Economic Impacts of Distributed Energy Resources This subsection briefly describes the numerous costs and benefits quantified and included in the case study. Table 51 provides a brief overview of the avoided costs of supplying marginal energy from the utility’s perspective. These costs are avoided if energy consumption is reduced or DERs produce energy and increased if consumption is increased or DERs consume energy, and can have time varying values. The avoided costs have a 10-yr. procedural history in evaluating the cost-effectiveness of distributed energy resources at the California Public Utility Commission (CPUC). Table 51. Utility’s Avoided Cost of Energy Components. Component Description Avoided Energy Cost Hourly wholesale value of energy Avoided Generation The avoided cost of building new generation capacity to meet system Capacity Cost peak loads Avoided Ancillary Services The avoided marginal of providing system operations and reserves Cost for electricity grid reliability, assumed to be 1% of energy cost The avoided cost of increased resistive transmission and distribution Avoided Losses losses due to an increase in end load The avoided abatement cost of carbon dioxide (CO2), nitric oxide, and Avoided Emissions nitrogen dioxide (NOx) emissions associated with the marginal generating resource The avoided purchases of required renewable generation at Avoided RPS prices required to meet a renewable portfolio standard The time value of money when the peak distribution network load is Distribution Deferral Value reduced, and an investment in distribution capacity can be deferred Avoided mechanical wear on distribution equipment such as tap changing Distribution Operations transformers or switching capacitors Table 52 describes the costs and benefits that a utility customer faces when deciding to adopt a DER such as the SIS.
Economic Impacts of Distributed Energy Resources This subsection briefly describes the numerous costs and benefits quantified and included in the case study. Table 51 provides a brief overview of the avoided costs of supplying marginal energy from the utility’s perspective. These costs are avoided if energy consumption is reduced or DERs produce energy and increased if consumption is increased or DERs consume energy, and can have time varying values. The avoided costs have a 10-yr. procedural history in evaluating the cost-effectiveness of distributed energy resources at the California Public Utility Commission (CPUC). Table 51. Utility’s Avoided Cost of Energy Components. Component Description Avoided Energy Cost Hourly wholesale value of energy Avoided Generation Capacity Cost The avoided cost of building new generation capacity to meet system peak loads Avoided Ancillary Services Cost The avoided marginal of providing system operations and reserves for electricity grid reliability, assumed to be 1% of energy cost Avoided Losses The avoided cost of increased resistive transmission and distribution losses due to an increase in end load Avoided Emissions The avoided abatement cost of carbon dioxide (CO2), nitric oxide, and nitrogen dioxide (NOx) emissions associated with the marginal generating resource Avoided RPS The avoided purchases of required renewable generation at prices required to meet a renewable portfolio standard Distribution Deferral Value The time value of money when the peak distribution network load is reduced, and an investment in distribution capacity can be deferred Distribution Operations Avoided mechanical wear on distribution equipment such as tap changing transformers or switching capacitors Table 52 describes the costs and benefits that a utility customer faces when deciding to adopt a DER such as the SIS.
CSIRDD_Sol4_E3_DRAFT_final_report_Aug2016.docx