1 DIRECT TESTIMONY OF SCOTT B. BORDENKIRCHER On Behalf of Arizona Public Service Company Docket No. E-0A-1-00 1 1 June 1, 1
1 1 Table of Contents I. INTRODUCTION... 1 II. SUMMARY... III. TECHNOLOGIES AND APS PROGRAMS... A. Advanced Grid Technologies... B. Advanced Metering Infrastructure... C. Advanced Data Analytics... D. Battery Storage... 1 E. Solar Partner Program... F. Solar Innovation Study... 1 G. Red Rock Solar... H. Microgrids... IV. PLANT ADDITIONS... V. CONCLUSION... 1 Renewables, Microgrid and Technology Innovations Post-Test Year Plant Additions... Attachment SBB-1DR i
I. INTRODUCTION DIRECT TESTIMONY OF SCOTT B. BORDENKIRCHER ON BEHALF OF ARIZONA PUBLIC SERVICE COMPANY (Docket No. E-0A-1-00) Q. PLEASE STATE YOUR NAME, ADDRESS AND OCCUPATION. A. My name is Scott B. Bordenkircher. I am the Director of Transmission and Distribution Technology Innovation and Integration at Arizona Public Service Company (APS or Company). My business address is 00 N. th Street, Phoenix, Arizona, 00. 1 1 Q. WHAT IS YOUR EDUCATIONAL AND PROFESSIONAL BACKGROUND? A. I earned a Bachelor of Science in Business and Information Systems from the University of Phoenix. I began employment with APS in 0 and have served in numerous management and leadership capacities during my tenure with the Company, including Director of Information Security and Compliance and Director of IT Applications. I was made Director of Technology Innovation and Integration in June, 1. 1 Q. WHAT ARE YOUR RESPONSIBILITIES AT APS? A. I am responsible for the research, development, assessment, selection, and implementation of new technologies for APS s electric grid both at the Distribution and Transmission levels. This includes Advanced Metering Infrastructure (AMI), energy storage, advanced grid technologies such as supervisory controlled switches, automated voltage regulation, and fault indication, as well as new customer programs like microgrids, utility-owned residential solar, and home energy automation. I am also responsible for enterprise data analytics.
II. SUMMARY Q. PLEASE SUMMARIZE YOUR DIRECT TESTIMONY. A. My direct testimony describes key technology investments APS has made, and is making, in the electric grid to enhance reliability and performance, increase efficiency, enable alternative energy and distributed energy resources, and empower customer choice. My testimony discusses key customer programs including the Solar Partner Program and the Solar Innovation Study, APS s grid modernization efforts, APS s successes in distribution automation, AMI, and the newly launched microgrid program. Additionally, I will identify projects planned through June 0,, and discuss Technology Innovation and Integration s contribution to the Company s post-test Year plant adjustment. 1 1 III. TECHNOLOGIES AND APS PROGRAMS A. Advanced Grid Technologies 1 Q. WHAT ARE ADVANCED GRID TECHNOLOGIES AND WHY ARE THEY PREFERABLE TO THE TRADITIONAL GRID? A. Although utilities across the nation have different definitions of the advanced grid, the reality is straightforward: advanced grid technologies, including intelligent automated devices, are incorporated into the existing electrical grid in order to increase system visibility, reliability, and control. These devices permit APS to receive near real-time operational data and more accurate information about its facilities, infrastructure and customer power quality. This information is made available to the distribution operations center, which, through two-way communication and control, can remotely command field devices. These capabilities enhance efficiency, increase reliability, and reduce cost. Aside from the operational benefits to APS, these technologies also allow customers to access more information about their individual usage, thereby helping them to more efficiently use electricity. A modern, flexible grid facilitates customer choice
and enables the addition of distributed energy resources such as rooftop solar and energy storage. Given the increasing importance of these resources, and the need for APS to support its customers choices about these resources, APS views the adoption of advanced grid technologies as a positive inevitability. 1 1 1 Q. WHY ARE ADVANCED GRID TECHNOLOGIES NEEDED TO SUPPORT DISTRIBUTED ENERGY RESOURCES? A. The traditional grid was designed to support the one-way flow of power; from centralized generation facilities to the end-use customer. The introduction of distributed energy resources in the grid represents a fundamental change in the design basis of the system. Adding generation into the middle of individual distribution feeders can cause two-way power flow. As customers adopt more and more distributed energy resources, the need to transition to an advanced grid becomes increasingly necessary. For example, unchecked PV penetration on distribution feeders can cause power flow and load patterns to emerge that actually push local voltage beyond allowable ANSI standards. Advanced grid technologies, like advanced inverters, can be an important tool to allow APS to regulate the output of these resources and proactively prevent such voltage overload problems from occurring. In addition, an advanced grid implements two-way, secure, digital communication that allows APS to communicate with each device on the network, and operate devices from a central location. By doing so, advanced grid technologies can help ensure power quality is maintained even with the intermittent nature of rooftop solar and other emerging technologies. Maintaining power quality to protect APS customers appliances and equipment from surges caused by the increasing level of installed rooftop solar is one of APS s core responsibilities.
