Over the course of 2016, most of the advanced energy policy conversations in Nevada have been around net metering, with much score-keeping of progress and setback. Between rollback in June and partial reinstatement in December, net metering has taken center stage, with more to come this year. But another official decision has set the stage for Nevada to once again be an expanding market for advanced energy. It was a little-noticed ruling by the state’s public utility commission (PUC) to incorporate costs and benefits across all attributes in weighing various options for meeting the needs of electricity customers. AEE’s nonprofit educational affiliate, the AEE Institute, was right in the middle of it.
In April of last year, Nevada PUC then-chairman Paul Thomsen issued a procedural order requiring Sierra-Pacific Power (a subsidiary of NV Energy) to file a supplemental study to its triennial integrated resource plan (IRP). The order required SPP to examine the costs and benefits of different attributes for 100 MW blocks of power generated by natural gas, solar, wind, and other advanced energy technologies, including energy storage, plus similar blocks of energy efficiency and demand response. The list of attributes to be considered included transmission and distribution gains and losses, ancillary services, and locational benefits. Importantly, the order had SPP consider the cost and benefits of compliance with environmental regulations, including avoided criteria pollutants and carbon emissions.
At the recommendation of the PUC, AEE Institute intervened, looking to capitalize on its extensive work on the intersection of energy and environmental regulation. In testimony on the chairman’s order, AEE Institute provided up-to-date national data on various technologies, including beneficial cost-benefit ratios of renewable energy and energy efficiency that went above and beyond state requirements. We were able to provide value by providing recent cost data, recent technology information, and recommendations for improving methodologies.
For example, AEE Institute challenged claims that battery storage systems have an installed cost of about $647/kWh, when recent prices for battery storage are as low as $481/kWh, 36% less than the provided estimate. In addition, AEE Institute provided information from nationally respected sources, such as the Lawrence Berkeley National Laboratory’s wind market report, which helped the PUC understand the technologies that are available. For instance, AEE Institute provided data showing that wind turbines with 90- to 100-meter hub heights could be used in the Interior West. The higher capacity factors of these tall turbines make wind power more economically competitive. Finally, AEE Institute made recommendations around presenting energy efficiency’s emission benefits, specifically noting that using emissions per MWh instead of absolute quantities of emissions reduced understates the impact of energy efficiency on emissions and partly obscures the effects of other generation resources.
Thanks to our participation in this proceeding, future Sierra Pacific RFPs for renewable energy will require that “bidders identify value attributes that their proposed resources can provide and the cost to provide them,” while future renewable energy and energy efficiency acquisitions and PPAs must “identify the value attributes that are provided by the resource, including but not limited to: capacity, energy, transmission and distribution benefits/cost, flexibility, environmental benefits, fuel diversity/hedging, and other ancillary services that are provided by the resource to…customers.” The PUC also rejected the idea of Sierra-Pacific acquiring an older natural gas plant in Arizona to meet new demand, encouraging the utility to consider renewables and demand-side efficiency instead.
This is all pretty wonky, but critical to advanced energy getting to compete on its economic merits. The PUC order ensures that, in deciding the best way for a utility to meet its customers’ electricity needs, at least one Nevada utility will have to consider all the value various options provide – not just price, but all benefits to electric power customers, including lower costs for maintaining the electric distribution system and complying with environmental regulations that come with power generation – before the PUC approves utility spending on those options.
What the Nevada PUC has done is define a new way for utility commissions to fulfill their missions to ensure the reliability and affordability of electricity for all customers – for Nevada, and by example for other states. In getting there, AEE Institute was in the forefront – and now stands ready to help other states follow Nevada’s lead.
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