Illinois’ Largest Utilities Embrace the Smart Grid

Illinois Largest Utilities Embrace the Smart Grid

Over the next five to seven years, smart grid infrastructure, including advanced metering infrastructure (AMI), will be deployed for customers of the two largest utilities in Illinois: Commonwealth Edison and Ameren Illinois. Over five million new meters will be installed and over $2 billion of smart grid investments will be made. The challenge confronting consumer and environmental advocates in Illinois is how to make sure that infrastructure is rolled out in a way that maximizes other policy objectivesnamely, saving customers money on their energy bills and promoting opportunities for innovative technologies like microgrids and energy storage.

Years of discussion in Illinois culminated in the Energy Infrastructure Modernization Act, a new law that supports smart grid deployment and funds programs to support electricity system innovation through:

Test beds where energy entrepreneurs can test new hardware and software solutions. Both ComEd and Ameren are now required to create live, on-the-grid, real-time opportunities for energy entrepreneurs to test new technologies. Ameren established one near the University of Illinois, dedicated to testing more traditional electrical system technologies ranging from 120/140 volts to 69,000 volts as well as an integrated test home for smart appliances. ComEds test bed is 120,000 homes in its innovation corridor, with a focus more on behind-the-meter, in-home technologies.

Venture capital support for early-stage smart grid companies. The Energy Foundry is a private, nonprofit impact venture capital fund with roughly $24 million to invest in early-stage smart grid companies, providing funding opportunities for companies engaged in the test beds and smart grid ecosystem.

Consumer education programs targeted to energy efficiency, demand response, and dynamic pricing elements of pilot programs. Our law is unique because it mandates significant funding for consumer education from third parties, such as municipalities and nonprofits. We want most of this funding to be used for concrete programs around energy efficiency, demand response, and dynamic pricing.

Performance metrics to measure the performance of the AMI smart grid rollout, including measures for voltage optimization, distributed generation, and greenhouse gas emission reductions. We see this as key to the entire regulatory bargain where our utilities have the option to recover their costs in a new rate scheme provided they meet specific performance and investment mandates. Some of these performance metrics were established by statute and have corresponding ROE penalties if they are not met. An additional 20 metricsincluding GHG reductions due to smart gridwere developed by CUB and the Environmental Defense Fund (EDF) and agreed to by ComEd and Ameren.

We came to Colorado and eLab Accelerator to review the current project landscape and to sit down for the first time to catch our breath and lay out a vision for what successful deployment of AMI in this new policy framework would look like. Our team consisted of representatives from consumer advocates (CUB), the Energy Foundry, EDF, the wholesale market (PJM), and an energy efficiency and dynamic pricing program implementer (Elevate Energy). We focused on Illinois energy markets, including coordination between state and RTO-based markets, and tried to see forward paths to develop business models and customer outreach plans for energy efficiency, demand response, and dynamic pricing programs.

Before we came to Colorado, we had all collaborated on various regulatory filings which laid the groundwork for our Accelerator discussions. We had worked on the legal issues around access to customer use data, procurement of energy efficiency and energy efficiency program design, and progress made by ComEd and Ameren in deploying AMI. What we didnt have was the time to sit and identify specific areas where we though this deployment could create value to customers while building an ecosystem to support innovation from folks who are not the utilities.

What we came away with were three main objectives by which we can measure success:

Are customers using less energy? (Is average kWh consumption dropping?)
Are we using less energy at peak times? (Is load shape getting better?)
Are we meeting our environmental goals? (Are GHG emissions dropping?)

We developed a list of six strategic areas to focus on, and laid out an admittedly ambitious goal for each area by 2018. For each area, we looked at specific actions we could take now and policies we needed to put in place to support our goals.

Dynamic Pricing: We laid out a goal of having 50 percent of Illinois customers with a new smart meter on some type of dynamic pricing. Illinois already has a residential real-time pricing program and thanks to the new law, will have a utility peak-time rebate program. Meeting this goal will mean not only studying the demographics of who is already on a dynamic pricing plan but piloting things like a demand-response smart thermostat program and working with wholesale markets like PJM on a price-responsive demand project. Since Illinois has electric municipal aggregationin which cities or counties can negotiate better electricity prices on behalf of their residents and eligible small businesseswe plan on designing a time-of-use (TOU) option for municipalities to use in their aggregation contracts. We also plan on asking the PUC to approve a utility TOU this summer.

Customer Participation: Since Illinois will have almost five million meters in place by 2018, we set out a goal of having one million customers with an in-home smart device by 2018. Our utility energy efficiency standards require them to include third-party programs, giving us the chance to pilot in-home devices, and since the Illinois Power Agency adopted our suggestion to procure negawatts, we have another potential source of funding for an in-home device pilot. One new idea out of Colorado was to take a look at how we transform the existing marketwe decided we needed to work with the State on how to fund a program that would go after existing mercury thermostats.

Voltage Optimization: Weve talked about how technology could be used to optimize the grid to achieve savings, and settled on a goal of four to five percent efficiency gains. Ameren has already done a pilot on how voltage optimization can achieve these efficiencies. Based on these findings, and discussions with ComEd, we plan to ask the ICC to order ComEd and Ameren to undertake voltage optimization programs by 2015.

Microgrid Development: One area that we identified that can support our other goals is a coordinated microgrid development strategy. Our goal is to have five microgrids in place by 2018. While our team facilitator was great throughout, this was probably the area where we neededand gotthe most help: defining what we meant by microgrid, looking at what the most likely scenarios were for a microgrid to be proposed (for example, by customers in one area that need extra reliability or resilience, such as our Illinois medical district), and identifying the cascading questions that come once you start looking at microgrids (such as asset ownership, cost recovery, and rate design). The biggest concern we identified here was that while we want to work with the utilities on microgrid solutions, we also want to make sure they dont monopolize the access to or assets on a microgrid.

Distributed Generation Adoption: Illinois has lagged behind other places in using distributed generation, and we laid out a goal to remedy that: 150 MW of distributed solar, combined heat and power (CHP), and other technologies. The test will be piloting things like community solar and making sure that we connect those pilots with our microgrid strategy.

Energy Storage: This might be our reach goal: 525 MW of storage. For one thing, we realized we need to find out what is actually out there in terms of storage before we go any further. Then we realized we needed to reach out to a broader stakeholder community to identify what we would need to promote storage. Next steps include holding an Illinois storage summit to figure out what our strategy should be.

Weve made some progress already in laying the groundwork. Illinois recently passed a law providing $30 million for the procurement of solar distributed generation, and we have begun revising our net metering and interconnection standards. Now we need to expand our team to include other key stakeholders and begin looking at how where we can move these ideas from the flip chart to actual programs.

Source: Rocky Mountain Institute

SMART GRID Bulletin March 2017

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