1 Q. WHAT HAS APS DONE TO INTEGRATE ADVANCED GRID TECHNOLOGIES AND WHAT DOES IT PLAN TO DO IN THE NEAR TERM? A. APS developed a Transmission and Distribution Operations Vision Plan (Ops Vision Plan) in to address APS s advanced grid technology needs on a -year rolling basis. The Ops Vision Plan is updated annually to adjust for changing power grid conditions and customer demands, such as the changing speed of intermittent resource adoption, new technology additions, and shifting customer loads. Through the Ops Vision Plan, APS is building a modernized and flexible grid by investing more than $1 million in grid technologies through. APS s post-test Year plant cost is $. million for the following technologies: Integrated Volt/VAR Control, Supervisory Controlled Switches, Network Protectors, Network Backbone, Supervisory Cap Bank Controllers, Distribution Substation Health Monitoring and Communicating Fault Indicators. Additional details on some specific technologies are discussed below. 1 1 Q. WHAT ADVANCED GRID TECHNOLOGIES HAS APS INCORPORATED AND HOW DO THEY BENEFIT CUSTOMERS? A. APS s advanced grid technologies include: Fire Mitigation Technologies Fire Mitigation Technologies include Downed Conductor Detectors (DCD), a combination of sensors and automation technology that provides real time alerts to the distribution operators when a power line has fallen to the ground. This technology helps to prevent fires by allowing APS operators to know immediately when a wire is down on any of the circuits where these devices are installed and therefore greatly decreases response time. APS currently has DCDs installed.
1 Supervisory Capacitor Bank Controls A capacitor is an electrical device that is used to correct voltage or power factor issues that occur with normal grid operations. This improves the overall efficiency of the utility system and ensures power quality for customer end-use equipment. Capacitors are installed in groups (called cap banks,) and are used to maintain proper voltage levels along the length of a feeder; from substation to end-of-line. APS is in the process of upgrading its capacitor bank communication control systems to allow for two-way communications between these devices and the operations control center. This has allowed distribution system operators to monitor the status of the cap banks and mitigate abnormal voltage levels remotely. The ability to dynamically control cap banks is especially critical when integrating higher penetration levels of distributed energy. By the end of 1, APS will have upgraded over 00 cap banks. 1 1 Integrated Volt-VAR Control (IVVC) IVVC is an automated system of capacitors and voltage regulators that are able to autonomously control voltage levels along a distribution feeder. This includes functionality for flattening (or leveling out) the voltage across a long distance feeder, thereby enabling a reduction in energy production. This system also provides necessary support for rooftop solar by mitigating the negative voltage effects of intermittent power production along a feeder. On feeders where IVVC is installed, customers benefit by having a higher level of power quality, which is necessary for the proper functioning of consumer appliances, and the increased ability to support customer-sited energy resources. APS has been installing IVVC systems since 1; there are currently installed, and the Company anticipates having a total of by the end of June.
