2016 RENEWABLE ENERGY CASE COMPETITION SPONSORED BY

Transcription

1 2016 RENEWABLE ENERGY CASE COMPETITION SPONSORED BY

2 INTRODUCTION In the Fall of 2012, Hurricane Sandy slammed into the East Coast of the United States, killing hundreds of people and causing over $70 billion in property damage. i Entire communities went dark, some for months afterwards, and roughly seven million people found themselves without power. ii This storm, and fear of more frequent and destructive storms like it, brought climate change, grid resilience, and reliability to the forefront of the grid reform conversation. Backed by Governor Andrew Cuomo s administration, New York s energy regulators launched a comprehensive modernization initiative in 2014 known as Reforming the Energy Vision, or REV, for short. REV has some ambitious goals. In the words of New York s Chairman of Energy and Finance Richard Kauffman: New York is moving to a more market-based, decentralized approach with how it shapes energy policy. This new approach will help protect the environment, lower energy costs and create opportunities for economic growth. By developing innovative market solutions, Governor Cuomo is changing the energy industry into a clean, cost-effective and dynamic system that is more resilient to the impacts of climate change. iii While energy industry investors around the country are worried about the "utility death spiral the idea that distributed energy resources like solar and battery storage will soon turn the centralized electric utility into an artifact serving an ever-decreasing number of customers New York REV is one of the most notable efforts to push utilities to adapt to the forces behind the "spiral." In many states there have been conflicts between distributed resources and the utility, such as in Nevada where the utility NV Energy has been sparring with advocates of residential solar over policies like fixed charges on solar users. In contrast to this adversarial relationship, REV seeks to transform New York utilities into collaborative partners that can facilitate and encourage new types of customer-oriented clean energy. Because of the precedents it could set for fundamental transformations in the utility business model, REV has been called "arguably the most important regulatory proceeding in the country right now." iv After more than two years of regulatory work, several major changes necessary to bring about the goals of REV have taken place, and key elements of New York s grid of the future are beginning to take shape. More work remains, v and there is still a great deal of uncertainty and speculation about the ultimate success of REV, but a stronger market for clean energy solutions is beginning to emerge. With new rules and incentives in place designed to push utilities into the 21 st century, the regulators have laid much of the groundwork. Much of the burden now shifts to the private sector to explore and develop innovative solutions in order to help bring about a resilient, flexible, and cleaner grid. Page 1

3 YOUR TASK You and your team are founding a start-up and looking to take advantage of the new market opportunities emerging from New York REV. You are free to focus on any type of product or service (software, hardware, platforms, etc.), but your idea must be directly pertinent to at least one of the four following technology categories (with recommended subcategories as bullets): - Energy Storage o Aggregation and Control - Microgrids - Distributed Generation o Optimization o Customer Engagement/Interconnection - Demand Management o Demand Response o Energy Efficiency You will be presenting your business idea to two groups: first to a group of venture capital investors for seed funding, and second to a coalition of REV decision makers (NYSERDA, NY Public Service Commissioners, and the New York Power Authority) to assess the value your idea provides to the grid. Please prepare two separate presentations to submit this Sunday, November 6, at 11:59PM: 1. Each team will have 30 minutes for the Round 1 (morning) presentation to VCs, focusing on the commercial case for your business proposal. You should prepare a 20-minute presentation, and the presentation will be followed by 10 minutes of Q&A. Your Round 1 presentation should address the following: - What is your business model? - What is the estimated market size for your product(s) and/or service(s), and who are your target customers? - How does your product(s) or service(s) create value for customers and utilities, and how does that value align with the goals of REV? Think in particular about how your product(s) or service(s) could capitalize on the incentives and revenue opportunities provided by REV reforms. Note that you should prioritize value-creation for customers over utilities. - How much value does your business create for investors? What are the key metrics you will use to evaluate the financial success of your business? Page 2

4 - What types of partnerships or joint ventures are necessary to ensure the success of your business? - What are the major risks associated with your proposed business model and strategy? - How much initial financing are you requesting from VCs? What additional financing sources or means (including public funding and REV incentives) might be necessary to your business? 2. The four teams selected for the final round will make their second presentation to a coalition of REV decision makers who are conducting due diligence in order to assess 1) the value that your product or service will create for the grid and 2) the feasibility and long-term sustainability of your business model. Note that all teams must submit this presentation this Sunday, November 6, at 11:59PM. The final round will also consist of a 20-minute team presentation followed by a 10-minute Q&A. Your final round presentation should address the following: - Recap of Round 1 presentation (approximately 10 minutes). - How does your product(s) or service(s) create system-wide value for utilities, customers, and the grid? This should be a deeper dive into the same topic from Round 1. The answer to this question should be primarily quantitative, but you are encouraged to incorporate qualitative concepts as well, as well as environmental and social benefits that you hope to monetize. - How will you go about securing necessary partnerships, joint ventures, REV incentives, and/or future financing (if any)? - What is your go-to-market strategy? - How will you position your product(s) and/or service(s) in order to maximize customer adoption and ensure support from key stakeholders? Judging criteria: Responses will be evaluated on the following criteria: - Analysis: Identify challenges and opportunities; provide quantitative and qualitative support; offer original insight. - Recommendations: Follow logic from analysis; address identified questions; demonstrate sound judgment, a creative approach, and realistic answers. - Presentation: Clear, concise and structured presentation, well-balanced among team members; aesthetically pleasing and effective slides. Page 3

5 - Questions & Answers: Clearly answer posed questions; provide convincing explanations; answer as a team; be open and transparent about weaknesses or flaws. Format of submissions: Responses should be in Microsoft PowerPoint format. Include in the footer of your response the name of your team. Your team name can be selected at your discretion, but may not contain any vulgar language or profanity. Do not include your school name or any identifying references (such as to your mascot, hometown, state, etc.) in any part of your submission so as to eliminate any bias in judging. Please remove from your response and from document properties any information that could reveal your school or team members. Solutions for this case are due at 11:59 PM EST on Sunday, November 6th, 2016 and should be submitted to lorentzj@umich.edu. ENERGY IN NEW YORK In 2015, New York s Independent System Operator (NYISO) published an analysis of New York s current and expected challenges with regards to its energy infrastructure. vi Among their findings: - Despite an overall surplus of power resources, transmission constraints and congestion create reliability risks. For example, the Southeast portion of the state uses some twothirds of the state s electricity, but only half of the state s generating capacity is located in this region. - In addition, maintaining future reliability through transmission upgrades is expected to be expensive. The ISO forecasts that nearly 4,700 circuit-miles of transmission lines will need to be replaced over the next 30 years, at an estimated cost of $25 billion. - Overall electric energy usage is not expected to grow over the next decade, while peak demand is expected to grow. For more detail on NYISO s analyses and forecasts, including a breakdown of New York's current electricity mix, see Appendices I V. New York introduced competitive wholesale energy markets in the 1990s. Under the current system, roughly 94% of New York s electricity needs are met through a day-ahead market overseen by the NYISO. 60% of the energy exchanged on that market is bought and sold through competitive auctions overseen by the NYISO, with the remaining 40% exchanged through bilateral contracts between generators and utilities or energy service companies (ESCOs). The remaining approximate 6% of New York s energy is traded through the real-time market. vii In addition to the traditional exchange of electrons over the day-ahead and real-time markets, New York features markets for capacity, ancillary services, transmission congestion contracts, demand response, and other services. viii Page 4

