The U.S. Department of Energy (DOE) recently approved a request from the Arizona Corporation Commission to receive technical assistance from the Lawrence Berkeley National Laboratory on the development of a proposal that will allow Arizona Public Service Co. (APS) and its customers to save money through the synchronization of potentially millions of smart devices on the grid.
The proposal would establish a new special contract or rate, also known as a tariff, which will compensate smart devices for the value each device provides to the grid. Such as, in the case of at-home batteries when they dispatch extra energy to the grid during times when energy supplies are low or in the case of smart appliances and smart thermostats when they draw excess power from the grid during times when energy supplies are high.
"The U.S. DOE is pleased to provide technical assistance to Arizona for this innovative tariff that will allow aggregation of all types of demand-side resources, from energy storage to grid-interactive water heaters," said Kelly Speakes-Backman, acting assistant secretary for energy efficiency and renewable energy. "We are eager to work with states, utilities, and other stakeholders to aid the delivery of clean, reliable, and affordable power to homes and businesses."
"The coordination of millions of devices that otherwise would be operating independently represents the future of Arizona's electric grid," said Arizona Corporation Commission Chairwoman Lea Márquez Peterson. "When these devices are aggregated into comprehensive portfolios, they have the potential to act as a virtual power plant, providing power and other benefits to the APS and its customers, just like any other resource on the grid. Collectively, they should be treated just like any other resource in a utility's energy mix."
The balancing of supply and demand on the grid can help reduce the overall cost of providing power to customers because it allows traditional power plants to run more smoothly, while millions of smart devices can help flatten the peaks and troughs of extreme market volatility such as rare instances when Arizona's most critical power plants go offline or during times of extreme heat or cold. It can also help reduce overall costs for customers by preventing the need to build multi-million dollar power plants that will be intended to run for only a few hours each year, such as to meet peak demand, which is the most extreme hour of the most extreme month of a year.
The Lawrence Berkeley National Laboratory first approached the Arizona Corporation Commission with the possibility to provide technical assistance at no cost to the Commission after the Commission voted last November to adopt the new tariff proposal, which is anticipated to be finalized by the Commission later this year.
"What we see unique about this tariff is that it incorporates both distribution system values and bulk power system values," said Lisa Schwartz of Lawrence Berkeley National Laboratory. "It's not just solar here, which could be an unconstrained export on the grid. It's solar working in tandem with storage, in tandem with various flavors of demand response — whether it's the utility controlling the water heater or the customer with an automatic smart setting on the thermostat in response to a price signal. And all these aggregated demand-side resources together provide more value to the utility and its customers instead of just a single distributed resource."
During a meeting on Feb. 18, the Commission voted 5-0 to accept the offer from Lawrence Berkeley National Laboratory, pending approval from the U.S. DOE. The DOE approved the request on Feb 23, 2021.
"I would support all options of technical assistance offered by the National Lab. For me, it's about customer savings and affordability and the use of different smart technologies through this aggregated tariff so customers can see a real advantage to participating in a program that works directly with the APS," said Márquez Peterson.
As the collaboration between Lawrence Berkeley National Laboratory and the Arizona Corporation Commission moves forward, Lawrence Berkeley will be working according to the commissioners' recommendations to put together a final report. The report will provide valuable data as to how and in what way the devices will be able to be interconnected, and what value this type of system will provide to the grid.
Stakeholders are encouraged to work with the APS prior to and following the company's April 1 proposed tariff filing deadline to contribute to the development of the tariff and its rate design, including the compensation values and eligible technologies included in the tariff. This will help ensure a robust stakeholder process so that APS customers receive the greatest benefit possible.
The proposed tariff is subject to approval by a majority of commissioners at a future open meeting.