Introduction launch PowerPath DC. SEPA worked with District stakeholders to arrive at a definition The power sector is making significant for NWAs (see below) to inform its investments in modernizing the grid to regulatory treatment and to address how address multiple business objectives. As to incorporate NWAs into the distribution examples, Ameren, FirstEnergy, and Pepco planning process. are developing grid modernization programs that exceed $7.5B total. These “Non-wires alternative (NWA)” is any action or investments are to replace aging strategy in the energy delivery system domain transmission and distribution system that uses non-traditional transmission and/or infrastructure. Moreover, these distribution solutions – such as distributed investments enable the grid system to be generation, energy storage, energy efficiency, flexible and agile in a new utility demand response, and grid software and environment that includes distributed controls – with the intent to defer or replace energy resources (DERs) such as energy the need for specific energy delivery system efficiency, demand response, combined equipment investments. An NWA must meet heat and power, electric vehicles, and energy delivery system needs and be more microgrids. cost effective consistent with the guiding principles of sustainable, well-planned, secure, As the penetration of DERs increases, the affordable, and non-discriminatory. utility planning process should change to accommodate these new energy The question for utilities and regulators is: sources. Utilities are focusing on can the utility planning process create a determining the most cost-effective marketplace for NWAs without jeopardizing approach without compromising reliability, the affordability, reliability, security and safety, and efficiency as a key objective. safety of the grid?

Providing new grid services using DERs, This paper, part of the SEPA Grid while also deferring the need for traditional Modernization Framework, answers this grid investments presents new question and offers an approach for opportunities for utilities, customers, and incorporating NWAs into grid third parties. These opportunities are being modernization. It outlines best practices labeled as non-wires alternatives for utilities and regulators to create a (NWAs). SEPA, through our research and stakeholder-informed system planning advisory work, has developed process that supports a marketplace for recommendations for NWA policies and NWAs to integrate DERs without sacrificing programs. Recently, SEPA consulted with system safety, affordability and reliability. A the D.C. Public Service Commission in major paradigm shift is occurring around paving the regulatory path forward to system planning in the electric power

Smart Electric Power Alliance 2 industry and this paper outlines changes Problem Statement #1: necessary to the planning process to Existing system planning processes lack accommodate NWAs. stakeholder engagement which leads to contentious rate cases and proceedings challenging 1) utility load forecasts and 2) utility proposed projects.

The wide variety of stakeholder perspectives creates challenges when incorporating stakeholders into the utility planning process. SEPA’s experience facilitating industry working groups yields the following observations about Source: Smart Electric Power Alliance, 2019. stakeholder informed grid planning. § Environmental and consumer The Challenge advocacy stakeholders favor a Today’s electricity delivery system planning planning process that fairly process is a proven blend of utility load evaluates DERs against traditional forecasting, system assessments, project grid investments, aligns with clean recommendations and capital expenditure energy policy goals, and positions plans. It often culminates in an annual customers at the center of all regulatory filing addressing rates and new decision making. Information flow project approvals. has to be bi-directional and the utility has to be open to big ideas The ability of DERs to contribute to and specific solutions. operational flexibility and locational value § Utility stakeholders tend to be creates opportunities for utilities to primarily focused on reliability, leverage these solutions to provide low safety, and affordability. For these capital cost options to traditional grid stakeholders, the utility is investments. Part of unlocking the full accountable for the system and potential of DERs relies on utilities and must have authority to identify regulators to unpack today’s system locational constraints and grid planning process to determine where needs and to manage and control NWAs fit. This paper delves into this along the risks of integrating DER assets. two key problem statements. These different perspectives often create differences in opinion about the role each

