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Distributed Energy Resources: Impact of distributed energy resources on retail customers’ pricing
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White Paper Distributed Energy Resources: Impact of distributed energy resources on retail customers’ pricing Authors: Balakrishnan S, Saravanaselvan R The retail side of electricity involves the final sale of electric power from an electricity provider to an end-use consumer. These sales range from the service for a large commercial facility to small businesses and to individual households. In recent days, increasing amount of installations of distributed energy resources (DERs) on the customer side of the electric grid exemplify both a challenge and an opportunity for retail suppliers. Retail suppliers have to adjust their retail price plans for customers having DERs installed in their location, though it may not always be the case, and have to show price plans to illustrate the full-value benefits of installing DERs in order to promote DERs installation. For this study, DER technologies are defined as behind-the-meter power generation and storage resources typically located on an end-user’s premises and operated for the purpose of supplying all or a portion of the electric load. These resources may also be capable of injecting power into the bulk electric power system. This document outlines the impact of installation of a solar system on a typical commercial customer’s price plans. The wholesale price of electricity is dynamic. It changes on interval basis based on the availability of supply and changes in demand. Various factors that affect demand include: Consumer behaviour Weather Time of day Day of the week Economic conditions Typically, retail electric providers offer a wide variety of price plans including Fixed Price and Variable Price. The former is a common buying option for consumers seeking budget certainty that gives a set price-per-kWh during a designated contract term. Whereas, the latter option allows consumers to pay the varying market price of electricity for each given hour. This hourly fluctuation provides consumers with the flexibility to adjust their usage to take advantage of market dips. For brevity of this study, only fixed price option is considered.
For this study, a commercial facility located in North Central Texas with annual consumption of ~32,000 kWh has been considered. The premise has a 35.5 kW solar system installed to supply a portion of its electric load.
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Fixed price plan without solar panels The figure below shows the price run dashboard for the fixed energy price plan, with various components, for the commercial customer taken for this study. ReD - Pricing Engine has been used for making various price run scenariosi.
Figure 1 - Fixed Energy Plan price run dashboard
The result of the run shows 0.038035 $/kWh rate for the 12 months’ contract period with the projected contract usage of 31,894.5 kWh. The figures below show the recorded 15-Minutes interval meter information for both generation and load for the recent one-year period. It can be seen from the figures that the facility has excess generation in most of the months except Dec-15, Jan-16 & Feb -16.
Figure 2 – July 2015 to June 2016 15-Minutes interval generation and load kWh
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Figure 3 - Hourly averages of generation and load by month
Figure 4 – Monthly total generation and load kWh
For the analysis, two different scenarios have been considered: 1. The premise has no storage ability and the excess power will be supplied to the grid instantaneously. 2. The premise has a storage mechanism and most of the power if not all utilized by the premise itself.
Fixed price plan with solar panels & without storage For this case, the 15-minutes interval load has been adjusted based on the corresponding interval’s electricity generation. The load value corresponding to all excess generation intervals has been nullified. The table below compares the component wise results of with and without solar panels installed. It can be seen from the results that instantaneous reduction approach yields only 4.92% of the load offset and less than 1 mil difference in the fixed price.
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4.92% Reduction Category
Component
Basis
$/kWh
$
$/kWh
9.46
0.000297
8.97
0.000296
Ancillary Charges
31.89
0.001000
30.32
0.001000
ERCOT ISO / Administrative Fee
17.70
0.000555
16.83
0.000555
Unaccounted for Energy (UFE)
15.95
0.000500
15.16
0.000500
929.19
0.029133
864.24
0.028500
49.44
0.001550
47.00
0.001550
159.47
0.005000
151.62
0.005000
1,213.10
0.038035
1,134.14
0.037401
Wholesale Cost of Energy with Loss Billing Charge Cost to Serve by Account Credit Card Fee OH & Deal Costs
Solar Panels & No Storage
$
Basis
Energy Cost
Actual Load
Credit Premium Extended Payment Term Premium Retailer Margin Sales Agent Fee
Total
-
-
-
-
-
Figure 5 - Fixed Price of actual load vs. Fixed Price of actual load with solar & no storage
Figure 6 - Comparison of actual and reduced load by month - with solar & no storage
Fixed price plan with solar panels & storage system For this case, 15-minutes interval load has been adjusted based on a). the corresponding interval generation and b). the excess generation that is cumulatively added to mimic the storage system functionality. The figure below compares the monthly load of with and without solar system. It can be seen from the figure that this approach yields only 64.56% of the load offset and about 2 mils difference in the fixed price.
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Actual Load
64.56% Reduction Category
Component
Basis
Basis
Energy Cost
$
$/kWh
$
$/kWh
9.46
0.000297
3.32
0.000294 0.001000
Ancillary Charges
31.89
0.001000
11.30
ERCOT ISO / Administrative Fee
17.70
0.000555
6.27
0.000555
Unaccounted for Energy (UFE)
15.95
0.000500
5.65
0.000500
929.19
0.029133
307.76
0.027225
49.44
0.001550
17.52
0.001550
159.47
0.005000
56.52
0.005000
1,213.10
0.038035
408.34
0.036124
Wholesale Cost of Energy with Loss
-
Billing Charge Cost to Serve by Account Credit Card Fee OH & Deal Costs
Solar Panels & Storage
Credit Premium Extended Payment Term Premium Retailer Margin Sales Agent Fee
Total
-
-
-
Figure 7 - Fixed Price of actual load vs. Fixed Price of actual load with solar & storage
1,213.10
0.03804
408.34
0.036124
-
-
-
-
-
-
-
-
Figure 8 - Comparison of actual and reduced load by month - with solar & storage
Further analysis has been made on the payback calculations of these scenarios. The analysis reveals that irrespective of the scenarios the system pays back starting from 14th year.
Conclusion Getting the right retail prices is a key element for retailers in assuring cost effective and reliable power service in a world with increasing distributed energy resources. There are numerous distributed energy resource initiatives remain to be seen and the growing necessity for DERs isn't going to diminish in the coming years. This will obviously force retail electric providers to change their conventional pricing model and have a flexible pricing engine that could handle various scenarios a customer with distributed energy resources could open up in real-time.
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Authors R. Saravanaselvan holds a doctorate from Anna University (one of the premiere university in India), is a Business Analytics & Product Architecture Manager at ANB Systems Inc. He possesses a strong electrical engineering background.He has a top-notch experience in solutions architecture of energy efficiency and retail electric software for utilities, retail marketers, educational institutions and government.
S. Balakrishnan is a consultant in energy efficiency & retail electricity markets and the CEO of ANB Systems, Inc., a software development firm. He has three decades of experience in providing energy efficiency and retail electricity related services. He holds a Master of Science degree in Mechanical Engineering from the New Jersey Institute of Technology and a Bachelor of Engineering degree from the University of Bombay, India.
Acknowledgement
The authors would like to thank:
Jigme Dhonyou, Business Analyst, ANB Systems Inc. For participating in many useful discussions and making various price run scenarios using ReD. Sanjoy Ghosh, Business Intelligence Specialist, ANB Systems Inc. For helping out with the design of various chart images.
ReD is a back-office portal solution for electric retailers, wholesale suppliers and similar organizations, for the management of data and operations. It has an array of solution modules including pricing engine, load forecaster, settlement system, wholesale deal capture system including risk management, scheduler and bidding system, billing system, customer information system, and data repository for all the downloaded data. ReD is modular and its features can be turned on and off based on the implementation and client needs. i
Please visit http://www.anbsystems.com/red/ to know more about the product.
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