1. Locational Net Benefit Analysis Working Group
November 16, 2016
Webinar
drpwg.org

2. Agenda Time Topic 9:00-9:15 9:15-10:00 10:00-11:00 11:00-12:00
A. Introductions and Status Update
9:15-10:00
B. Review Outline of WG Short-Term Final Report
10:00-11:00
C. Data Discussion
11:00-12:00
D. Presentation of LNBA Tool
Discussion on Avoided Transmission Cost Component (7.3)
Wrap up and adjourn

3. ICA and LNBA Working Group Background
ICA and LNBA WG Purpose - Pursuant to the May 2, 2016, Assigned Commissioner’s Ruling (ACR) in DRP proceeding (R ), the Joint Utilities are required to convene the ICA WG to:
Refine ICA and LNBA Methodologies and Requirements
Authorize Demonstration Project A and Project B
CPUC Energy Division role
Oversight to ensure balance and achievement of State objective (ensure adequate stakeholder representation in consensus statements, keeping WG activities on track with Commission expectations/needs, demonstration project results review, quality control on deliverables)
Coordination with both related CPUC activities and activities in other agencies (IDER CSF WG, CEC and CAISO interagency matters, interconnection/Rule 21/SIWG, other proceedings that may impact or be impacted by locational value calculation such as AB 350/IRP and LTPP/TPP/RPS)
Steward WG agreements into CPUC decisions when necessary
More Than Smart role
Engaged by Joint Utilities to facilitate both the ICA & LBNA working groups. This leverages the previous work of MTS facilitating stakeholder discussions on ICA and LBNA topics.

4. October Recap
October 19th: Webinar discussing long-term refinement topics
October 27th: Webinar on deferability criteria
November 10th: Submission of Intermediate Status Report on Long Term LNBA Refinement

5. Upcoming Deadlines
IOUs will submit Demo B Final Report Q (current internal deadline: Dec. 16, 2016)
WG Final LNBA Report tentatively due January 2017, pending joint motion

6. Working Group Final Report: Proposed Process
November meetings (11/16 and 11/18): Review “Super Outlines” to confirm areas of consensus, non-consensus, proposed alternatives, and recommendations for next steps
December meetings: Review 1st draft of reports after Super Outline
Early January: Review Final Demo A/Demo B Reports
Review 2nd draft of reports after Dec meeting
Mid January: WG meetings to review recommendations
Review 3rd draft, incorporating recommendations after seeing Demo results
Late January: Final WG meeting
January 30*: Final reports due
*pending joint IOU motion

7. LNBA “Super Outline” By “Super Outline” we mean the following:
An initial written document that provides stakeholders with clear direction on what the final report will look like in terms of structure, organization, and content. 
For each of the short-term topics, include the following:
Identify key issues that were discussed
For each issue, summarize the conversation and main discussion points, including alternatives that were considered (if applicable)
Summarize areas of consensus:  things the IOUs will do for Demo A and/or recommendations for the future
Summarize any next steps / areas for future study and analysis

8. LNBA “Super Outline” 6.1. Activity related to Demonstration Project B
Recommend a format for the LNBA maps to be consistent and readable to all California stakeholders across the utilities’ service territories with similar data and visual aspects (color coding, mapping tools etc.).
Consult to the IOUs on further definition of grid service, as described in requirement (1)(B)(iv-v) of Section above, and in coordination with IDER proceeding.

9. LNBA “Super Outline”: 6.1.a
Recommend a format for LNBA maps to be consistent and readable to all California stakeholders across the utilities’ service territories with similar data and visual aspects (color coding, mapping tools, etc.)
Summary: The WG discussed this topic at the July and September LNBA WG meetings, in conjunction with the ICA WG. Utilities discussed inputs into the project deferral value and system-level avoided cost calculations. The proposed Demo B maps will display deferrable projects as a layer on top of ICA heat maps, with cost of deferral shown in a symbolic manner (ex: $, $$, $$$). These heat maps will include multiple layers showing separate services and functions. Clickable circuit maps lead to pop-up information about the circuit. The growth scenarios would be represented by a user-selectable map layer. Growth scenarios 1 and 3 outlined in the August 23 revision of the ACR will be used in the maps. Both ICA and LNBA results will be based on load flow modelling. All inputs to the LNBA tool, to the extent that they are non-confidential, will be provided. The utilities are aiming to use all public data for its inputs. Additional data outside of the pop-up information will be available in a downloadable data set.
A draft data and mapping template was circulated for comments among the Working Group in July. Utilities have also asked for WG feedback on the high-level user flow information presented in October.
Points of Consensus:
Recommendations and Next Steps:
The WG would like to engage in continued discussion on:
how growth scenarios will be represented in heat maps
what information regarding deferrable projects are included in pop-up information versus downloadable data
how projects deferring a future identified need may be included in LNBA maps

