Infrastructure Needs and Our Electric Grid for the 21st Century Building The Backbone of Energy Efficiency: New England’s Competitiveness, Innovation and Sustainability in the 21st Century Infrastructure Needs and Our Electric Grid for the 21st Century William Zarakas Principal, The Brattle Group Bill.zarakas@brattle.com June 2, 2015 Federal Reserve Bank of Boston

Electricity Infrastructure A Few Evolving Trends Traditionally defined lines of demarcation for utility infrastructure are becoming increasingly blurred, mainly by energy resources located in the distribution system Demand-side resources, including energy efficiency, are increasingly being considered as a resource to defer growth-related investments / upgrades to electric distribution infrastructure The cost of power from distributed generating resources is declining, but the scale and scope effects associated with power produced from comparable centralized resources are typically less expensive on a wholesale basis

Distributed Energy Resources Distributed Generation (PV and other) Energy Efficiency Demand Response Storage May Defer T&D Expansion May Enhance System Resilience Scale < 1 0 MW Near Point of Use Some directly quantifiable (commercial); most are less observable (behind the meter) From system planning perspective, frequently considered negative load, but… …Some jurisdictions have initiated proceedings aimed at developing DER into controllable resources, via the utility functioning as a “platform” (e.g., New York REV)

NYISO Coincident Peak Forecast Near Term Impacts Evolution of DER as a major power resource will not happen instantaneously Largest DER impact expected to be from energy efficiency Points to the continued importance of centralized resources Treated as “NegaWatts” NYISO Coincident Peak Forecast Portions may be considered “controllable” resources Source: NYISO 2015 “Gold Book”; NYPSC Generic Environmental Impact Statement (GEIS for REV and CEF, 2015)

Infrastructure Needs and Our Electric Grid for the 21st Century New England Electricity Infrastructure Pipeline expansion to meet needs of NG CCs Fuel diversity in generating resources Role of imports Distribution infrastructure and the integration of DERs, starting with energy efficiency 28 GW peak; 31 GW installed capacity Majority of new capacity: NG CC 500 MW solar; 800 MW wind; solar expected to increase 3x and wind to increase 5X in next 10 years +15% net energy imports (Quebec, New Brunswick + New York) ~50% energy from natural gas CC units; ~6% from coal/oil Retirements expected: oil/coal Limitations in electric transmission (wind) and NG pipelines Concerns re: the cost of upgrading distribution infrastructure and resilience enhancements

Panel Discussion Infrastructure Needs and Our Electric Grid for the 21st Century Pipeline expansion to meet needs of NG CCs Fuel diversity in generating resources Role of imports Distribution infrastructure and the integration of DERs, starting with energy efficiency