During December 2014, New York took a small step towards the city’s vision of turning utility companies into operators of distributed client-centric power grid assets. The decision is now left up to Consolidated Edison, in order to prove that it can indeed utilise the power of the new assets in a timely manner, and of course, at an affordable rate.
Consolidated Edison’s Queens Demand Management Program was approved by the New York Public Service Commission during December 2014.
The detailed plan indicates roughly $1 billion is needed in order to upgrade the Brownsville no.1 and 2 substations to be capable of using a more cost effective system of distributed alternatives. These actions being what the utilities say they need to accomplish by 2018 to avoid overloads on the system.
Consolidated Edison proposes an energy efficiency program
Consolidated Edison plans to incentivize clients (utilizing close to $200 million) in enrolling within a demand response and energy efficiency program in their areas. It is estimated this will allow a 41 megawatts decrease of energy being used during the moments when the substations are under most demand. A further 11 megawatts concerning utility-side battery storage will be able to provide additional stability for both substations, which normally have to manage under a very long 12-hour peak period.
They expect to spend a further $150 million on client-side resources, which works out to about $3.7 million per megawatt, a further $50 million is to be spent on their utility-side battery implementation, which works out to about $4.5 million per megawatt.
“These per-MW unit costs are generally higher than previous network-oriented programs due to the complicated nature of the network conditions and the demographics of the area,” is duly noted within their filings, as there are many residential and commercial clients compared to the bigger power users available for bigger chunks of the load.
Large investments by Consolidated Edison likely to mean more cost to consumers
That fact alone make the Consolidated Edison project all the more difficult and challenging than other projects of the same type out there, such as the South California Edison’s distributed energy procurement within the OC region.
This plan does seem viable in light of the impending substation upgrade alternative according to the benefit-cost analysis submitted by Consolidated Edison during September 2014. This will only be possible if the company is allowed to rate-base or increase client rates over the next few years in order to cover a greater portion of these unconventional investments.
This may be trickier than it seems because whatever Consolidated Edison invests in, or charges its clients to pay for, outside of the conventional utility infrastructure may be seen as overstepping the boundaries when it comes to another group being able to compete within the energy market place. Clients may also be overcharged for something another group could provide at a cheaper rate.
Utilities and consumers to share costs and benefits of new energy system
To overcome this challenge, Consolidated Edison faces harsh limits on owning any piece of the BQDM project’s megawatts of resources outside of their 11 megawatts of storage systems. On the client side, they put in a request for information concerning projects that could meet their needs and have received around 78 responses, which include demand responses, energy storage and proposals for energy efficiency.
The BDQM project is an important test concerning Reforming the Energy Vision (REV) of New York. This long-range implementation will restructure the states regulations in allowing both utilities and customers to share the costs as well as benefits of distributed resources. A “distribution systems platform providers” (DSPPs) will eventually be needed, which will be a network that Consolidated Edison, as well as other groups within the state, may manage energy services through various aggregators and third parties.
Photo by: Chris Goldberg on Flickr