10. LNBA “Super Outline”: 6.1.b
Consult to the IOUs on further definition of grid service, as described in requirement (1)(B)(iv-v) of Section above, and in coordination with the IDER proceeding.
Summary: The WG discussed this topic at the July and October WG meetings. The joint IOUs presented on the distribution services, attributes, and performance and measurement requirements that were originally prepared as part of the IDER proceeding under the Competitive Solicitations Framework (CSF) Working Group meeting. These services are: 1) distribution capacity, 2) voltage support, and 3) reliability (Back-tie) and resiliency (microgrid) services. These services inform which projects are considered deferrable.
Points of Consensus: The WG agreed to use the definition of grid services as defined through the CSF Final Working Group Report.
Recommendations and Next Steps:

11. LNBA “Super Outline”: other
Other: Use Cases
Summary: The WG discussed this topic at the June, July, and August meetings. It was discussed that LNBA use cases could include:
Information purposes (visual heat maps to inform DER providers and stakeholders of locations where DER may be most valuable/optimal locations)
Distribution planning in the context of competitive solicitation bid evaluations (means of identifying and prioritizing DER deferral opportunities, through understanding how locational value informs pricing and/or procurement)
Possible future use cases, such as benefitting the interconnection process, input into program design or rate setting, and identifying both optimal and suboptimal locations
Points of Consensus: The WG agreed to use the above as use cases for LNBA.
Recommendations and Next Steps:
Long term: The WG will continue to evaluate possible future use cases as a potential long-term refinement issue

12. Data Discussion
We received submissions from 6 separate entities on data access to the Excel template.
Data has been scoped as a long-term refinement item with relevance to both ICA and LNBA WGs.
Specifically in ICA, the WG has agreed to include the following specific long-term refinement items within the larger data conversation:
3.2.b: ways to make ICA information more user-friendly and easily accessible
3.2.d: market sensitive information (type and timing of the thermal, reactance, or protection limits associated with the hosting capacity on each line)
For the November meetings, it is proposed that the WG review the compiled template and address the following questions:
Is the request addressing a need within ICA, LNBA, both, or within another proceeding or track?
Does the function support a particular grid service?
Can data issues be characterized with regards to the Walk/Jog/Run framework?
Are utilities currently addressing or are there plans to address?

13. Data Discussion
MTS published a paper in October 2016 on using the Walk/Jog/Run Framework to sequentially frame the evolution of grid data needs and capabilities.

14. Data Discussion
System planning: data used as inputs and assumptions in distribution system planning, including hosting capacity analysis, interconnection studies, annual planning, near-term operational planning, and information that lowers the overall cost of DER integration
Regulatory compliance: data used by regulators to make informed decisions about performance of distribution system, utility expenditure requests, and potential location and value of Der as a non-wires alternative or other system value, including data for determining locational and system value
Grid operations: real-time information about system state and availability and operation of interconnected DER, including utility data and information from grid sensing and measurement devices and operational systems, as well as data generated by DER providers’ and customers’ systems and devices
Commercial transaction: data to drive efficiency into procurement and compensation activities
e.g. financial data such utility avoided cost and pricing as well as the structural elements of transactions (term, performance requirements, commercial terms and conditions, etc).
Market efficiency : supports market oversight and evaluation of market effectiveness to achieve desired objectives regarding customer choice, system performance, reliability, and environment

15. Data Discussion
WALK: Planning and regulatory function related to enabling high penetration of distributed generation resources.
JOG: Expanded data needs to animate operational markets for grid services and capture local benefits of DER
RUN: Enhanced market coordination and management of energy transactions

16. Data Discussion
Please refer to Excel worksheet on data

17. Distribution Resources Plan – LNBA Tool Discussion
October 28, 2016
Larsen Plano, PG&E | Will Speer, SDG&E

18. LNBA Tool Overview

19. Demo B LNBA Tool: Project Deferral Value Calculation
Project deferral benefit module will be used in Demo B to calculate indicative ranges of avoided costs realized by deferring identified capital projects
User inputs: costs, discount rate, inflation, deferral duration, revenue requirement multiplier, etc.
Results are used in heat maps
IOUs’ inputs will be provided, to the extent possible
IOUs will strive to use public inputs
No confidential or market-sensitive inputs would be provided
Will be made publicly available as part of LNBA Tool

