Global spending on NWAs is forecasted to grow from $63 million in 2017 to $580 million in 2026, according to Navigant Research. More and more distributed energy resources are being connected to the grid every day. Utilities and grid operators must find ways to work with these assets and incentivize how they operate in order to provide the lowest cost, lowest carbon grid for consumers that also maximizes reliability. One way utilities and grid operators have begun to do this is by deploying non-wires alternatives. In November 2018, SEPA published a free report, "Non-Wires Alternatives: CASE STUDIES FROM LEADING U.S. PROJECTS,” that featured 10 case studies from utilities implementing NWAs. The report was a joint effort between E4TheFuture, PLMA, and SEPA, and it was well done.
The most interesting part was the information on best practices and lessons learned from leading utilities who have deployed DERs for NWAs. It revealed major opportunities for improvement. A blockchain-based transactive market approach would be a better solution to the challenges discussed in SEPA’s report than the traditional bilateral and proprietary vendor solutions that are typically deployed today. Here are three examples that illustrate why.
Right-Sized Commitments - The SEPA reported explained that NWAs are great for addressing high load growth and for minimizing the risk of stranded assets that can result when forecasts don’t pan out. However, forecasting is hard, and committing to multi-year bilateral contracts can be risky as well. A blockchain-based transactive market approach provides more flexibility by allowing capacity commitments to be procured and adjusted closer to real time to meet actual needs as they arise.
Competitive Pricing - Over time, as technology and markets mature, DERs will earn multiple value streams. At the same time, costs continue to decline. A blockchain-based transactive market approach that allows commitments to be procured closer to real-time avoids long-term commitments at high prices and ensures a competitive cost of service for NWA.
Procurement - The case studies outlined in the report showed that direct procurement was the predominant choice for procurement. On average, the procurement process took almost a year. This long timeline resulting in fixed bilateral contracts unfortunately ends up excluding many resources that could provide support to the grid. A blockchain-based transactive market approach would allow utilities to take advantage of as many resources on the grid as possible to provide NWA.
Recruiting - Another challenge was ensuring the right program parameters were identified upfront to maximize recruiting efforts. This is difficult to get right from the start and is a challenge over time as things change. A blockchain-based transactive market approach allows the utility to make adjustments to the NWA program parameters to maximize participation as needed and to respond to changing grid needs over time.
Future-Proofed - A market-based approach keeps the door open to the future as more and more assets join the grid allowing the most suitable and competitive resources to continually be eligible to provide services.
DER Diversity - Overall in the report it was noted that projects that achieved the most success tended to have an open approach to solutions. A blockchain-based platform, such as Electron’s, allows the most technologies to be brought to the table through easier integration.
Fewer Proprietary Platforms - Additionally, the open platform approach means that utilities don’t have to install yet another DERMs or other proprietary platform in order to manage resources. This cuts down on the number of screens that a grid operator needs to look at and login to. It also leaves DER dispatch optimization to the vendor who is the expert in how that particular DER resource can best respond.