1 1 Distribution Substation Health Monitoring Customers, and the grid, benefit from investments made in technologies that can reduce the frequency and duration of unplanned outages and prolong the useful life of equipment. Adding real-time monitoring and analysis devices to APS s substations allows APS to better predict equipment failures and make necessary adjustments, thus prolonging the life of the equipment. This also reduces, or even eliminates, customer outage minutes, and enables a more efficient and costeffective use of grid assets. Implementing this technology involved the deployment of dissolved gas analysis monitors on APS transformers, connected to APS s Transformer Oil Analysis and Notification (TOAN) system which analyzes the data and provides early warning of potential failure. Software updates were made to TOAN from to 1 to process the additional data from the monitor deployments, and APS deployed 1 monitors across substations from 1 to the end of. APS expects to deploy an additional monitors from January of 1 through June of. 1 Network Backbone All of the aforementioned technologies are only as good as the communications system used to relay the information from the field to APS s operations control center. Launched in, the Network Backbone program implements long distance, high bandwidth, secure data communications between APS s operations centers and field installations. This collection of fiber-optic, microwave, and other wireless communication mediums serves as the highway for information and control signals to flow. Continuing investment in this network serves to extend its reach to additional substations throughout APS s service territory. The use of APS s private network backbone better ensures cybersecurity and provides additional reliability and bandwidth necessary to
carry the company s critical data. Without this program, many of the customer benefits realized by other grid modernization efforts would not be possible. B. Advanced Metering Infrastructure 1 1 1 Q. WHAT IS AMI, WHAT ARE ITS ADVANTAGES, AND HOW DOES IT BENEFIT CUSTOMERS? A. AMI stands for Advanced Metering Infrastructure. This safe, encrypted, FCC-compliant metering technology allows APS to conduct the following functions remotely, which used to be performed manually: meter reading, programming meters with new rates and programs, and performing service connects and disconnects. AMI has resulted in a significant increase in efficiencies, and reductions in O&M costs and vehicle emissions. It has also reduced the number of safety-related incidents because there are fewer personnel in the field. For customers, AMI has increased the opportunity to gain more knowledge of their energy use. AMI meters also provide power quality data which is used to ensure that electricity is delivered to customers at the correct voltage. This grants APS operators a greater level of system visibility than what they ve had previously. This augmented system visibility and situational awareness, and the ability to leverage the AMI network for other uses, makes it a foundational platform for many future advanced grid programs. Q. DOES APS INTEND TO CHANGE ITS AMI SYSTEM? A. No, APS does not currently have any plans to make bulk changes to its AMI system. However, during the first half of 1, the Company replaced approximately 10,000 of its initially deployed AMI meters, and the Company may replace additional AMI meters as it finds necessary. These first generation meters utilized G cellular technology to transfer the meter data; a technology currently being phased out by cellular companies in
favor of G and LTE networks. The cellular radios built into these early meters utilized AT&T s wireless network and AT&T identified December 1, 1 as the last day it would support G technology. Due to AT&T s announcement, APS had to replace those specific AMI meters with new meters that could be supported by current cellular networks. APS surveyed the AMI vendor marketspace and after a competitive selection process, chose Landis+Gyr as the replacement meter. These meters will allow APS and its customers to continue to recognize the benefits of AMI. 1 1 1 Q. DOES APS HAVE AN OPTION FOR THE FEW CUSTOMERS WHO CHOOSE TO NOT TO HAVE AN AMI METER? A. Despite all the advantages that AMI meters provide for the customer and the utility, APS understands some customers desire not to have AMI meters and will be proposing an AMI Opt-Out Option in Schedule 1 discussed further in the direct testimony of Charles A. Miessner. In the past, when a customer has opted to have a non-standard APS meter instead of a standard APS meter (an AMI meter), the non-standard meter could have been either an analog or a digital meter. As the Company moves towards more widespread demand rates, it will require its non-standard meter to be digital. Additionally, customers with rooftop solar and non-residential customers will not be able to opt out of an AMI meter. Q. ARE THERE CERTAIN CUSTOMERS WHO CANNOT OPT-OUT OF HAVING AN AMI METER? A. Yes, rooftop solar customers and non-residential customers cannot opt-out. APS does not allow customers who have rooftop solar to opt out of having an AMI meter because it is critical to APS s grid reliability and load forecasting accuracy that APS have current production data from all rooftop solar systems. It would not be practical or timely to collect this data manually and significant lags in this information could cause issues with distribution system configuration and capacity planning that could result in outages or
equipment overloads. Non-residential customers may not opt-out of having a standard meter because they are larger customers with more complex billing structures, including demand rates based on minute intervals for certain commercial customers, that require the sophistication of an AMI meter. 1 1 1 Q. DECISION NO. 0 (APRIL 0, ) ORDERED APS TO PROVIDE INFORMATION TO ASSIST THE COMMISSION IN EVALUATING ISSUES RELATED TO CUSTOMERS WHO CHOOSE TO NOT HAVE AN AMI METER. IS THERE ANY INFORMATION RELATING TO THAT ORDER YOU WOULD LIKE TO DISCUSS? A. Yes, I will address the following topics: the total number of APS customers who have elected to be served with non-standard (non-ami) meters in the Test Year; a breakdown by region of the number of APS customers who have elected to be served with nonstandard meters in the Test Year; the average per-customer, per-test Year costs of providing service with a non-standard meter as compared to the average per-customer, test-year costs of providing service with an AMI meter; the Test Year costs and expenses attributable to allowing customers to receive service through a non-standard meter; and a comparative analysis of the costs and benefits of AMI meters as opposed to the costs and benefits of non-standard meters. The other information requested in the decision is provided in the direct testimony of Mr. Miessner. At the end of the Test Year, APS had a total of 1, customers who elected to be served with non-ami meters.
