NRRI-15-02-NRRI-Non-Transmission-Alternatives


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Non-Transmission Alternatives (NTAs) are electric utility system investments and operating practices that can defer or replace the need for specific transmission projects, at lower total resource cost, by reliably reducing transmission congestion at times of maximum demand in specific grid areas. NTAs can be identified through least-cost planning and action, one geographic area at a time, for managing electricity supply and demand using all means available and necessary, including demand response, distributed generation (DG), energy efficiency, electricity and thermal storage, load management, and rate design.
The Federal Energy Regulatory Commission (FERC) targeted NTAs in Orders 890 and 1000, requiring regional transmission planning processes which are open, transparent, and coordinated, and which provide opportunities to review NTAs on a comparable basis to transmission infrastructure.
NTAs are important because they can be lower-cost options that simultaneously support multiple goals and objectives for 21st Century infrastructure. For example, NTAs can offer:
ï‚· affordability and lower cost,
ï‚· higher efficiency because some distributed technologies can be integrated, and synergistic;
ï‚· reliability, redundancy, and resilience;
ï‚· risk-reduction for a number of known system challenges and risks;
ï‚· environmental protection, especially with lower greenhouse gases and hazardous emissions and lower water consumption; and,
ï‚· possibly also social benefits, such as increased job creation and retention.
In several locations around the U.S., lower-cost NTAs are already proving capable of deferring or displacing some needs for higher-cost transmission projects. Thus, there is growing interest about NTAs in state public utility regulatory commissions and among other interested parties. Important questions being addressed include:
ï‚· What are the technical and economic potentials for NTAs?
ï‚· Are there any particular identifiers, in the course of transmission and integrated resource planning, of important opportunities for NTA analysis?
ï‚· Who might be responsible for modeling and planning NTAs, and what will be procedures for bringing information about possible NTAs into the relevant utility planning process(es) at either the state or regional levels?
ï‚· How should potential developers plan, seek approval for, and implement NTAs?
ï‚· What are the appropriate venues for NTA planning and approvals?
ï‚· Are there appropriate roles for regulated utility companies in NTA analysis, design, operations, and management, or should third parties and customers assume those roles?
ï‚· How can system operators be certain that NTAs will prove at least equivalent to and as reliable as the transmission options they might postpone or replace?
ï‚· How will NTA cost recovery and cost allocation be handled?
This paper introduces and explores the subject of NTAs. In Part I, NTAs are defined and their potential roles in transmission planning processes are described, as they are currently defined by FERC Orders 890 and 1000, and as NTAs could be included in state or utility integrated resource planning (IRP). Part I also itemizes and reviews the reasons for considering NTAs, which include cost savings, alleviating transmission siting concerns, and possibilities for NTAs to increase system reliability and resilience and to provide positive synergies by co-locating infrastructure and better integrating infrastructures and services, primarily for: (a) consumer energy use; (b) electrical and thermal energy supplies, demands, and utilization; and (c) combined energy and water infrastructure.
Next, challenges associated with NTAs are reviewed and summarized. Three major challenges are identified: (1) modeling and demonstrating equivalence to transmission options; (2) cost recovery and cost allocation; and (3) potential misalignments with traditional electric utility business models and regulatory regimes.
Part II briefly reviews existing state policies and regulatory actions related to NTAs and proposes some preliminary options for state regulators to consider, for instigating and perhaps institutionalizing NTA modeling, planning, and implementation. Only two states, Maine and Vermont, have passed legislation that is directly related to NTAs: Maine’s law directs the state regulatory commission to determine whether it is in the public interest to designate a smart-grid coordinator, whose functions could include NTA development and operations, and Vermont’s law obligates the utility or other transmission provider to undertake NTA analysis. Several other states and the Bonneville Power Administration have also taken actions supporting NTA modeling and development. Part II includes brief descriptions of those actions. In addition, many states have program requirements and incentives that focus on some of the specific components that might make up NTAs, such as energy efficiency, demand-response, load-management, DG, and storage.
Next, Part II summarizes options that state utility commissions can consider for supporting NTA modeling, planning, and implementation. Options include:
ï‚· reviewing existing rate designs and utility compensation incentives to check how they affect different NTA resources;
ï‚· reviewing authorities and previous regulatory decisions to determine whether any changes are needed to facilitate differential service charges, by grid location, in support of NTA development;
ï‚· reviewing and understanding how NTAs might complement, or conceivably conflict with, existing state regulatory policies and practices;
ï‚· identifying one or more specific transmission projects for consideration, and inviting interested parties to propose NTAs;
ï‚· coordinating electric utility planning with local governments and communities; and,
ï‚· for states with restructured electric utilities, including provisions for the support of NTA development, such as energy efficiency and renewable or clean energy standards, in requirements for standard offer service.
Part III concludes with the idea that FERC efforts to establish “comparable consideration” of NTAs could be less than fully effective, primarily because of the absence of any mechanisms for NTA cost-sharing. Even so, FERC’s efforts to institutionalize NTA analysis could prove to be a most important first step towards developing NTAs, and it appears that states have multiple opportunities to advance cost-effective NTAs through existing IRP and certificate of need proceedings. With the possibility that NTAs could produce cost-savings for utility customers, it is worth some effort to enhance existing state procedures, or even develop new ones if necessary, to ensure opportunities for NTAs to compete.

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