6 NEW YORK REV New York REV is a comprehensive and ambitious process. It includes more than 40 different initiatives spread across three strategic pillars: the Reforming the Energy Vision Regulatory Docket, the New York State Energy Research and Development Authority s (NYSERDA) Clean Energy Fund, and NYPA s leadership through operations and programs. ix For purposes of this competition, although you are welcome to explore how your business might successfully capture incentives from all the pillars (including the Clean Energy Fund), our primary focus is on the first of the three pillars: the REV Regulatory Docket. Building on energy deregulation in the 1990s, the overall aim of the REV docket is to reform the framework under which energy is generated, delivered, and sold. x As NYPSC Chair Audrey Zibelman put it, "By fundamentally restructuring the way utilities and energy companies sell electricity, New York can maximize the utilization of resources, and reduce the need for new infrastructure through expanded demand management, energy efficiency, renewable energy, distributed generation, and energy storage programs." xi The REV docket features two "tracks." Track 1 of the proceedings focuses on developing distributed resource markets and a new role for utilities as providers of Distributed System Platforms (DSPs). Track 2 of the proceedings targets ratemaking and revenue stream reforms to support the growth of the DSP model. xii The case will address each of these Tracks in turn, beginning with the DSP model, which is in many ways the cornerstone of the regulatory changes underway in REV. REV - Distributed System Platforms If you are considering partnering with or selling your product/service to utilities, it is important to understand the new rules and incentives coming out of REV that are intended to shape utility investment behavior. The New York Public Service Commission (PSC) defined the distributed system platform (DSP) as follows: The DSP is an intelligent network platform that will provide safe, reliable and efficient electric services by integrating diverse resources to meet customers and society s evolving needs. The DSP fosters broad market activity that monetizes system and social values, by enabling active customer and third party engagement that is aligned with the wholesale market and bulk power system. xiii Importantly, the PSC sees the DSP as primarily an enabler of innovation. In the April 2015 Order establishing the DSP framework, the PSC wrote, "[t]he reformed electric system will be driven by consumers and non-utility providers, and it will be enabled by utilities acting as Distributed System Platform (DSP) providers...." xiv This enabling role features a couple of key constraints on utilities. First, utility ownership of DERs is highly restricted, except in instances with a demonstrated need where a viable third party option is not available. Second, DER providers are Page 5

7 to be treated as "customers and partners, rather than competitors, of traditional grid service." The DSP is responsible for offering information, interconnection, and dispatch services on reasonable terms, and DER providers and their customers are entitled to compensation from the DSP. xv This required level of collaboration is a fundamental element of New York REV s vision of a transactive grid. To ensure that the DSP providers fulfill their role as market enablers that encourage innovation and grid improvements without crowding out third parties, the Commission has been rolling out a set of new rules describing DSP functions. These functions fall into three primary categories: integrated system planning, grid operations, and market operations. Integrated System Planning The new model for DSPs requires utilities to expand and modify their traditional system planning, which has traditionally focused on justifying capital expenditures. The primary feature of this new model is the Distributed System Implementation Plan (DSIP), a multi-year plan containing a proposal for capital and operating expenditures required for DSP functions, and system information required by third parties to effectively participate in the market. 1 Grid Operations Grid operations rules primarily revolve around integrating distributed energy resources (DERs) into the electricity delivery system. The goal here is not just to add more DERs to the grid, but also to integrate those DERs and use them to enhance grid reliability and resilience. The PSC foresees DSPs increasingly relying on DERs to maintain reliable system operations during both blue sky days and significant system events. xvi In order to achieve that optimal integration, the PSC outlines a set of specific needs and functions for the DSP, including: - Committing and dispatching market-based DER and integrating load impact information with core utility grid operations. - Increasing the use of intelligent grid-facing equipment (e.g. sensors, voltage monitors). - A grab bag of more advanced grid management functions such as real-time load and network monitoring, enhanced fault detection and location, automated feeder and line switching, and automated voltage and VAR control. xvii Market Operations Market enablement is perhaps the most significant function of DSPs, but it also involves the greatest uncertainty and long-term speculation. The PSC argues that many products and rules will have to develop over time, that price transparency will eventually yield more competitive 1 These DSIPs contain more specific information about the goals and programs of each utility. They are publically available through the REV dockets, and you can examine them for more detail on specific DER opportunities and challenges, as well as plans for new investments such as distribution management systems, advanced meter rollouts, and online marketplaces. Page 6

8 markets, and that those markets will eventually be able to accurately value technology attributes and capabilities with reduced regulatory involvement. xviii In the relatively short term, the PSC outlines a core set of specific needs and functions oriented around markets: - DSPs will procure grid service products such as peak load modifications, non-bulk ancillary services, and load management to defer capital investments and enhance system security. - DSPs will offer services and pricing to enable greater penetration of DERs and utilityscale renewables. - Service providers will be able to develop new offerings based on their own assessment of needs and products offered by or to the DSP. These offerings could include electricity services such as fixed commodity pricing, demand response, and efficiency. - Over the longer term, DSPs will need to establish a standardized state-wide market, with common protocols and market rules that will simplify customer engagement, reduce barriers to entry, and enable product development and best practice transfer. - The DSP should facilitate interaction between the retail and wholesale markets. - DSPs should, when advantageous and cost effective, incorporate microgrids into system planning. In its February 2015 Order, the PSC notes that [b]uilding effective retail markets for DER will require a much smarter and technology enabled platform for mass market consumers to gain knowledge of the services available to them in the market. xix REV - Rate Restructuring Platform Service Revenues The PSC sees Platform Service Revenues (PSRs) as a new form of utility revenue that will facilitate the growth and health of distribution markets. These revenues will take time to evolve into a specific, clear financial incentive, but the PSC has in the meantime imposed a set of criteria to inform the process of defining them. In order for the utility to capture PSRs associated with providing or procuring a service, they have to satisfy the following criteria: - The service facilitates market growth and/or operation - There isn t already a complete and adequately served third party market for the service - Utility economies of scale will likely result in cost-effective market stimulation - Utility provision of the service is unlikely to raise significant market barriers xx Page 7