1 1 1 The breakdown of customers in who had non-standard meters is listed below: Region of Arizona # of Meters Northwestern Prescott, Cottonwood, Sedona, Dewey, Flagstaff, Metro Phoenix, Northeastern Payson, Show Low, Snowflake 1, Southeastern Casa Grande, Bisbee, Douglas, Globe, Miami Southwestern Yuma, Parker, San Luis Grand Total 1, A residential customer that chose to opt-out created additional meter reading related costs to APS during the Test Year of $.; this is comprised of $. for the initial set-up plus an additional $. per month. A commercial customer s additional cost in was $.; this is comprised of $. for the initial setup plus an additional $. per month. The total cost and expenses attributable to meter reading for non-ami meters in the Test Year was $,01,1. This cost includes expenses such as: the additional transportation costs and wear and tear on vehicles; additional employees or additional employee time allocation to manually read meters and input the information into the billing system; and additional supplies, equipment and technology. Throughout the deployment of the Company s AMI meters, APS has provided the Commission with information regarding the costs, benefits, and deployment status of automated meters. Pursuant to Decision No., the Company provided semiannual reports detailing APS s move toward advanced infrastructure, and the cost of AMI has been examined by the Commission in each of the Company s last three rate cases. AMI meters continue to provide operational efficiencies, as discussed above,
and are an integral part of enabling technological advances in distributed resources and grid stability. C. Advanced Data Analytics 1 1 1 Q. WHAT IS ADVANCED DATA ANALYTICS AND VISUALIZATION? A. Advanced data analytics and visualization (ADA) is the transformation of raw data into usable and actionable business information that is then presented to a user in such a manner as to allow for timely, accurate decision making. ADA grants the ability to analyze data already available to the utility; to see congestion on the distribution system and take steps to alleviate the constraints on those lines, preventing outages experienced by our customers. For example, ADA can be used when customers purchase Electric Vehicles (EV) if a load analysis is not performed on the transformer to ensure it is right-sized to accommodate the additional EV load, the customer may overload the transformer beyond its design rating and experience an unplanned outage. ADA allows APS to predict what could go wrong before it does and limits the risk of not being able to accommodate customer choices and technology opportunities. By more closely monitoring current assets, APS can optimize those assets to elongate lifespan and increase efficiency. As APS modernizes its power grid, data analytics will also provide customers with additional beneficial insight into their energy usage and demand which will give them opportunities to save on their bills Q. WHERE/HOW IS ADVANCED DATA ANALYTICS BEING IMPLEMENTED AT APS? A. APS is implementing advanced data analytics programs that can more accurately predict rooftop solar production, monitor and trend power quality, provide outage intelligence, and perform predictive and preventative asset health analysis. APS is following a use
case based approach, where each use case is solving an existing business challenge. Currently ADA is being implemented across Transmission, Distribution, Customer Service, and Marketing & Trading business units, with plans to expand to Generation, Resource Planning, and Finance business units over the next 1- years. Common platform and architecture principles are being leveraged in development of these applications across the enterprise, thus making the entire process more effective and efficient. APS has taken steps to ensure customer information and data remains private by utilizing best-in-class, defense-in-depth security architectures. APS s post-test Year plant cost for ADA applications and toolsets is $. million. D. Battery Storage 1 1 1 Q. DOES APS CURRENTLY HAVE ANY PROGRAMS THAT INCORPORATE BATTERIES? A. APS has two programs that incorporate batteries. The Solar Partner Program (SPP) incorporates two grid-scale battery storage systems. These are larger MWH-scale batteries that will be interconnected to the distribution grid at strategic locations (one in a substation and one at approximately the mid-point of a distribution feeder). The Solar Innovation Study (SIS) includes smaller kwh-scale battery storage systems at the residential level. SIS will install battery systems interconnected behind-the-meter to provide customer-side services. Both of these programs involve deploying batteries in a controlled and monitored manner to assess how the potential benefits of batteries can be fully enjoyed by all customers in the most cost-effective way. Both are discussed in detail below. 1