20. Calculation Example Discrete Deferral Value for one year
Deferral Value = Full Cost of Asset * RECC + DO&M
RECC Calculation
i = 2.5%, r = 7%, book life = 40 yrs
𝑟−𝑖 1+𝑟 𝑟 𝑁 𝑟 𝑁 − 1+𝑖 𝑁
RECC = 4.5%/1.07 *1.07^40/(1.07^ ^40) = 5.12%
Full Cost = Direct Capital * RRScaler = $8M * 150% = $12M
Deferral Value = $12M * 5.12% + $0.20M = $0.81M
Source: E3,

21. Deferral Value for Multiple Years (E3)
RECC-based deferral values escalate with inflation each year.
Discounting the stream of annual deferral values yields the total present value of a multi-year deferral.
𝑫𝒆𝒇𝒆𝒓𝒓𝒂𝒍 𝑻 = 𝒚=𝟏 𝑻 𝑺𝒂𝒗𝒊𝒏𝒈𝒔𝑶𝒏𝒆 𝟏+𝒊 𝟏+𝒓 𝒚−𝟏
SavingsOne = Deferral value savings in the first year = $0.815M
Two year deferral = $0.815M + $0.815M *(1.025/1.07) = $1.6M
Source: E3,

22. Demo B LNBA Tool: System-Level Avoided Cost Calculation
System-level Avoided Cost Module will be used in Demo B to estimate system-level avoided costs
User inputs: Hourly DER Profile, life
Results don’t vary within Demo B areas, and are NOT mapped
Borrows typical avoided costs from E updated DER Avoided Cost Model
Generation Capacity, Energy, etc.
In addition to DERAC, includes flexible capacity and renewable integration avoided costs
Will be made publicly available as part of LNBA Tool

23. High-Level User Flow for Demo B Deliverables
DRAFT
High-Level User Flow for Demo B Deliverables
Access the LNBA mapping layer that identifies deferral opportunity locations
Select a section with a deferral opportunity to view project description
Download distribution deferral datasets for project
Construct a DER profile that meets the required electric characteristics, considering deferral requirements and ICA results
Upload DER profile in LNBA Tool to estimate system-level avoided costs

24. Appendix

25. Avoided Cost Theory (E3)
LNBA will use the Real Economic Carrying Charge (RECC).
RECC used to calculate the annual economic value or “economic depreciation” of an asset.
Economic depreciation = value of deferring the asset and its future replacements by one year, in constant real dollars.
Any change in O&M costs is also included.
Economic value = Full Cost of Asset * RECC + DO&M
Full Cost of Asset = Present Value of revenue requirements associated with capital project
Source: E3,

26. ACR Requirements and LNBA Tool
The IOUs will use the primary analysis for the LNBA methodology described in section 4.3 and 4.4.1
ACR Requirement
Location in LNBA Tool
Avoided T&D
"Project Inputs & Avoided Costs" Lines 18-47
Avoided Generation Capacity - System and Local RA
"SystemAC" Columns AL-BP
Avoided Generation Capacity - Flexible RA
"Flex RA"
Avoided Energy
"SystemAC" Columns B-AF
Avoided GHG
"SystemAC" Columns DF-EJ
Avoided RPS
"SystemAC" Columns EP-FT
Avoided Ancillary Services
"SystemAC" Columns BV-CZ
Renewable Integration Cost
"DER Dashboard" K4
Use of Real Economic Carrying Charge
"Project Inputs & Avoided Costs" Line
Avoided O&M Associated with T&D Project
"Project Inputs & Avoided Costs" Line 28

27. Relevant Sections of 5/2 ACR
Section 4.1: “evaluate one near-term (0-3 year lead time) and one longer term (3 or more year lead time)… at least one voltage support/power quality- or reliability/resiliency related deferral opportunity in addition to one or more capacity-related opportunities [for possible deferral].
Section 6.1: “[LNBA working group] Activity Related to Demonstration Project B… Consult to the IOUs on further definition of grid service, as described in requirement (1)(B)(iv-v) of Section above, and in coordination with the IDER proceeding.”
Section 4.4.1(1)(A): “The IOUs shall identify the full range of electric services that result in avoided costs for all locations within the DPA selected for analysis.”

28. LNBA Avoided Transmission Cost component
ACR Section : LNBA Specific Requirements
(2) For avoided costs related to transmission capital and operating expenditures, the IOUs shall, to the extent possible, quantify the co-benefit value of ensuring (through targeted, distribution-level DER sourcing) that preferred resources relied upon to meet planning requirements in the California ISO’s transmission plan, Section 7.3, materialize as assumed in those locations. The IOUs shall provide work papers with a clear description of the methods and data used.
(A) If the IOUs are unable to quantify this value, they should use the avoided transmission values in the Net Energy Metering (NEM) Public Tool developed in R
See pp for a complete list of specific locations.