Analysis of Smart Grid Technologies – Tools to Enable Renewable Energy in Hawaii Prepared for the: State of Hawai‘i Department of Business, Economic Development and Tourism Under Supplemental Contract No. 1 for Contract #60514 for the NETL Grant Project Task 1, Subtask 4, Smart Grid Technologies Prepared by: Black & Veatch Submitted by: Hawai‘i Natural Energy Institute October 2013 ANALYSIS OF SMART GRID TECHNOLOGIES – TOOLS TO ENABLE RENEWABLE ENERGY IN HAWAII B&V PROJECT NO. 179326 . All rights reserved. 2 PREPARED FOR Hawaii Natural Energy Institute ©Black & Veatch Holding Company 201 1 OCTOBER 2013 ® ® Hawaii Natural Energy Institute | TOOLS TO ENABLE RENEWABLE ENERGY IN HAWAII Table of Contents Legal Notice.............................................................................................................................................................. 1 1.0 Executive Summary ............................................................................................................................ 1-1 1.1 Scope of Work ........................................................................................................................................ 1-2 1.2 Report Organization ........................................................................................................................... 1-3 1.2.1 Introduction and Purpose ............................................................................................. 1-3 1.2.2 Grid Flexibility .................................................................................................................... 1-3 1.2.3 Energy Efficiency ............................................................................................................... 1-3 1.2.4 Demand Response ............................................................................................................ 1-4 1.2.5 The Smart Grid Enables Technologies That Provide Flexibility .................... 1-5 1.2.6 Barriers to Increased Penetration of Renewable Generation in Hawaii .................................................................................................................................... 1-6 1.2.7 Solutions to Barriers to Increased Penetration of Renewables in Hawaii .................................................................................................................................... 1-6 1.2.8 Integration of Enabling Technologies....................................................................... 1-6 1.2.9 Proposed Implementation Roadmap ........................................................................ 1-7 1.2.10 Summary of Overall Recommendations or Proposed Next Steps ................. 1-7 2.0 Introduction and Purpose ................................................................................................................ 2-1 2.1 Background ............................................................................................................................................ 2-2 2.2 Purpose .................................................................................................................................................... 2-3 2.3 Existing Conditions ............................................................................................................................. 2-3 3.0 Grid Flexibility ...................................................................................................................................... 3-1 3.1 Traditional Electric System Flexibility/Reliability Functions ........................................... 3-1 3.2 Traditional Sources of Flexibility .................................................................................................. 3-2 3.2.1 Flexible Conventional Generation .............................................................................. 3-3 3.2.2 Demand Response ............................................................................................................ 3-4 3.2.3 Curtailment .......................................................................................................................... 3-4 3.2.4 Sub-hourly Scheduling .................................................................................................... 3-5 3.2.5 Consolidation of Balancing Areas ............................................................................... 3-5 3.2.6 Enabling Transmission ................................................................................................... 3-5 3.2.7 Energy Storage ................................................................................................................... 3-6 3.3 New Emerging Flexible Resources ............................................................................................... 3-6 3.4 A “Proactive Approach” in Hawaii ................................................................................................ 3-8 3.5 Section Summary ............................................................................................................................... 3-11 4.0 Energy Efficiency (EE) ........................................................................................................................ 4-1 4.1 The Value and advantages of energy Efficiency ...................................................................... 4-1 4.2 existing Energy Efficiency programs in Hawaii ....................................................................... 4-2 4.3 Transmission And Distribution efficiency, voltage conservation and voltage/VAr optimization ................................................................................................................. 4-5 4.4 Smart Metering increases customer driven efficiency ......................................................... 4-5 BLACK & VEATCH | Table of Contents i Hawaii Natural Energy Institute | TOOLS TO ENABLE RENEWABLE ENERGY IN HAWAII 4.5 Green Button Initiatives Present New Opportunities to Increase Customer- Driven efficiency ................................................................................................................................... 4-8 4.6 Energy Efficiency creates the need for additional system flexibility ............................. 4-8 4.7 Opportunities to Enhance Hawaii’s Energy Efficiency Programs, as Identified to Date In State Planning Documents ..................................................................... 4-9 4.8 Opportunities to Enhance Hawaii’s Energy Efficiency Programs, as Identified by third parties .............................................................................................................. 4-11 4.8.1 Appliance efficiency standards.................................................................................. 4-12 4.8.2 State government initiatives ...................................................................................... 4-12 4.9 The Interaction between Energy Efficiency & Demand Response ................................ 4-12 4.10 Section Summary ............................................................................................................................... 4-13 5.0 Demand Response ............................................................................................................................... 5-1 5.1 What is Demand Response, What are the types of Demand response .......................... 5-1 5.1.1 Direct Load Control .......................................................................................................... 5-2 5.1.2 Third-Party Aggregation ................................................................................................ 5-4 5.1.3 Load Shifting and Scheduled Load Management ................................................. 5-5 5.1.4 Rate Design Programs ..................................................................................................... 5-6 5.1.5 Load Shaping ....................................................................................................................... 5-9 5.2 Demand Response For Flexibility ............................................................................................... 5-10 5.3 Hawaii’s Existing Demand Response Programs .................................................................... 5-11 5.4 Opportunities to Enhance Hawaii’s Demand Response Programs................................ 5-13 5.4.1 Measurement and Verification of Demand Response ...................................... 5-14 5.4.2 Evaluating the cost-effectiveness of DR Programs............................................ 5-16 5.5 Customer interactions, communication techniques and advancements in load control........................................................................................................................................... 5-17 5.6 Section Summary ............................................................................................................................... 5-19 6.0 The Smart Grid Monitoring, Communications and Control Technologies ...................... 6-1 6.1 how does the Smart Grid enable .................................................................................................... 6-2 6.2 Hawaii’s Existing Smart Grid, Communications and COntrol Programs ....................... 6-8 6.3 Opportunities to Enhance Hawaii’s Smart Grid Programs ................................................. 6-9 6.3.1 Smart Metering as an enabler ...................................................................................