9 In addition, although the overall structure of PSRs is still developing, the ratemaking order did include some specific structural changes that should immediately affect utility investment behavior. For example, the PSC allowed utilities to earn a rate of return on software leased from third parties. The Northeast Energy Efficiency Partnerships organization (NEEP) argues that this opens the door to third-party vendors offering software as a service (SAAS) tools for utility use. xxi Earning Adjustment Mechanisms Given that PSRs need time to evolve, the PSC devised a transitional or bridge incentive: the Earnings Adjustment Mechanism (EAM). EAMs are intended to achieve much the same overall outcome as PSRs, and the PSC expects that in the long term EAMs will be phased out in favor of exclusive use of PSRs. xxii Although in its May 2016 Ratemaking Order the PSC allowed a lot of flexibility around EAMs, they did provide a handful of guidelines and rules. In particular, they noted that the maximum amount of earnings from EAMs should be capped at 100 basis points total from all new incentives (equivalent to 2.4% of delivery rates or 1.1% of total bills). However, this cap can be allowed to float if a convincing case is made for high ratepayer value from the incentive. In addition to laying out guidelines and ground rules, the PSC proposed four categories of earning opportunities for EAMs: Peak Reduction/System Efficiency: The PSC seeks to cost-effectively reduce peak demand by anywhere from 15-20%, as well as increase load factor on the grid. Rather than impose a specific target, the PSC required each utility to put forward cost-effective targets for peak reduction and load factor improvement. Energy Efficiency: Energy efficiency EAMs will be connected to targets to be developed by the PSC s Clean Energy Advisory Council, and will reward products that can optimally reduce demand and increase the total amount of efficiency activity. Interconnection: The PSC promotes EAMs for interconnection in order to incentivize high quality applications, timeliness, and reasonable costs. This EAM is limited to projects of 50 kw or greater, and involves: a threshold requirement that interconnection times be reduced to the requirements indicated in New York s Standardized Interconnection Requirements rule; and a metric (for determining the value of the EAM) that is based on application quality and applicant/customer satisfaction. xxiii Customer Engagement: The PSC did not adopt a general customer engagement EAM, instead electing to approve, on a case-by-case basis, EAMs for actions that affect customer behavior. This could include incentives based on customer adoption of time-of-use or smart rates, customer enrollment in demand response and efficiency programs, and customer fuel switching (e.g. electric vehicle or heat pump adoption). The PSC notes that proposals for customer engagement EAMs should evaluate expected customer and system benefits. xxiv Page 8

10 REV - Other Elements and Challenges The Clean Energy Fund Managed by NYSERDA, the Clean Energy Fund is a 10-year, $5 billion fund that has four key aims. $2.7 billion is allocated towards market development, which NYSERDA defines as reduc[ing] costs and accelerat[ing] demand for energy efficiency and other behind-the-meter [BTM] clean energy solutions, and increas[ing] private investment. xxv $961 million is allocated towards the NY-Sun program, which has a target of bringing solar to 150,000 new homes and businesses by $782 million goes to the NY Green Bank, which partner[s] with private financial institutions to accelerate and expand the availability of capital for clean energy projects. The remaining $717 million of the Clean Energy Fund is directed at innovation and research in cutting-edge technologies in five key opportunity areas : smart grid technology, renewables and distributed energy resources, high performance buildings, transportation, and cleantech start-up and innovation development. xxvi Market Development Thus far, REV has been an object of both frustration and excitement, and stakeholders and experts have identified a handful of challenges, risks, and difficulties that your team should consider when devising a product or service. One shared frustration is the lack of an animated market at this point in the process, with some disagreement about how to best resolve that problem. A department manager at Consolidated Edison, the primary electric utility serving New York City, noted that there needs to be emphasis and agreement on the problems that innovators are trying to solve, that they have to evolve beyond thinking just about widgets and all the great things the widgets do, and towards constructive partnerships that tackle real problems in the power sector. One of the biggest frustrations identified to date is a lack of data, with many vendors arguing that better data-sharing from utilities would enable them to come up with superior solutions to utility challenges. xxvii Data Access and Cybersecurity Amidst the debate about increased data sharing and access, one major concern for utilities is security and customer privacy. Industry leaders broadly agree that pairing greater and greater quantities of data with analytics can yield tremendous benefits, from de-risking projects and reducing uncertainty to understanding load profiles and developing targeted customer solutions. The problem is that unlocking this set of value opportunities requires increasing the exchange of confidential information that has traditionally been under the total control of the utility. Experts and utilities worry about the cybersecurity headaches that this greatly expanded and more open network of data-sharing will cause. As a March 2016 report from ScottMadden put it, implementation of the DSP model will require a deluge of sensitive data to be shared among utilities, consumers, and third parties, and the DSPP [DSP Provider] and all relevant third-party entities will have to implement well-thought-out cybersecurity policies and solutions. xxviii Page 9

11 TECHNOLOGY CATEGORIES Energy Storage Storage forms a critical component for the success of New York REV and for meeting the State Energy Plan s target of reducing greenhouse gas emissions by 40% by The large gap between peak demand (nearly 34,000 MW) and average demand (18,000 MW) has grown, and this has several implications. xxix The system s utilization factor has declined and all components across the system generators, poles, wires, transformers, etc. are sized to meet these high peak loads that occur very infrequently. This leads to high inefficiency across the system, likened to building a 16-lane highway to handle traffic that only occurs on three holidays a year. xxx In addition, another key element of the plan (installation of Distributed Energy Resources) requires readily available storage. Figure 1 demonstrates the criticality of storage for any DER option. Fig. 1 Storage Use Cases xxxi Because of intermittency, widespread adoption of wind and solar relies on stable and costeffective storage. Storage can help address the minute-to-minute fluctuations from, for example, clouds crossing the sun s path, but it is also a critical tool for longer-duration challenges with renewables. Appendix VI shows the famous duck curve of California, in which load requirements during the afternoon period are dropping, as the maximum expected generation from solar and other renewables occurs during these periods. Without storage, there is a risk of over-generation and waste of generated solar, followed by a hasty and expensive ramping of non-intermittent power sources in the late afternoon. Page 10