Smart Electric Power Alliance 3 stakeholder group should play and mistrust frameworks for DERs and NWAs, to be between stakeholder groups. This fosters a released in 2020. confrontational environment often leading Problem Statement #2: to a lengthy and expensive decision-making process. Existing utility processes do not give customers or DER solution providers sufficient time and Evaluating Benefits and Costs of information to develop NWA solutions in lieu NWAs of traditional grid investments. Utilities and stakeholders are continuing to DER solution provider stakeholders are examine best practices for evaluating and absent from most utility planning balancing costs and benefits of NWA processes, thus creating tension with projects. NWAs often can include multiple utilities. Utility planning processes are benefits for the bulk power system, mostly internal to the utility with no or very distribution, customers, and society. How to little information provided to external properly account for these resources, and stakeholders. The only option for determining how costs should be socialized stakeholders to participate is to react to the across customers are still under utility’s plans during utility rate filings or investigation today. A number of other regulatory proceedings (See Figure jurisdictions are approaching evaluation 1). differently, with some using standard BCA handbooks, others allowing utilities to The challenge of utility DER ownership develop their own methodology, and others remains unsolved in some jurisdictions, and choosing to move forward with least cost is met with innovative regulatory best fit methodologies. SEPA is continuing approaches in others. The rules for to work on these issues in an upcoming ownership and operational structure of National Standard Practice Manual DERs directly leads to regulators’ ability to examining principles and cost-effectiveness establish an open and interactive market for DERs as NWAs.

Smart Electric Power Alliance 4 requirements with DERs relates to incorporating NWAs into system SEPA Has Identified Three Common planning. Similarly to DER ownership, Applications Fostering Utility Ownership of procuring NWAs can also be utility-owned DERs. and managed as well as third-party owned Serving low- or moderate-income customers: and managed. The following section offers The New York Public Service Commission SEPA’s perspective on incorporating NWAs (NYPSC) adopted a regulatory policy into the utility planning process to address framework allowing utility ownership of DERs the challenges outlined above. The for low or moderate income (LMI) customers. objective is to specify a utility planning process that ensures stakeholder views are Pilots: Several jurisdictions are starting to recognized, and utilities, customers, and allow utilities that aren’t typically allowed to third parties are able to provide solutions own generation to own DERs in pilot that address grid needs. Doing so will allow deployments in order to better understand the the utility to successfully implement NWA market and grid implications. projects and contracts that align with their Grid requirements: The Maine Public Utility system planning needs. Commission ruled to allow utility ownership of generation and energy storage – only if the SEPA Recommended asset improves grid reliability and efficiency. California and Massachusetts have Approach implemented rules to allow DER revenue The transition to a clean and modern grid capture by third-parties, utilities, and requires a significant investment of capital customers as a way to reach ambitious and time. Incorporating NWAs into a grid renewable energy carve outs and modernization program can help optimize mandates. In Massachusetts, utility energy the money and time spent integrating storage ownership is still unsettled. Conversely DERs. Through work with clients on grid in Illinois, the Illinois Commerce Commission modernization and DER planning, SEPA has (ICC) issued a final order determining that developed the following best practices and ComEd can recover costs of energy storage via framework for creating a grid distribution formula rates. In D.C., modernization planning process stakeholders recommended the PSC allow incorporating NWAs: utility ownership of DERs for added reliability.

Although utility ownership of DERs is not the focus of this paper, it is important to note the regulatory approaches to the topic and specifically how meeting grid

Smart Electric Power Alliance 5 Planning Process Best Practices Understand the Drivers for 1. Understand the drivers for Enhanced System Planning enhanced system planning and incorporation of NWAs and NWAs 2. Review the planning process to A successful grid modernization program, ensure it can support NWA projects requires an understanding of all the 3. Develop improved load forecasts drivers. The drivers of enhanced system 4. Ensure stakeholders have access to planning are 1) regulatory/policy related, 2) system-level data to be able to public/community related, and 3) formulate NWA solutions technology related (See Figure 2). 5. Enable Utility and Third-Party NWA Partnerships Review the Existing Process Once there is an understanding of the drivers and objectives for an NWA program, a thorough review of the planning process must be initiated to ensure it can support NWA projects.

