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Valuing Distributed Energy Resources for Non-Wires Alternatives

Valuing Distributed Energy Resources for Non-Wires Alternatives

Full Title: Valuing Distributed Energy Resources for Non-Wires Alternatives
Author(s): Nicholas Laws, Michael Webber, and Dongmei Chen
Publisher(s): Elsevier Inc.
Publication Date: June 8, 2024
Full Text: Download Resource
Description (excerpt):

Distributed energy resources (DER) as non-wires alternatives, regardless of owner, have the potential to reduce system operating costs and delay system upgrades. However, it is difficult to determine the appropriate economic signal to incentivize DER investors to install capacity that will benefit both the DER investors and the system operator. To determine this co-optimal price signal, we present a bilevel optimization framework that determines the least cost solution to distribution system over-loads. A key output of the framework is a spatiotemporal price signal to DER owners that simultaneously guarantees the DER owners’ required rate of return and minimizes the system operation costs. The framework is demonstrated with a case by which the system operator considers utility owned battery energy storage systems, traditional system upgrades, and energy purchased from DER owners. The results show that utility owned storage combined with DER for non-wires alternatives can result in lower operating costs with similar upfront costs to traditional system upgrades by avoiding or delaying upgrades. In a use-case example we show that when valuing DER the operating costs over 20 years can be reduced by over 40% resulting in a $3M net present value.

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