ADS, other stakeholders see CPP helping smart grid

APPA balks at deadlines, others welcome modernization

Smart Grid Today
August 5, 2020

The EPA's final Clean Power Plan (CPP) explicitly mentioned demand-side management measures such as conservation voltage reduction (CVR), DR, energy storage and other smart grid programs and technologies that states can use to meet their GHG-reduction requirements, Assn for Demand Response & Smart Grid (ADS) Executive Director Dan Delurey told us yesterday. ADS was concerned when the draft version last year laid out a series of "building blocks" states could use in their plans to cut GHG emissions without mentioning CVR, DR and smart grid (SGT, Dec-2).

The final version released Monday described DR in detail – even if it did not always refer to it by name – and spelled out the roles CVR, storage and other smart grid technologies could play as options states can choose from in their plans, Delurey said.

"It's really what I was hoping for," he added, though the inclusion of smart grid among suggested means of reaching the goals in the rules does not guarantee smart grid will be an integral part of any state plan, he added. That responsibility falls on state regulators, utilities and vendors.

"The final ruling has opened the door to smart grid .... It's not going to be automatic. This was never a case where things were going to be laid out on a platter for smart grid technology and practices, but it puts them in the game.

"It's up to the utilities and the industry to decide what they want to do."

States also need to build on work already happening in the smart grid sector to deal with issues such as grid modernization and reducing line losses – while integrating GHG cuts into a more holistic plan for the grid, Delurey said.

Lots of the smart grid developments aimed at grid modernization that could take place under the CPP "really ought to be happening anyway," and with California and New York increasingly taking on DG, states have started taking those steps, he added.

Even if the CPP ultimately results in more cooperation and investment in smart grid, it is not going to eliminate all the vexing issues the sector faces such as net metering and other rooftop solar controversies, Delurey said.

The CPP could also lead to a boost in energy efficiency and renewable energy, particularly with combined heat and power (CHP) and waste heat to power (WHP) systems, Jessica Lubetsky, a researcher at Pew Charitable Trusts, told us yesterday. The organization has not taken an official position on the CPP, Lubetsky said, but did studies on various C&I energy-efficiency measures and clean or renewable energy sources.

Pew found CHP and WHP could grow 33% under the CPP.

But wider adoption of both generation types is hampered by a lack of parity in the tax code, where WHP does not benefit from any tax credits and CHP only gets a 10% credit, she added, noting credits for other renewables are much higher.

One potential solution may be the Power Act, a bill introduced in Congress by US Rep Tom Reed, R-NY, Lubetsky said. The bill has a 30% tax credit for CHP and WHP.

A bigger issue – one that affects all manner of renewable energy projects – is the barrier caused by interconnection fees and standby rates that slow projects down and ultimately make them economically infeasible, she added. The fees vary by region, but are "particularly burdensome" in the southeastern US, Lubetsky said.

Other places with high demand for rooftop solar are seeing similar challenges, she added. Such rates "have long been seen as a traditional way for utilities to keep their customers – but as they evaluate their goals, we may see changes."

Another bill in Congress – the Heat Act, introduced by US Sen Jeanne Sheehan, D, NH – would order DOE and FERC to create a best-practices plan to equalize interconnection fees and standby rates, Lubetsky said.

APPA: Too much, too soon

Some worry the CPP's GHG cuts are too challenging and too soon for some states, with the potential to pass the cost of added renewables onto ratepayers, the American Public Power Assn (APPA) told the press yesterday. The final CPP gave utilities more flexibility with renewable-energy credits and interstate trading guidelines, APPA said.

Targets in several states are more flexible, it added, citing Arizona, Florida, Georgia, South Carolina and Tennessee as examples. But other states have higher reduction targets including Illinois, Kentucky, Nebraska, West Virginia and Wisconsin, APPA said.

The association is concerned the CPP will result in "stranded assets" of coal plants that are shut down before their lives are used up, while forcing states to bring renewable generation online before it becomes cost effective, the association added.

Renewables already cheaper

Other groups see CPP targets as attainable due to renewable energy costs having already fallen, the Advanced Energy Economy Institute (AEEI) told the press this week. The institute is the "charitable and educational affiliate" of Advanced Energy Economy, a lobbying group with IT giants and smart grid firms among its members.

Lower solar- and wind-technology prices, combined with new smart grid technology already in use by utilities, should quell concerns over the reliability of a grid that relies less on fossil fuel generation, it added.

The plan will ensure improvements in the grid and more renewable energy in the long run, even though the CPP delays compliance until 2022, AEEI said. Smart grid technology will ultimately improve the grid's reliability rather than destabilizing it, it added.

AEEI took NERC to task after the reliability agency faulted the draft earlier this year. NERC's criticism ignored the role of DR and DG could play in increasing grid reliability and the overall drop in renewable technology prices, we reported in May (SGT, May-11).