12 Storage has multiple other benefits besides improving the capacity value of renewables. The widespread proliferation of storage technologies should allow utilities to defer investment in transmission and distribution upgrades, provide peak shaving and frequency regulation services to the grid, and, by adding a layer of control, aggregate and utilize localized storage as a grid asset. The last piece is particularly important when considering the resiliency of the overall system, where critical facilities such as hospitals and municipal buildings will require continued service in the event of grid outages (such as those during Hurricanes Sandy and Irene), and the availability of large aggregated storage will allow these facilities to continue functioning. Research by the Rocky Mountain Institute also indicates that storage is most beneficial when placed behind-the-meter as opposed to the transmission or distribution level (Fig. 2). Behind-themeter storage has value to residential customers as a back-up source and to commercial and industrial (C&I) customers for demand charge reduction. Fig. 2 Rocky Mountain Institute Economics of Battery Storage xxxii Regulatory Support The New York Battery and Energy Storage Technology Consortium s (NY-BEST) Energy Storage Roadmap calls for 2 GW of multi-hour storage capacity by 2025 and 4 GW by xxxiii Under REV, NYSERDA has awarded 7 New York-based companies contracts to scale-up or demonstrate new approaches to storage these companies will deliver bench-to-prototype technologies including: Page 11

13 - Urban Electric Power, New York City: Advanced batteries for grid-based application that use zinc-manganese-dioxide chemistry to reduce total cost. - Varta Microbattery, Hudson Valley: Minimizing the need for additional components in Solar PV + Storage applications and developing an island interconnection device to allow ease of connection and disconnection of microgrids. - Enermat Technologies, Clifton Park: Improving storage capacity of lithium-ion batteries by commercialization of graphene-based electrodes. - American Fuel Cell, Rochester: Scaling up new fuel cell technology that allows for reduced manufacturing costs against existing products. xxxiv Pilot Projects REV has also driven pilot projects, such as one between Con Edison, SunPower and Sunverge, where behind-the-meter storage in residential developments is being integrated with the grid to function as a virtual power plant (VPP) under the control of the utility. Over 300 homeowners will lease SunPower s high-efficiency solar systems and, for an additional monthly fee, have access to Sunverge s battery systems, which will be connected to the solar system to provide back-up power to certain essential appliances. The real value to Con Edison will come from the ability to aggregate these manifold solar+storage systems as a VPP to supply the grid during peak periods through the use of intelligent real-time monitoring and control systems. With a total energy output of 4 MWh, this project will allow utilities to test dispatching and rate models, software and hardware platforms and validate the assumption that combined PV+storage systems can add value to the overall grid by adding a layer of reliability and improving power quality, while at the same time allowing utilities to defer costly distribution upgrades. xxxv Storage also forms an important part of Con Edison s Brooklyn/Queens Demand Management Program (BQDM), where high load growth in the region means existing capacity will be exceeded by Rather than building a new $1 billion substation, Con Edison proposes to invest $200 million in customer-side load management strategies (of which storage will be a part) and $300 million in traditional utility upgrades. xxxvi The BQDM program is discussed in more detail under the demand management section of this case. Significant Players Tesla, AES and Aquion Energy (among many others) are some of the prominent movers in the battery storage space. While Tesla and AES both offer lithium-ion solutions that do not differ significantly from existing laptop and cellphone batteries, Aquion has chosen a different tack by utilizing saltwater manganese oxide chemistry offering batteries that are cradle to cradle certified. xxxvii (Other storage technologies include Lead-Acid, Nickel-Cadmium, Sodium Sulfur, and a host of non-battery options such as Compressed Air (CAES), Thermal Storage, Flywheels, and Pumped Hydro. xxxviii ) Stem, Inc. operates on a subscription model, in which customers do not own the asset, but instead pay a monthly fee for a suite of services. Stem is responsible for the supply, installation Page 12

14 and operation of these storage assets. Stem assembles batteries from third-party manufacturers and integrates software monitoring and control prior to installation. An early success of this model has been the award from Southern California Edison (SCE) for 85 MW of distributed capacity in the Los Angeles area, to be installed behind-the-meter by 2021 to serve as a flexible resource at the command of the utility. xxxix Geli, on the other hand, has chosen to focus purely on software and services, providing software design and management tools for storage. This model relies on a set of software / firmware drivers that are compatible with leading battery suppliers, and adds monitoring and control capabilities to aggregated storage, thus allowing Geli to offer services to utilities as a controller of distributed assets. xl As DG penetration grows, battery technology matures, and storage prices continue their decline (Appendix VII), the list of opportunities for market entrants in the energy storage space will continue to grow. Opportunities include providing pure storage system software, non-intelligent storage hardware, or integrated storage solutions that combine hardware and controls. Vendors further can choose whether their play is residential behind-the-meter, C&I BTM, or utility-scale. Constraints Despite the obvious benefits of battery storage at both the utility and customer-level, several barriers have historically existed to widespread deployment. xli The REV process is beginning to break these down through utility business model revision and rate reform. Nature of existing markets: In general, existing market and rate structures do not allow for full compensation or incentivizing of DER and Storage. For instance, while utility programs or tariffs such as energy efficiency, distributed generation etc. cover some areas, many other benefits such as upgrade deferrals, frequency response or environmental impact have not been covered. Limited availability of financing: In many respects, energy storage financing is where solar PV was a few years ago no standardized processes that mitigate risks for investors, limited thirdparty financing and loan guarantees as well as manufacturing incentives. This creates a need for advanced analytics to help de-risk projects and lead to more standardized financing. Sharing of information: For a robust storage market, all participants require complete information on system capabilities, existing networks, customer needs by location, etc. in order to map out the most effective places for DER services. Additionally, third-party service providers such as energy service companies need information on customer accounts and usage, in order to tailor and market their services. Page 13

15 Microgrids In its most basic form, a microgrid provides improved reliability to clusters of users, by allowing decoupling from the grid in case of outages and ensuring continued supply. This is particularly pertinent in the case of New York, given its recent experience with Hurricane Sandy. New York University (NYU) was one of the few locations in New York City that did not experience significant power outages during the hurricane, due to the availability of a microgrid that continued operating when the main grid was affected. xlii Microgrids create value for regulators, utilities, and end-use consumers by combining several disparate elements (Fig. 3). A typical microgrid could involve renewable energy elements such as rooftop solar and small wind turbines; residential, commercial and grid energy storage; and most importantly, monitoring and control that is constantly talking to the grid, all while leveraging existing infrastructure and equipment. Fig. 3 The many components of a microgrid xliii While current microgrids rely mostly on conventional energy resources such as natural gas and diesel generation, renewables and storage are forming an increasing part of overall U.S. microgrid capacity. 30% of capacity is expected to come from these two sectors by xliv Regulatory Support One of the key tenets of REV is to move towards a framework that nudges utilities to work with developers to set up microgrids. Under the new structure, utilities stand to earn money by making systems more efficient and resilient. xlv This is in contrast to business-as-usual, where Page 14