Smart Electric Power Alliance 6 Figure 1 illustrating traditional system replacements. This process may differ planning reveals a series of linear steps that from jurisdiction to jurisdiction; however, typically begin with the utility conducting determining where NWA consideration can load forecasts and end with a filing to the be introduced into the existing planning Commission. These filings outline all the process is an important piece to proposed projects for the next 5-10 years successfully incorporating NWAs into grid that will address the capacity and reliability modernization programs. constraints projected from load forecasts. Grid Needs Assessment & Locational Utility planning processes typically involve a Constraints Report: system assessment analyzing capacity and Grid needs and locational constraints reports reliability constraints across the show assumptions and results of the planning system. Utilities on the bleeding edge of process that yield grid needs related to grid enhanced system planning in New York, services, such as capacity and California, Massachusetts, D.C. and Rhode reliability. These types of reports present Island have introduced hosting capacity areas of system constraint that could be analysis into the process. Sharing this subject to NWA consideration. analysis to DER solution providers via hosting capacity maps provides grid By conducting a review of the planning visibility where there are capacity and process, utilities and stakeholders can reliability constraints with potential NWA identify the most logical and beneficial replacements and deferrals. points in the process for increased stakeholder participation and third-party Hosting Capacity Analysis: solicitation for NWAs. Utilities still lead the Hosting capacity analysis indicates which grid process and external stakeholders gain distribution circuits can easily accept increased visibility into the planning distributed generation without upgrading the process, including the ability to contribute circuit. Releasing hosting capacity analysis NWA proposals. and maps enables DER solution providers to identify ideal locations for new DER projects Develop Improved Load and potential NWAs. Forecasts Utilities are increasingly evaluating NWAs An important component of a planning after conducting load forecasts and process that supports NWAs is making sure pinpointing areas needing replacements load forecasts see the whole picture, and upgrades. At this point in the process, including load growth and increasing DER utilities can reasonably consider deployment. Just as it is important for alternatives to traditional grid upgrades or utilities to share data with developers and

Smart Electric Power Alliance 7 third parties, it is equally important to (PG&E), Southern California Edison (SCE) encourage data flow from DER developers and the Sacramento Municipal Utility to DER forecasts to accurately determine Department (SMUD) have emerged as the impact of DERs on the load forecasts. leaders in DER load forecasting by integrating system and customer DER data Some utilities may not yet see the need for into their forecasts. As part of the DER forecasting at current penetration California Public Utilities Commission levels. However, it is important to align (CPUC) Distributed Resource Plans (DRP) processes in preparation for anticipated proceeding, Investor-owned utilities (IOUs) DER growth. The ability to forecast DERs in California will be sharing DER growth accurately is dependent on the quality of scenario forecast methodologies. data shared and collected from C&I customers, developers, DER solution providers and EV charging owners. It’s Ensure Stakeholders Have important to understand factors impacting Access to System-Level load growth as well as the factors reducing Data load. To ensure viable NWA options from the Two-Way Data Flow: market, utilities should ensure customers, third parties and developers have access to Load forecasting is a data driven process. To information on future system capacity. This ensure accurate load growth projections and allows third parties to formulate solutions DER forecasts, it is critical for utilities, and ultimately bid on request for proposals customers and third parties to coordinate and (RFPs) for NWA solutions. facilitate two-way data exchange. Quality load and DER growth forecasting is dependent Utilities and regulators should establish a on load factor inputs from the C&I customer, planning process that enables a real estate development, and DER developer marketplace for NWAs where customers, communities. third parties and developers are able to access publicly available system-level data Utilities can take advantage of DERs by with ease to better understand the grid’s properly accounting for them during their needs in order to offer up ideas and system planning. Utilities have the ability to solutions that fill those needs. forecast scenarios to reflect low, moderate and high DER penetration. These scenarios could include customer-sited solar, storage and electric vehicle charging stations.

