they were discussed but not quantified (e.g., ancillary services). Other categories, including many at the distribution level, were very locationally and/or temporally specific and dependent on high DPV penetration. These were sometimes quantified and at other times discussed. Notably, when it came to utility costs, integration costs were discussed in all cases, though they were deemed to have a small impact. Other utility costs were omitted for the most part; however, the utility-commissioned study (by NorthWestern Energy in Montana) included both lost utility revenue and programmatic/administrative cost categories. While there are some similarities across studies, each had fairly unique methods that are detailed in the body of this brief.

14 SOLAR ENERGY↗

Electricity Rate Designs for Large Loads: Evolving Practices and Opportunities 2026 Update

Electricity demand from large-load customers such as data centers is projected to grow significantly in the near term. While these large loads play an important role in advancing technology innovation and economic growth in the United States, meeting their energy needs requires utilities and regulators to consider important operational and financial risks, such as insufficient energy supply or underutilized investments, that can impact all customers. This paper builds on similar research published in January 2025, providing an overview of how utilities and regulators are managing these risks through different tariffs, including rate structures and electric service agreements. Regulators, utilities, customers, and other stakeholders can use this paper as a foundation when discussing issues and sharing perspectives on developing or reviewing large-load tariffs.

24 POWER TRANSMISSION AND DISTRIBUTION↗

Opening Up Transactive Systems: Introducing TESS and Specification in a Field Deployment

Transactive energy systems (TS) use automated device bidding to access (residential) demand flexibility and coordinate supply and demand on the distribution system level through market processes. In this work, we present TESS, a modularized platform for the implementation of TS, which enables the deployment of adjusted market mechanisms, economic bidding, and the potential entry of third parties. TESS thereby opens up current integrated closed-system TS, allows for the better adaptation of TS to power systems with high shares of renewable energies, and lays the foundations for a smart grid with a variety of stakeholders. Furthermore, despite positive experiences in various pilot projects, one hurdle in introducing TS is their integration with existing tariff structures and (legal) requirements. In this paper, we therefore describe TESS as we have modified it for a field implementation within the service territory of Holy Cross Energy in Colorado. Importantly, our specification addresses challenges of implementing TS in existing electric retail systems, for instance, the design of bidding strategies when a (non-transactive) tariff system is already in place. We conclude with a general discussion of the challenges associated with “brownfield” implementation of TS, such as incentive problems of baseline approaches or long-term efficiency.

24 POWER TRANSMISSION AND DISTRIBUTION↗

Q1-2024 Solar Cost Benchmarks

Each year, the U.S. Department of Energy’s (DOE) Solar Energy Technologies Office (SETO) and its national laboratory partners develop cost benchmarks for U.S. solar photovoltaic (PV) systems. These benchmarks track progress toward reducing solar costs and guide R&D priorities. Unlike typical studies that report only $/W, SETO uses intrinsic units (e.g., $/m² for mounting structures) to better capture how technology improvements such as module efficiency would impact system costs. This allows flexible modeling where inputs can vary significantly to assess cost sensitivity. Costs are reported in two ways: Minimum Sustainable Price (MSP): Long term, financially viable price under stable market conditions. Modeled Market Price (MMP): Actual market price, influenced by short term distortions such as tariffs or subsidies. Three national labs collect cost data from industry stakeholders, ensuring no duplication in outreach to stakeholders. Data reflects real transactions (primarily from Q1) and is weighted based on the number of sources per cost element. The PV System Cost Model (PVSCM) divides total installed system cost into eight categories: 1. Module (PV) 2. Inverter 3. Energy Storage System (ESS) 4. Structural BOS (SBOS) 5. Electrical BOS (EBOS) 6. Fieldwork 7. Office work 8. Other (developer/EPC costs) The first five are hardware costs, while the last three are soft costs. Each category includes fixed and variable cost components, where “size” depends on context (e.g., manufacturing capacity for modules vs. system capacity for installation costs). Variable costs are expressed using appropriate intrinsic units. The model reflects the owner’s upfront overnight capital cost, excluding tax credits. Tariffs and subsidies are treated as temporary market distortions affecting MMP but not MSP. PVSCM is implemented in Excel, where cost elements are aggregated into total system cost. Additional sheets handle unit conversions and operation & maintenance (O&M), with O&M costs levelized over the system’s lifetime.

14 SOLAR ENERGY↗

Role of Standard Demand Response Signals for Advanced Automated Aggregation

Emerging standards such as OpenADR enable Demand Response (DR) Resources to interact directly with Utilities and Independent System Operators to allow their facility automation equipment to respond to a variety of DR signals ranging from day ahead to real time ancillary services. In addition, there are Aggregators in today’s markets who are capable of bringing together collections of aggregated DR assets and selling them to the grid as a single resource. However, in most cases these aggregated resources are not automated and when they are, they typically use proprietary technologies. There is a need for a framework for dealing with aggregated resources that supports the following requirements: • Allows demand-side resources to participate in multiple DR markets ranging from wholesale ancillary services to retail tariffs without being completely committed to a single entity like an Aggregator; • Allow aggregated groups of demand-side resources to be formed in an ad hoc fashion to address specific grid-side issues and support the optimization of the collective response of an aggregated group along a number of different dimensions. This is important in order to taylor the aggregated performance envelope to the needs to of the grid; • Allow aggregated groups to be formed in a hierarchical fashion so that each group can participate in variety of markets from wholesale ancillary services to distribution level retail tariffs. This paper explores the issues of aggregated groups of DR resources as described above especially within the context of emerging smart grid standards and the role they will play in both the management and interaction of various grid-side entities with those resources.

24 POWER TRANSMISSION AND DISTRIBUTION↗

Customer Engagement in AEP gridSMART Residential Transactive System

— In 2013, AEP Ohio (AEP) operated a 5-minute real-time price (RTP) electricity market system on 4 distribution feeders as part of their gridSMART® demonstration project. The RTP households were billed for their electricity usage according to an RTP tariff approved by the Public Utility Commission of Ohio. They were given the incentive that their annual bill would be no greater than if they were on the flat-rate tariff, but they had financial incentives to shift consumption from high price periods to low price periods. Incentives were also available for response under high prices from local events, such as reaching the distribution feeder capacity or a critical peak pricing event. An analysis of this transactive system experiment was completed in early 2014. This paper describes the incentive provided to the customer, the nature of their interaction with the smart thermostat that provided automated response to the transactive signal, and their level of satisfaction with the program.

Widergren, Steven E.↗