16 utilities would view a movement of consumers away from the grid as a threat rather than an opportunity. The NY Prize (a partnership between NYSERDA and the Governor s Office of Storm Recovery) has allocated $40 million for communities that build their own energy systems, are able to supply themselves and also provide power to critical community assets such as fire stations and hospitals while supplying excess power to the grid. Under this program, more than 80 communities across the state have received $100,000 grants to study project feasibility, and Stage 2 applications are now open for detailed engineering and commercial assessments that evaluate the feasibility of installing / operating a community microgrid within New York State with funds of up to $1 million each available to 10 selected applicants, followed by Phase 3, which will provide up to $7 million in funding to a maximum of 5 participants to support construction of microgrids. xlvi Phase 2 and Phase 3 projects will require cost-sharing with the affected communities. Pilot Projects National Grid has partnered with Clarkson University in order to develop a community resilience microgrid for Potsdam with an underground distribution network and coordination of new and existing distributed energy resources as a demonstration project under REV. xlvii This project is meant to test billing models, control of microgrids, disaster recovery and DER procurement. Working in close collaboration with the local government, the Canton-Potsdam Hospital and SUNY Potsdam, the project team has analyzed National Grid s existing customers in terms of service recovery requirements, generated benefit-cost analyses incorporating societal benefits (were critical fire, police and emergency medical services to be lost) and begun thinking of different tiers of service to be offered through the microgrid. Similarly, the Clean Coalition has partnered with the Long Island Power Authority and PSEG Long Island to perform feasibility studies for the implementation of a microgrid in East Hampton, Long Island. This microgrid would achieve almost 50% of its power requirements from local solar resources, and would help defer or avoid multi-million dollar transmission upgrades by combining up to 15 megawatts of solar power with a 25-megawatt-hour energy storage system. xlviii The project would also provide back-up power to water pumping and filtration plants, as well as fire-fighting facilities. Significant Players Total U.S. microgrid capacity is expected to exceed 1.8 gigawatts (or a total value of $3 billion) by Much of the growth in this capacity is non-utility. xlix Many microgrid plays are oriented around monitoring and control services. SolarCity has been one of the pioneers in offering microgrids as a service, providing a range of customization and financing options for municipalities, communities, hospitals, and other groups to install microgrids under its GridLogic solution. SolarCity s value offering relies on the fact that SolarCity s in-house grid engineering team will design and install each GridLogic project with a system of software-based monitoring and controls that manage the mix of distributed energy resources and utility power to maximize savings. l Siemens has taken a similar path by providing Page 15

17 Microgrid Software as a Service (MSaaS), where customers can choose to forego on-site IT infrastructure, and instead allow Siemens to provide monitoring and control of distributed resources over the cloud. li Other providers offer control services primarily to utilities. General Electric offers monitoring and control functionality under its Grid IQ Microgrid Control System, allowing grid operators to control energy assets with the goal of minimizing the total cost of operation. lii ParetoEnergy, based out of Washington, DC, has developed an interconnection solution called GridLink, utilizing power electronics rather than mechanical switches to enable utilities to synchronize with and control microgrids. liii ABB has recently begun shipping a plug-and-play modular microgrid, with all components in a single container. The microgrid can be scaled up to 4,600 kw to meet different demands. It features battery storage, power controllers where the customer can plug in different sources such as solar, wind, the grid or even diesel generators, and a cloud-based remote control system. liv Constraints Some of the same constraints that limit the market for storage (lack of developed markets, limited availability of financing, protocols for information-sharing) have historically affected microgrids. The problem is in part compounded, because microgrids are aggregates of many different elements, (DERs, storage, grid controls, etc.) each with their own cost and financing challenges. As costs of these individual elements decline, microgrids are expected to become increasingly viable. lv The fact that microgrids are generally highly customizable, and can be matched in various configurations, makes a like-to-like comparison difficult. In addition, microgrids are typically not entirely greenfield, but instead utilize existing grid assets such as distribution wires. S&C Electric has identified different levels of microgrid implementation (Fig. 4), and this may provide one way to analyze projects and identify how best to meet customer needs. Grid stability has long been a concern for utilities, with the risk of unintentional islanding, where a portion of grid becomes separated but is not completely shut down, posing a safety risk to utility workers. However, the aforementioned market players have moved to address this concern. In addition, the Institute of Electrical and Electronics Engineers (IEEE) has developed international standards to guide the design and operation of DER systems in concert with the grid, thus providing a common reference point for different users. lvi Page 16

18 Fig. 4 Levels of Microgrid Implementation lvii Page 17

19 Distributed Generation The number of distributed power generators has grown prodigiously across the country in a short amount of time, soaring from just over 17,000 in 2005 to over 200,000 by 2014, according to the U.S. Energy Information Administration (EIA). lviii Distributed generation can refer to any power source that is located close to where it is used, as opposed to the traditional generation model of a power plant on a grid connected to energy users who may be many miles away. But while this term can include geothermal, diesel engines, and other energy sources, rooftop solar panels have been the most important distributed technology driving the boom. As costs of photovoltaic solar have fallen about 54% since 2008 lix and novel financing methods have arisen, rooftop solar has become an increasingly feasible choice for homes and businesses to install. For example, in September 2016, the 35,000 th rooftop solar installation in New York s Long Island was completed, adding up to 320% growth in solar over four years. lx New York also hits above its weight class when it comes to solar. Despite gloomy winters contributing to an overall below average amount of solar resources, New York has similar or even greater potential to use distributed solar to offset the total sales of electricity by utilities compared to more naturally sunny states like Arizona and Texas, according to a recent study from the National Renewable Energy Laboratory. lxi Part of the reason for that potential is the state s relatively high number of rooftops that are particularly suitable for solar generation. New York Governor Andrew Cuomo has laid out a goal of adding more than 3 GW of solar capacity in the state by Cuomo s NY-Sun Initiative offers a set of incentive programs for rooftop solar to help residences and businesses meet that goal. Grid Infrastructure REV aims to shore up distributed generation in New York by removing barriers that prevent customers from receiving the full value of the power they self-generate, as well as setting up new potential sources of revenue for distributed power. Beyond building a direct path, REV also aims to indirectly facilitate distributed generation by fostering a transmission and distribution environment in which it can thrive. This broadly entails 1) optimizing the electric grid to allow for two-way flows in a market where the electric consumer is also generating his or her own power for the grid and 2) installing advanced meter infrastructure. Advanced meters can help distributed solar unlock its full economic potential. The Federal Energy Regulatory Commission (FERC) defines advanced metering infrastructure as a metering system that records customer consumption hourly or more frequently and that provides for daily or more frequent transmittal of measurements over a communication network to a central collection point." lxii A customer using distributed solar power is saving resources in the sense that when electricity is being generated by the solar panels, the wires connected to the utility s system are not being tapped. But if that customer s electricity usage is only being tracked by a conventional meter, read just once a month, it is difficult to gauge the system contribution made by the solar panels. But with smart meters that can be read on an hourly basis or less, the amount of energy that Page 18