1 1 Q. WHAT ARE THE POTENTIAL BENEFITS TO APS CUSTOMERS OF INTEGRATING BATTERY STORAGE ON THE GRID? A. Grid-scale (1kV or higher) battery storage can offer a number of benefits to the grid, including: providing generation capacity, ancillary services (such as voltage support, frequency regulation and spinning reserves), and facilitating the deferment of certain distribution equipment purchases and upgrades if placed in key areas. The precise impact of grid-scale batteries is not yet fully known, and much of the research APS is undertaking in this area revolves around proving out their capabilities as well as the most effective manner in which to operate them. Due to their limited size, it is not clear if residential-level batteries can provide the same type or degree of benefits that gridscale batteries might offer. APS is optimistic that SPP and SIS will help provide the necessary field experience and data to support and demonstrate the benefits and challenges of battery storage at the grid-scale and residential levels. More study beyond these two limited programs may be warranted in the future. 1 E. Solar Partner Program Q. WHAT IS THE SOLAR PARTNER PROGRAM? A. The Solar Partner Program (SPP) was designed to forge an innovative path for future solar deployment. The program enables APS to partner with customers and the state s local solar installers to create a brighter, cleaner energy future for Arizona. Consistent with Decision No., APS has installed approximately MW of rooftop solar on approximately 1,00 homes at targeted locations. Each rooftop solar installation includes an advanced inverter and secure, two-way communications which allow APS to monitor and control power production and the advanced inverter functions of the rooftop solar site. APS is the first utility in the nation to deploy and control UL Listed advanced inverter technology remotely from a centralized control system. The rooftop solar
systems are on APS s side of the meter and all power produced by the systems flows directly to the grid for use by all APS customers. Participating customers do not pay anything for the systems themselves, APS retains ownership. In exchange for making their roofs available for this program, APS compensates each participant with a bill credit of $0 per month. In addition to the rooftop solar systems, APS has also installed two, MWh batteries on two strategically selected distribution feeders as discussed earlier in my Testimony. 1 1 1 Q. DID APS CREATE AN ADVISORY COMMITTEE FOR THE SOLAR PARTNER PROGRAM? A. Yes, APS created the Solar Partner Program Advisory Council comprised of representatives from the Commission and Commission Staff, the Electric Power Research Institute, the Residential Utility Consumer Office, National Renewable Energy Laboratory, the Smart Electric Power Alliance, other Arizona electric utility system operators and engineers, the Arizona rooftop solar industry, inverter manufacturers, and university power systems engineering departments to discuss and advise on the parameters of SPP. The advisory council meets twice per year to review the direction of the program and to provide feedback on the program design, research methodologies and results. Q. WHY WAS THE SOLAR PARTNER PROGRAM CREATED? A. SPP was created to assist both APS and the U.S. electric industry in understanding how the increasing penetration of various customer-sited technologies affects the grid, meet customer (all customers) demand for solar options, and contribute to APS s Renewable Energy Standard Tariff requirements. The program will help APS in identifying the best possible combination of secure and reliable communications technologies and infrastructure that will allow real-time monitoring and control of rooftop solar systems. 1
The program will also evaluate the effectiveness of advanced inverters and grid-scale batteries on stabilizing power quality and managing voltage and will provide a greater understanding of feeder capacity benefits. Lastly, the data collected will be used to evaluate if changes to the interconnection standards are necessary, as well as provide qualitative data on the interplay between other automated grid devices. 1 1 1 Q. WHY IS SPP GOOD FOR APS CUSTOMERS? A. SPP is exploring how to optimize the grid and increase reliability for the long-term benefit of all customers. SPP provides a no-risk rooftop solar option to APS customers that might not otherwise qualify with third-party leasing companies. In addition, SPP does not just benefit the individual home on which the rooftop solar system is installed, but instead, because of being connected on the grid side of the meter, the energy produced by that system is delivered for use by all customers. The goal of the program will be to validate the assertion that advanced inverters can mitigate the adverse effects of increased photovoltaic (PV) through enhanced power regulating capabilities, and in what circumstances. APS anticipates that the program will prove that the operational challenges of distributed solar can, in many cases, be effectively managed by configuring advanced inverters and issuing real-time commands. While there has been similar research based on generic engineering models in the past, general theoretical conclusions still need broader field verification. For the research to have the greatest benefit to APS customers, it must be conducted on APS s grid. The collection and analysis of data will help anticipate and identify the tools that are the most effective at mitigating the negative impacts of increased PV penetration on the distribution grid. This program will also allow APS to validate and further develop complex planning models which will improve near- and long-term forecasting.