In California – where customer sited solar PV is prevalent – Pacific Gas and Electric

Smart Electric Power Alliance 8 In states with a focus on NWAs, utilities and their partners wish to develop web portals offering solar calculators, hosting capacity maps, restricted circuit maps, and solar heat maps. Third parties can use this data to develop NWA solutions. Examples of utilities who provide these types of portals include:

Joint Utilities of New York (ConEd, Central Hudson Gas and Electric, National Grid, NYSEG, RG&E and Orange & Rockland) Overview of Currently Accessible System Data

Pepco D.C. and MD Hosting Capacity Map, Solar Heat Map, Restricted Circuit Map

SDG&E Integration Capacity Analysis (ICA) and Locational Benefit Analysis (LBNA) Map

PG&E Distribution Resource Planning Data Portal

Xcel Energy Minnesota Hosting Capacity Map Source: Smart Electric Power Alliance, 2019. Table 1 outlines the system-level data availability by company and data Key: type. Some actions have been regulatory RR – Regulatory Requirement driven and others have been voluntary or market driven. S – State Led V – Voluntarily Provided UC – Under Regulatory Consideration

Smart Electric Power Alliance 9 Regulatory Required Hosting Capacity Maps: Data Security and Customer Privacy In May 2019, solar advocates in Georgia It is critical that stakeholders have a level of requested the Georgia Public Service visibility into the grid in order to propose Commission to require Georgia Power to NWA solutions and DER programs. As produce a hosting capacity map to save DER discussed in the previous section, third developers time and money. The parties’ access to system-level data enables recommendation was part of a larger the development of NWA solutions. strategic deployment plan for distributed solar Despite the importance of being open and resources across the state of Georgia. transparent with data, utilities are also responsible for keeping the grid secure Public Access to Data from bad actors. Utilities should ensure All system planning data that is publicly customer privacy and grid security by not available through annual utility filings and disclosing critical energy infrastructure data rate cases (i.e. load forecasts, DER or customer personally identifiable availability, hosting capacity analysis) should information (PII) data. The next section of be made easily accessible to provide this report outlines utility best practices for system transparency to parties seeking to developing a secure portal accessible only offer NWAs. by appropriate parties under a non- disclosure agreement (NDA) with the utility. To animate the third-party NWA market, utilities should provide an additional report Non-Public Data Sharing to the public which identifies locational Utilities should consider establishing a constraints and grid needs. In California, secure portal for sharing location-specific utilities are beginning to develop Grid grid data to ensure third parties have Needs Assessments identifying public areas access while maintaining necessary grid on the grid which may be candidates for security protections. The primary users of alternative solutions outside of the normal such a portal would be NWA RFP substation or transformer replacement. In respondents (i.e DER aggregators, solar PV D.C., stakeholders proposed to require developers, energy storage developers, Pepco to develop Locational Constraint solution providers) and government Reports to act in the same capacity – to agencies developing DER programs. It is identify areas requiring traditional grid best practice to require the users of the investments so that third-parties can offer portal to sign an NDA, mitigating risks of alternative solutions to meet the utility’s bad actors. needs. The relevant system-level data provided would be non-public location-specific data that is required in order to develop an NWA

Smart Electric Power Alliance 10 solution to a specific grid need or locational process. Soliciting stakeholder ideas, constraint. This type of data may include: designing NWA RFPs, determining DER hourly load profiles for service areas, hourly performance and participation in the profiles of DER supply load for specific wholesale market and contract execution are feeders and circuits, peak hours for all components of a robust NWA procurement substations and feeders, and voltage profile process. for feeders/transformers/reclosers/ A successful NWA solicitation, procurement sectionalizers, etc. and contracting process relies on up-front When the utility is responsible for collaboration between utilities and third implementing the portal and releasing parties. This can take the form of sensitive data, the utility should also ensure workshops and individual meetings to any parties accessing data via the secure brainstorm NWA ideas and develop web portal are held to strict levels of contract mechanisms that both allow for cybersecurity policies and practices to third parties to provide grid services via protect the security and privacy of the data DERs and allow utilities to maintain grid being shared. reliability.