20 comes from distributed generation can be tracked and more easily turned into cost savings to reflect the expensive, wires assets that were not used. One of the key tenets of REV is that non-wires alternatives (NWAs) to solving electric load problems should be pursued wherever feasible in order to further push the utility away from building and managing expensive assets like transmission and distribution infrastructure and more toward facilitating the consumer. While non-wires alternatives cover a host of technologies beyond just DG, like storage and demand response, smart meters combined with distributed solar panels are one powerful way to make these alternatives a reality. Con Edison has predicted it could save substantially in deferred substation and subtransmission projects through NWAs. Fig. 5 Con Edison Capacity Savings through NWA investment lxiii But on this point New York faces a big challenge if it is to switch to a dynamic model of a grid that encompasses both sides of the utility meter and relies increasingly on distributed resources and dynamic load management, as the PSC laid out in its Track 1 REV order. New York ranks at almost the bottom of the pack of the 50 states in terms of advanced meter penetration, according to a 2014 survey from the EIA. lxiv The survey found that just 0.4% of New York s meters can be considered advanced, 49 th out of 50 states, and compared to 96% and 92% for Nevada and Maine, respectively, the top two states on the list. Under challenges to achieving REV objectives across its service territory, in a June 2016 filing National Grid noted that only 0.3% of its customers have interval meters and that more than 50% of the distribution line miles operate below 5 kv and as such have limited capacity to host significant distributed energy resources. Page 19

21 In part due to efforts associated with REV, however, New York could start catching up. In 2015 Con Edison announced plans to install 4.7 million smart meters for its gas and electric customers at a cost of $1.3 billion. lxv One REV demonstration project pursued by utility National Grid provides an early example of what distributed solar in New York could ultimately look like. In collaboration with Solar Liberty and Buffalo Niagara Medical Campus (BNMC), National Grid is installing 500 kw worth of solar PV arrays on the rooftops of 100 homes adjacent to the BNMC in Buffalo. The Fruit Belt Neighborhood solar project, as it is called, will provide a monthly electric bill credit to the 100 customers for the output of the panels. In addition, fifty other customers in the neighborhood who are not hosting panels will, through lottery, be selected to also receive a credit. lxvi The project, scheduled to be completed in October 2017, therefore simulates one of the main goals of REV: compensating distributed solar not only for the power it directly produces but also for the greater societal benefits it achieves by reducing peak loads and deferring the need for new centralized generation and grid infrastructure. DG s value grows when it is combined with other technologies. This summer, Con Edison began a demonstration project to integrate residential solar with battery storage for over 300 homeowners. lxvii SunPower will provide the solar systems, which will be connected to Sunverge battery systems. Con Edison will use the pilot to examine if this combination of solar and storage can turn a residential area into a virtual power plant to supply the grid during peak demand times. SunPower is a solar panel manufacturer that also sells complete solar systems, like its Helix platform. Previously, SunPower provided Con Edison s energy services company, ConEdison Solutions, with solar systems that ConEdison Solutions can lease to homeowners for up to 20 years, while SunPower offers a 20-year warranty and production guarantee. SunPower has been considered the second-largest solar panel manufacturer in the US after First Solar. lxviii Net Metering REV also seeks to eventually transition New York away from net metering. lxix As the net metering debate consumes the clean energy conversation in states like Nevada, New York regulators want to create market conditions in which distributed generation can receive a direct rate that captures its full value. Regulators and stakeholders in the state are working on an idea to value distributed energy at what has been called LMP + D. LMPs are locational marginal prices the marginal price of energy calculated at specific locations on the grid. The D portion contains a range of benefits that distributed energy can provide for the energy system that are not currently valued. These include load reduction, frequency regulation, reactive power, line loss avoidance, resilience and locational values as well as values not directly related to delivery service such as installed capacity and emission avoidance, according to the PSC. lxx On October 31, the New York Department of Public Service released a paper that called for existing solar projects to receive the full retail-rate net metering credit for 20 years from the date of a project s installation. New projects, however, would receive the credit through 2020, after which the credit would decline until it aligns with the LMP+D value. lxxi Page 20

22 As this valuation process continues, New York distributed generation is in a unique position to expand. Up until recently, New York regulators dealt with concerns about net metering by capping the amount of net-metered energy based on a percent of a utility s electricity demand. lxxii But in October 2015 the PSC temporarily removed the cap on net-metered solar energy and ordered that the ceiling on net metering should be allowed to float until the REV process is further along. Fig. 6 lxxiii Interconnection One challenge for distributed generation in New York is a heavy backlog of interconnection requests. A new distribution generation user proposing a project of a certain size must apply to his or her utility and meet a set of requirements laid out by the PSC, known as the Standardized Interconnection Requirements. The state s interconnection queue has grown at an unprecedented rate over just the past year as more and more home solar users try to get their systems running, according to the Acadia Center. lxxiv But some groups complain that projects that have been abandoned but never bothered to formally withdraw are clogging up the queue of projects for interconnection approval, thus delaying solar projects that are otherwise ready to go. New York has tried to reform and simplify the interconnection process with steps like increasing the minimum size of distributed systems that must meet the requirements from two megawatts to five megawatts. lxxv But these reforms only apply to projects submitted after the effective date of the new rules, meaning they did not by themselves clear up the existing backlog. Since establishing minimum barriers to entry for clean energy technologies is one of the key objectives of REV, proposals to help distributed generators navigate the unwieldy interconnection process could be important for New York s broader energy transformation. A community solar model is one way to potentially solve some of New York s interconnection woes. For example, under the NY-Sun s Shared Solar program, a sponsor, which could be a private developer of a project, or another private company or entity, can propose a community solar project and band together groups of renters, homeowners, businesses, and municipalities and apply to share in the project s ownership and resulting electric bill reductions. lxxvi Page 21