Q. HOW MANY SPP ROOFTOP SOLAR SYSTEMS HAVE BEEN INSTALLED AND ARE CURRENTLY (OR ANTICIPATED TO BE) IN SERVICE? HOW MUCH HAS APS SPENT ON SPP? A. In, MW of SPP rooftop solar systems were installed; the remaining MW of SPP rooftop solar systems will be installed by June of 1. APS s post-test Year plant cost for the installation of MW of residential rooftop solar is $0.1 million. APS s average price per Watt for solar installation was $.. When all of the components of the SPP program are combined, including solar installations, secure communications, the advanced inverter control system, and the battery energy storage systems, APS s total capital investment in this important research program is approximately $0 million. F. Solar Innovation Study 1 1 1 Q. WHAT IS THE SOLAR INNOVATION STUDY? A. The Solar Innovation Study (SIS) is a -customer home energy management and rate research and development field program to examine the integration of customer-sided advanced technologies with demand-based rates. The study is comprised of single family homes (both standard efficiency homes and high efficiency Energy Star homes), where APS owned and operated technologies are installed. 0 homes are equipped with a combination of rooftop solar, advanced inverters, home energy management systems, and load controllers; other homes have rooftop solar, advanced inverters, home energy management systems, load controllers, and battery energy storage; and the last tranche of homes have rooftop solar, advanced inverters, home energy management systems, and battery energy storage. In addition, of the homes (spread among all of the groups) will have advanced, variable-speed air conditioners installed on them. 1
Q. WHAT IS THE PURPOSE OF THE SIS STUDY? A. The purpose of SIS is to study customers integration of demand-based rates with various demand and energy saving products along with distributed energy resource technologies. Various rate designs will also be tested via rate modeling in order to reaffirm which models result in bills most aligned with the utility s cost to serve. APS anticipates highlighting the participants successes utilizing rooftop solar, distributed energy resources, home energy management solutions, the grid, and demand rates in a way that reduces costs to APS and maximizes opportunities for customers. 1 1 1 Q. CAN YOU EXPLAIN WHY THE SIS STUDY IS VALUABLE TO ALL CUSTOMERS? A. The SIS benefits all customers because it explores additional opportunities for how home energy management systems, integrated with other customer products and devices, can enable customers to better control their demand and energy consumption. The lessons learned from this study could identify strategies that support the sustainable growth of renewable resources and the continued adoption of distributed energy resources that can meet both the needs of the customer and the utility. G. Red Rock Solar Q. WHAT SOLAR POST-TEST YEAR PLANT IS APS PROPOSING TO INCLUDE? A. APS is proposing to include a 0 megawatt solar plant called Red Rock Solar. Q. WHAT IS RED ROCK SOLAR? A. Red Rock Solar is a 0 MW, single-axis tracking, grid-scale solar facility that APS is developing on 00 acres of APS-owned land in Red Rock, Arizona. APS will own,
operate, and maintain the plant. The facility is intended to provide renewable energy to Arizona State University (ASU) and PayPal, who have agreed to pay a special rate for the energy output. Over the -year term of the agreement, ASU and PayPal will be purchasing Renewable Energy Credits (RECs) and equivalent energy to what Red Rock Solar is producing. APS s post-test Year plant cost for Red Rock Solar is $. million. Additional information on the rate treatment is discussed in the direct testimony of Leland Snook. 1 1 1 Q. PLEASE EXPLAIN WHY RED ROCK SOLAR IS BENEFICIAL TO ALL CUSTOMERS? A. Projects like Red Rock Solar are an important method of encouraging economic development, load retention and the deployment of new renewable resources. With this type of solar project, APS has the opportunity to provide more renewable energy to the grid, without creating additional costs for other APS customers. It also sets a tone that Arizona is open to businesses looking to relocate and utilize renewable energy in a costeffective manner. H. Microgrids Q. WHAT IS A MICROGRID? A. A microgrid can be defined simply as an electrical circuit that can either be disconnected from the centralized grid and operated autonomously (stand-alone or islanded), or be operated connected in parallel with the electric grid. Microgrids can range from simple onsite backup generation to complex, multiple interconnected loads and distributed generation resources. Microgrids frequently combine quick-acting, dispatchable generation and distributed energy resources, such as battery storage or renewables.