Enable Utility, Third-Party, Utility & Third-Party Partnership in New York: In 2014, ConEd proposed the $200M Brooklyn and Other Stakeholder Queens Demand Management (BQDM) NWA NWA Partnerships project, which included up to 52MW of non- NWAs are a new business model for the wires solutions. After approval by the New utility. What traditionally has been a service York Public Service Commission, ConEd solely built, owned and operated by the released RFPs, evaluated responses and utility to provide reliable, safe and negotiated contracts with third-party solution affordable electricity to customers must providers. The portfolio approach taken by now rely on a contract between the utility ConEd addressed the peak load and the and a third party. This puts a premium on constrained substation load profile. For risk management by the utility and the example, ConEd partnered with the New York need to establish clear performance City Housing Authority and other New York requirements as part of executing an NWA City Agencies to incorporate demand-side contract. management programs to reduce peak loads. In addition to reducing peak loads on

NWA Procurement: the customer-side, ConEd installed a 12 MWh Power sector participants issuing NWA energy storage system in 2018. For more procurements have much to learn about the information regarding ConEd’s BQDM most effective ways to structure the project, read SEPA’s NWA Case Study Report.

Smart Electric Power Alliance 11 When NWAs are owned and operated by third-parties in NWA contract negotiations non-utility entities, it is important to specify is a critical component of a successful the requirements for NWA performance project. and the consequences (i.e. financial Enhanced system planning is a culmination implications) of not meeting those of examining the traditional system requirements. For example, if a third-party- planning process and adding in the owned behind the meter energy storage elements discussed in this paper to asset is called on for dispatch as an NWA improve a utility’s system planning in during a peak event, the dispatch must be coordination with DERs and NWAs. Figure properly coordinated between all parties to 3 illustrates an enhanced system planning ensure the asset is serving a grid process that leverages elements of need. Determining dispatch coordination traditional system planning with these and managing risks for both utilities and added elements.

Smart Electric Power Alliance 12 Summary solutions, and participate in the competitive NWA procurement process. Throughout the country, utilities and regulators are at different stages of As more and more utilities incorporate considering NWAs. On one end of the NWAs into the grid, NWAs will become spectrum is a two-dimensional planning mainstream solutions rather than process that does not incorporate NWAs alternatives. Non-wires projects will just be and may result in stakeholder frustration yet another tool in the toolbox for utilities (See Figure 1). This linear process consists and developers to use in the 21st century of utility forecasts, system grid. recommendations, and construction. On the other end of the spectrum is an iterative and evolved three-dimensional planning process that successfully incorporates and creates a market for NWAs, while keeping customers and stakeholders at the forefront (See Figure 3). Striking the right balance of promoting an interactive and sustainable grid while maintaining a safe and reliable grid is the key challenge many utilities and regulators are facing today.

Incorporating NWAs into a grid modernization program requires the collaboration of all stakeholders. Opening the traditional planning processes to stakeholder engagement is an entirely new way of thinking about grid planning and the role stakeholders can play. The utility’s role is evolving to be that of the smart integrator of energy while being responsible for selecting the projects which provide grid safety, reliability and affordability. These new processes allow customers and third-parties to participate in grid planning, provide input into load forecasting, develop ideas for new

Smart Electric Power Alliance 13 About SEPA Environmental Engineering from Johns Hopkins University. The Smart Electric Power Alliance (SEPA) helps address the most pressing issues encountered in the smart transition to a carbon-free energy system by 2050. Utilities, industry, regulators and other electric power stakeholders trust SEPA to provide education, research, standards and collaboration around a clean and modern energy future. To learn more and discover our pathways, visit www.sepapower.org.

About the Authors Jared Leader researches and develops strategic plans at SEPA for programs and products that integrate DERs, NWAs and microgrids into utility resource portfolios and business operations. Jared co-led SEPA’s consulting engagement with the D.C. Public Service Commission facilitating their grid modernization initiative. Jared earned his BS in Civil and Environmental Engineering from the University of Virginia and his MS in Energy Policy and Climate from Johns Hopkins University.

Robert Tucker works with SEPA clients to develop solutions, define engagement scope and deliverables, and ensure project outcomes that meet clients’ objectives. Robert has over 25 years of experience helping utilities with business process and technology solutions solve complex problems or changing regulatory requirements. Robert earned his BS in Mechanical Engineering from North Carolina State University and his Masters in

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