23 Future Risks Dark clouds over distributed solar s future include uncertainty over future rate design, the potential for punitive fixed charges, and the eventual sunsetting of the Solar Investment Tax Credit (ITC). The ITC deducts 30% of the cost of the system from the claimant s taxes. The credit has created a market for many solar projects that would otherwise be uneconomic. But under legislation passed by Congress at the end of 2015, the credit will be reduced to 26% in 2020, 22% in 2021, and 10% from 2022 onwards. One of the most controversial aspects of the future of rooftop solar in New York revolves around the question of ownership. The PSC s 2015 REV Framework order declared that utility ownership of DER will be the exception rather than the rule under REV: A basic tenet underlying REV is to use competitive markets and risk based capital as opposed to ratepayer funding as the source of asset development, the order said. "Utility ownership of DER conflicts with this objective and for that reason alone is problematic." lxxvii Exceptions where the PSC has said it will be open to utility ownership, at least in the short term, include the REV demonstration projects, as well as instances where a public interest for a distributed resource has been identified, but a market solution has not yet materialized for example, a program for low to middle-income customers to save money through rooftop panels. Page 22

24 Demand Management From a system perspective, managing and reducing customer demand is among the lowest-cost approaches to solving a number of REV goals, including peak demand reduction. Peak demand reduction is one of REV s most important aims. The PSC s Track 2 REV order mandates that each state utility propose targets for reducing their peaks over the next five years. Peak reduction is particularly important to REV because of how many capital-intensive generation, transmission, and distribution assets exist to service load at the few times of day when peaks are at their highest. REV s aim is to replace these assets as much as possible with distributed tools that, due to lower costs, are more within reach of the typical consumer. Utilities and their industry partners should be encouraged to innovate and build policy priorities into their enterprise-wide business plans, as opposed to simply carrying out defined tasks that are dictated by the Commission, the PSC order said. For example, Con Edison believes it can avoid building a $1 billion substation to service the grid in Brooklyn and Queens and instead spend just $200 million on non-traditional solutions that will defer the need for the substation until 2026 by cutting electricity demand. lxxviii In a REV project that shows how demand side management runs the gamut of viable REV technologies, Con Edison s Brooklyn Queens Demand Management (BQDM) Program was approved by the PSC in December In August 2016, Con Edison approved a number of awards for third parties to take part in the project and provide 22 MW of demand response to cut peak load in two periods, from 4 pm to 8 pm and 8 pm to midnight. lxxix Stem Inc. will provide battery storage systems, while a number of other companies, such as EnerNOC Inc. and Direct Energy, will try to sign up Con Edison customers to agree to curtail energy usage or deploy distributed technologies like solar or storage during peak hours. Fig. 7 lxxx Page 23

25 Boston-based EnerNOC Inc. sells software to businesses for a range of energy purposes such as tools to collect data on sustainability goals or analysis of how a distributed solar system is or isn t saving money. EnerNOC also has products specific to utilities such as software to coordinate demand response. The company recently announced it would be reducing its global workforce by about 15% as it restructures its subscription-based energy intelligence software business to focus on more specific industry segments and high potential customers. lxxxi Direct Energy, headquartered in Houston, rose to prominence as electricity deregulation, mainly in the 1990s, opened many regional markets to alternative electricity suppliers. On a competitive basis, the company buys electricity or natural gas wholesale and supplies it to retail customers in many parts of the country. More recently, Direct Energy has tried to sweeten the deal for electricity customers by bundling the retail services with technologies like the smart thermostat made by Alphabet Inc. s Nest Labs. lxxxii But another focus for the company is a commercial and industrial services business. To help sell services such as energy auditing in the New York market, in 2014 Direct Energy purchased a demand response management system from a vendor. lxxxiii Direct Energy has several other lines of business, such as Direct Energy Solar, which designs and installs solar systems for residential and commercial customers. lxxxiv For an example of the times utilities need to target for peak reduction, here are National Grid's times of peak electricity demand over the past several years. lxxxv Year Date of Peak Time of Peak /22/2011 Hour ending 5 PM /17/2012 Hour ending 3 PM /19/2013 Hour ending 6 PM /2/2014 Hour ending 5 PM /29/2015 Hour ending 5 PM Data REV s demand management goal illustrates a pervasive theme: the importance of data sharing, and particularly data sharing between utilities and third-party technology providers, if the state is going to be able to fully harness and enable innovative technologies. Large amounts of data are needed to facilitate demand and peak forecasting, coordinate hundreds of thousands of distributed energy resources across the grid, provide necessary visibility for system planning, and achieve many other elements of REV. In a 2015 interview, lxxxvi New York state Energy and Finance Chair and key REV architect Richard Kauffman explained why data is so critical for the whole process with a comparison to Apple and its model of third-party app development: " There s a virtuous cycle that takes place, where the more Apple invests in the platform to make it valuable to the app developers, the more Apple gets paid back in revenue," Kauffman said. That s the kind of dynamic we need to create between the utilities and third parties. Page 24

26 Data is particularly critical for demand reduction because many of the tools for analyzing, predicting, and controlling peak load are only as powerful as the data they receive. Some REV demonstration projects are trying to set a precedent as to how data can be shared. In Ithaca, N.Y., Avangrid, the subsidiary of Spanish multinational Iberdrola and the parent company of utilities New York State Electric and Gas and Rochester Gas and Electric, is planning the Energy Smart Community, which they describe as a "test bed of a variety of REV initiatives." lxxxvii The project entails 12,000 smart meters to be rolled out in Ithaca to improve customers ability to manage their energy use. But to further enhance the feedback given by these smart meters, Iberdrola is combining the project with several other software tools: Customers will have access to an online portal where data from their smart meters will combine with other information to create personalized recommendations about an individual consumer s energy usage. Data will generate a heat map to identify constrained regions on the distribution network that could be improved through REV technologies like distributed generation or storage. Customer usage data will be used as granular information for vendors to propose behavior-based demand response programs. Behavioral Incentives But while better data analytics might help the response to changing consumer behavior, New York also wants to directly influence behavior with new incentives for consumers to manage their peak energy use. In many parts of the country, regulators have begun this shift by instituting time-of-use rates variable electricity rates that increase in peak hours and decrease in off-peak hours. But while nationwide adoption rates of opt-in time-of-use rates are around 25%, for New York utilities adoption is between just 0.1% and 1.9%, the PSC pointed out in its May order. lxxxviii A potential solution to this problem of low adoption, the PSC staff has proposed, is for electric rates in New York to move to what have been dubbed "Smart Home" rates. These rates, outlined in a PSC white paper, lxxxix would combine time-of-use rates with "LMP + D" compensation (see section on distributed generation for more info on LMP + D.) The PSC has ordered utilities to work with the state and third-party developers on projects to demonstrate Smart Home rates. "The ideal SHR participant will combine generation (such as PV), electric vehicle charging, storage, and load management (such as a smart thermostat) with an inverter that allows two-way power flows and reads voltage and other system characteristics," the PSC s Track 2 order said. Outside of the smart home rate, the PSC regards increased adoption of time-of-use rates as a desirable goal of the customer engagement piece of the REV process. Demand Response Demand response is the catch-all term for a variety of services that essentially play the role of a negative power plant. Instead of producing electricity, demand response decreases electricity use among customers. Like a power plant, a grid operator can dispatch demand response at certain times when curbing power is most advantageous for the grid or utility. Changes in technology over time have transformed demand response from a small-scale, manual process, into an increasingly sophisticated and automated product that regulators see as a central Page 25