1 1 1 Q. IS APS CURRENTLY WORKING ON ANY MICROGRID PROJECTS? A. Yes, APS will have two microgrids in service by the third quarter of 1. The first project is a partnership with Marine Corps Air Station Yuma (MCASY) on the development of MW of capacity in Yuma, Arizona. APS s post-test Year plant cost for the microgrid project is $. million. APS is seeking recovery of the full cost of this project based on a customer benefits analysis which showed that APS s need for peaking capacity and frequency response reserves, which would otherwise have to be obtained through other mechanisms, could both be provided by a single project at a cost savings compared to other sources in the market. The microgrid will function as a backup generator for the base whenever there s an outage affecting all or part of the site, and it can also be used as a supplemental power source for the rest of the community. Advanced, clean-burning EPA Tier- diesel generator sets (gensets) were selected as the generation type for the micro-grid due to rapid (less than seconds to full power output) response time and their low emissions. Whereas natural gas might take minutes, clean-burning diesel gensets take seconds to start up and provide power to the grid with comparable emissions. Another benefit these units provide is that they can be programmed to switch on automatically to ensure reliable power and frequency support in the event of a grid-frequency disturbance which helps to counteract larger system blackouts. For the second project, APS has partnered with Aligned Data Center (ADC) in Phoenix to develop a. MW diesel genset-based microgrid project with a new kv enhanced capability substation. The costs for this project are being shared between APS and ADC. ADC is covering the portion of the cost that is proportionate to their direct benefit and APS is seeking recovery of the portion that benefits all grid-tied customers. The first phase of this project will be constructed in 1 and consists of 1. MW of generation. APS s post-test Year cost for the ADC microgrid is $. million, for its portion of the
project. This represents a cost for new capacity that is lower than what is available in the market. Four different power lines sourced from three different distribution substations will bring electricity to the on-site substation; ensuring that if one line fails, the other lines will provide redundancy to ensure that electricity keeps flowing to the highreliability data center. This project will not only increase reliability and power quality for customers at reduced cost, but it will also serve a larger effort to draw businesses to the State of Arizona. 1 1 1 Q. YOU MENTION INCREASED RELABILITY FOR CUSTOMERS, COULD YOU EXPAND ON WHY MICROGRIDS ARE BENEFICIAL FOR APS S SYSTEM AND ITS CUSTOMERS? A. Microgrids are helpful to all customers because they increase the reliability of the distribution grid; especially in the local area. A microgrid can provide additional energy support on demand when a localized grid outage prevents power from continuing down the line. In addition, due to their fast-acting nature, microgrids can provide ancillary services, like frequency response, when APS s system needs them due to grid disturbances or major outages. Also by having generation resources located closer to certain customers, APS can respond and ensure uninterrupted service when events like storms cause wide-scale infrastructure damage. For example, the Aligned Data Center microgrid will be valuable to all customers because it will deliver additional localized power and be able to island from the central grid during periods of high congestion. APS will have additional optionality in managing the grid and delivering greater reliability to our customers due to the ability to call upon the generators to supply power when it is needed. This provides the dual benefit of creating the ability to serve a localized area of the grid if needed along with the ability to act as a system capacity resource for the benefit of all APS customers. The project is also beneficial due to its cost-sharing structure. When APS is able to share in
the costs of new generation with a site host, everybody wins; the larger APS customer community wins because this structure helps APS realize new peaking capacity via very cost-effective means which helps keep rates low, the State of Arizona benefits from a program with the ability to attract new economic development, and the host wins by being able to install on-site backup generation more cost-effectively than on a standalone basis. IV. PLANT ADDITIONS 1 1 1 Q. WHAT LEVEL OF PLANT ADDITIONS DO YOU EXPECT THROUGH JUNE 0,? A. Attached to this testimony as SBB-1DR is a breakdown of the capital projects discussed in this testimony that will be in service as of June 0,. As that exhibit shows, Renewables, Microgrid and Technology Innovation expects to add a total of $ million of plant by that date. These additions contribute $1 million to the Company s post-test Year Plant adjustment, as detailed on SFR B-, page, column. APS Witness Elizabeth Blankenship describes additional details of the adjustment, such as accumulated depreciation, accumulated deferred income taxes, depreciation expense, property taxes and interest expense. V. CONCLUSION Q. DO YOU HAVE ANY CONCLUDING REMARKS? Yes. Technology advancements and innovation will continue to play an important role in enhancing the safety, reliability and efficiency of APS s systems. Key technology investments must be pursued to prepare the electric grid for the future. These improvements will empower customer choice and further enable the adoption of alternative energy and distributed energy resources.
