IEEE Electrification Magazine - March 2015 - 23

information technologies are also key enablers for these
emerging energy service providers and will revolutionize the
energy service industry like they did for other industries,
including commercial retail, travel, and health care.
The traditional utilities need to be incentivized to invest
in new technologies through a decoupling mechanism,
meaning that the utilities' revenue and profit are not tied to
the number of kilowatt hours sold but cover a whole range of
services. Utilities should be allowed to engage in deregulated
electric retail services. In the United States, the rural utilities
have long adopted the cooperative model, which has been
very successful in keeping the electricity costs down.
Both traditional and nontraditional electricity service
providers can adopt the concept of transactive energy that,
according to the GridWise Architecture Council, "refers to
techniques for managing the generation, consumption, or
flow of electric power within an electric power system
through the use of economic or market-based constructs
while considering grid reliability constraints. The term
'transactive' comes from considering that decisions are
made based on a value. These decisions may be analogous
to or literally economic transactions."

Case Study 1: Cost of Distributed
Generation Integration in California
Southern California Edison (SCE) is an investor-owned public utility primarily engaged in the business of supplying
and delivering electricity to an approximately 50,000-mi2 area of southern
California. The SCE serves a population of nearly 14 million people
through approximately 5 million customer accounts. SCE's service area
covers a diverse geography of urban,
suburban, and rural areas including
desert and mountain regions. Approximately 75% of SCE's customers reside
in urban and suburban communities
covering 15-20% of the service territory, while the remaining 25% of customers live in rural areas spread
across 80-85% of the service territory.
Out of the total 4,500 feeder circuits,
3,626 are urban and 874 are rural. Figure 6 shows the geographic locations
of the urban and rural areas in the SCE service territory.
Two separate studies were conducted by SCE and the
California Energy Commission to estimate the cost of integrating 4,800 MW of distributed generation, which is SCE's
share of the 12,000-MW California statewide local energy
resource/distributed generation (DG) capacity target and is
primarily achieved through distributed PV. SCE has a peak
load of about 22.5 GW; therefore, the 4,800 MW of DG represents approximately 20% of DG penetration by capacity.
The studies conclude that the costs of the transmission
and distribution system upgrade for DG integration

Rural

Urban

Figure 6. The urban and rural areas in the SCE service territory.
[Image courtesy of a CEC study (CEC-200-2013-007) prepared
by Navigant.]

ranged from a low of US$1 billion for DG installed mostly
in urban areas to a high of US$4.5 billion for DG installed
mostly in rural areas. This indicates that the integration
cost for local DG could be as high as US$1/W if the distributed PVs were installed in rural areas.
The SCE's DG integration challenges and associated
costs are largely due to the incompatibility of the existing
grid infrastructure and the dramatic
change in power flows when many
distributed generators are interconnected. The distribution upgrade
need is driven by the voltage impact
from the DGs. Without any surprise,
the studies found that voltage violations are lower when DG is installed
in urban areas, where feeders are
shorter and cables are thicker, and
much higher when DG is installed in
rural areas, where feeders are longer
and cables are thinner. Voltage violations are lower when DGs are evenly
distributed and higher when they are
clustered in one place, the worst
being at the end of a long feeder.
In 2013, SCE announced the permanent retirement of the San Onofre Nuclear Generating
Station, Units 2 and 3, which reduces the total generation in
the Los Angeles, California, area by a little more than 2 GW.
Unfortunately, this capacity gap cannot be filled completely
by distributed PV. Even though the grid is able to handle higher DG penetrations, there is not a sufficient PV resource locally in the Los Angeles urban areas (see the "Los Angeles" data
point in Figure 2). Therefore, the lower-cost solution is not
achievable if PV is the primary resource. Other high-energydensity generation needs to be built locally, or it will be
necessary to import electricity. In rural areas, the distributed

The advancement
in renewable
generation
technologies and
the rapid decline in
costs have become
game changers for
the electric industry.

IEEE Electrific ation Magazine / marC h 2 0 1 5

Table of Contents for the Digital Edition of IEEE Electrification Magazine - March 2015