27 component, alongside distributed generation and two-way power flows, of the 21 st -century grid. Decades ago, utilities would literally pick up the phone and call large corporate customers and ask them if they could turn off certain pieces of equipment in order to cut load at certain times. Today, mobile apps on smartphones can control energy systems in real time, turning a home or business into a virtual power plant, generating negawatts that can smooth peak load on the grid, regulate grid frequency, and ease the integration of intermittent renewables that might produce power at inconvenient times. Demand response still exists in large part as a bilateral deal in which utilities pay customers to not produce electricity at certain times. But demand response has been evolving into a more holistic set of tools that cut or shift electricity usage, often with the help of advanced software and data analytics. Navigant Research has estimated that the product category of demand response management systems, which includes software to communicate between the customer and distribution network and manage electricity to hit load reduction goals, could grow from $46.1 million in 2016 to $232.3 million in xc High costs and complexity, however, have slowed adoption of these systems. The New York Independent System Operator has calculated that demand response as it currently stands in the state can be the equivalent to the output of two medium-sized power plants serving about 300,000 to 400,000 households. But that role is still small compared to other forms of energy. xci Fig. 8 Page 26

28 REV seeks to enable and grow a technologically-advanced, user-friendly form of demand response, primarily in order to significantly reduce peak demand (see earlier section on REV for discussion of peak reduction goals). But the PSC also sees demand response as an indispensable tool alongside energy storage to enhance the cost-effectiveness of weather-variable and intermittent generation. Demand response is also an enabling service for another technology that can help achieve REV objectives: electric vehicles. An ancillary benefit of electric vehicles is that utilities could help reduce peaks: the charge contained in electric vehicles could be essentially tapped as a distributed resource, and some utilities like Southern California Edison have already explored this potential. xcii As a result, the PSC has mentioned that one step utilities could take to benefit from an earnings adjustment mechanism under REV is to adopt programs to encourage electric vehicles. xciii Energy Efficiency While demand response focuses on short-term alterations of electricity use in order to reduce peaks and improve load factors, energy efficiency is about improving customers overall efficiency. Examples of efficiency incentives include rebates for more efficient appliances or incentives for residences to install smart thermostats to automatically control heating and cooling. New York had previously mandated these sorts of programs through an Energy Efficiency Portfolio Standard that was adopted in 2008 with the goal of saving 15% of energy by xciv But with the expiration of this standard in 2016, regulators are seeking new ways to expand energy efficiency. In September 2016 Con Edison reached an agreement with regulators to implement $99 million of efficiency programs and cut 0.7% of its load by 2019, above the 0.3% in cuts previously proposed under Con Ed s plan to fulfill the Energy Efficiency Portfolio Standard. xcv The PSC recommended that regulators offer utilities a positive earnings adjustment if they meet efficiency goals, and also recommended they require that at least 10% of incremental peak reduction be achieved through efficiency. To accomplish such goals, the PSC wants utilities to work with third parties that can bundle energy efficiency with other distributed energy resources. The energy intensity of efficiency improvements can be measured toward these goals in a number of ways, such as kwh per capita, kwh per customer and kwh per GDP. REV demonstration projects illustrate how efficiency can work in concert with solar, storage and other technologies. Such projects include Con Edison s CONnectED Homes, a platform that Con Edison is developing in collaboration with energy management software company Opower. Targeting Con Edison customers in Brooklyn and Westchester County, the project will try to overcome a lack of customer understanding about how to best manage their energy usage. Specifically, Con Edison wants to develop personalized recommendations for bundled distributed energy solutions based on each customer s unique energy consumption patterns. Opower will provide the software analytics platform that customers can use to figure out what products or services such as smart thermostats, energy audits, battery storage, or rooftop solar Page 27

29 would make the most sense for them based on cost, and match the customer with a vendor. Con Edison sees several potential revenue streams from the project, including: - Lead and conversion revenue from fees paid by service providers. - Revenue from retail sales made when Con Edison buys products and services wholesale and turns them around to customers. - Advertising revenue from fees paid by third-party providers who want access to the platform. xcvi Recently acquired by Oracle Corp., Opower provides a variety of software solutions to help consumers manage home energy use. Utilities are a major customer base for Opower, as the company offers utilities software and other tools designed to improve their demand response and efficiency programs. The company has a tight relationship with the biggest New York utilities. In addition to selecting Opower for the REV project, Con Edison has also brought them on to support an initiative to upgrade the utility s website with more tools for consumers to understand their energy use. xcvii Con Edison announced that agreement with Opower in March 2016, and that same month National Grid said it selected Opower to deliver personalized energy insights to customers in New York, Massachusetts, and Rhode Island, including nearly 3 million NY residents. xcviii Page 28

30 APPENDICES Appendix I: 2015 NY Average Net Electricity Generation, by Source (excluding DG) xcix Other 2% Wind 3% Petroleum 1% Coal 2% Solar Thermal and PV 0% Hydroelectric Conven9onal 19% Natural Gas 41% Nuclear 32% Page 29

31 Appendix II: Electric Energy Usage Trends in New York State: c Appendix III: Electric Peak Demand Trends in New York State: ci Page 30

32 Appendix IV: Regional Load and Capacity in New York State cii Appendix V: Distributed Solar Photovoltaics in New York: Historic & Forecast ciii Page 31

33 Appendix VI: California s Duck Curve civ Appendix VII: Changing PV and Battery Costs cv Page 32

34 Appendix VIII: Example of Time-of-use rates from Orange & Rockland Utilities cvi Page 33