Q. DOES THIS CONCLUDE YOUR DIRECT TESTIMONY? A. Yes. 1 1 1
RENEWABLES, MICROGRID AND TECHNOLOGY INNOVATION POST-TEST YEAR PLANT ADDITIONS Attachment SBB-1DR Page 1 of Line No. Project Name Purpose Estimated In-Project Cost To- Service Date Date Projected Costs to Close Total Projected Costs 1 Red Rock Solar Build a 0MW Solar Facility on APS-owned land at Saguaro 1//1 $,00 $,,0 $,0,0 Solar Partner Program Install MW of residential rooftop solar systems (~00) on selected feeders /0/1 $,, $,0, $ 0,00, MCAS Yuma Microgrid Design, procure, and construct a MW Microgrid project at the Marine Corps Air Station Yuma /1/1 $,, $ 1,, $,, AMI.0 and P1D Meter APS' remaining P1D meters are nearing end-of-life and must be Replacements replaced due to changes in the G AT&T network /1/1 $,,1 $,0, $,, Automated Meter Infrastructure Pre-capitalized cost of AMI meters purchases that are used for (AMI) Meters additions and replacements /0/ $ - $ 1,, $ 1,, Integrated Voltage Variance Controls The APS distribution system is required to maintain acceptable voltage at points along the feeders under all loading conditions. Integrated Volt/Var Control ("IVVC") adds capabilities to remotely control capacitor banks and voltage regulators 1/1/1 $,10, $,0, $,, Supervisory Controlled Switches This project will increase restoration capability will have the ability to speed recognition and response time. It has the potential to reduce a complete feeder outage to a smaller segment of the feeder; the remainder of feeder then can be picked up through the SCSs. This improves SAIFI, SAIDI, and CAIDI, and reduces Troublemen patrol and switching time. 1/1/1 $,00, $,,1 $,, Network Protectors Advanced Data Analytics Solar Power Partners Communication Devices Aligned Energy Microgrid 1 Network Backbone Solar Power Partners Energy Storage 1 Solar Innovation Study Data acquisition will improve distribution operation center vault readings, typically performed by crews. Monitoring equipment health will enable APS to modify maintenance plans, and position for a proactive approach to equipment replacement. The network protector project aligns with the grid modernization strategy as outlined in the Operations Vision. Development of analytic applications such as solar forecasting and visualization, revenue protection, voltage exceptions and visualization, etc. Install the required communications, monitoring, and control equipment to support Resource Management's MW residential rooftop solar program To provide back-up power to data center. Also, APS will own and operate microgrid and share the use of the generators to support the grid with peak shaving and frequency response resources The existing communication networks are not sustainable in their existing form to support APS future grid modernization efforts Procure and install two battery storage systems at a location where the effect on mitigating high solar penetration can be tested. This will occur under the MW Solar Power Partner program Perform field research with existing single family solar homes by integrating technology packages (energy storage, load management devices, smart inverters, smart thermostats, etc.) to modify load shapes to better align with grid requirements /0/ $ 1,, $,, $,,0 /1/1 $ 1,0, $,, $,, /0/1 $,1, $,, $,,0 /1/1 $ (1,,0) $,, $,0,0 1/1/1 $,0 $,1, $,0, /1/1 $, $,,0 $,1,0 /0/1 $ 1,1,0 $,0, $,,
RENEWABLES, MICROGRID AND TECHNOLOGY INNOVATION POST-TEST YEAR PLANT ADDITIONS Attachment SBB-1DR Page of Line No. Project Name Purpose Supervisory Cap Bank Controllers 1 Inverter Replacement Program This project will have the ability to speed recognition and response time. It has the potential to reduce a complete feeder outage to a smaller segment of the feeder; the remainder of feeder then can be picked up through the SCSs. This improves SAIFI, SAIDI, and CAIDI, and reduces Troublemen patrol and switching time. Solar Operations Capital Inverter Replacement Program to be performed at various solar legacy sites throughout Arizona Estimated In-Project Cost To- Service Date Date Projected Costs to Close Total Projected Costs 1/1/1 $ - $ 1,0, $ 1,0, /0/ $, $, $,1 The equipment will monitor for certain gases that indicate Distribution Substation Health potential transformer failure. This will reduce maintenance costs Monitoring and the number of catastrophic failures /0/1 $ 1,0 $, $, This increased visibility will give APS the capability to expedite direction of line patrol. This will allow field personnel to more quickly locate the faulted cable. It is anticipated that Communicating Fault Indicators improvements in SAIFI, SAIDI, CAIDI will be seen as well as a reduction in patrol time. Of the devices installed on feeders, CAIDI has been reduced by 1-min since in-service in. /0/ $, $,1 $, This is a combination of multiple projects that went into service in but have trailing clean-up costs that extend into 1. Trailing Costs for Projects In- The major projects in distribution include: City of Phx and Luke Service in Air Force Base AZ Sun projects; spare parts moved from the project into inventory. $ (,) $ (,) Total Renewables, Microgrid & Technology Innovation $,1, $,, $,0,