IEEE Electrification Magazine - September 2015 - 45

Interconnection standards are generally designed to
examine the impacts of adding generation onto the utility
system. New sources of load, on the other hand, are not
required to go through interconnection procedures and
are instead treated by different standards. However, utilities may want to review the system impacts of the charging functions at the same time they evaluate the generation from a new storage system. Charging a storage customer for upgrades associated with the increased load
through application of interconnection standards could result in customers being double charged or being
unfairly assigned costs that would
not normally be directly assigned for
other types of new load.
In light of this unique issue, regulators may want to consider whether
the interconnection process should
be used to evaluate the loading functions of a storage system or whether
traditional methods of managing
load should be relied upon for
assessing and addressing system
impacts from charging. If it is determined that the additional load from
storage systems will be evaluated as
part of the interconnection process,
then there may need to be a mechanism to ensure storage customers are not treated differently from other load
when it comes to allocating the costs of upgrades
required to accommodate changes in load.

use of renewable energy. The secondary concern is that if
the storage systems are used in a manner that increases
the overall amount of NEM credits generated, there would
be less capacity left in the NEM program.
Although there is little economic incentive today for
most NEM customers to store more power than is generated by the renewable energy system, regulators may
want to clarify program rules to ensure the integrity of
the NEM programs, while also not limiting the ability of
customer-sited storage systems to
help manage peak loads and smooth
variability. When faced with this
issue, the commission in California
considered various approaches,
including 1) estimation methodologies (in lieu of a separate meter);
2) requiring no measurement for systems below a certain size that may
pose a de minimis impact on the NEM
program; and/or 3) requiring no measurement for those who are not on
time-varying rates and thus lack an
economic incentive to export energy.
The commission ultimately chose to
utilize an estimation methodology for
smaller systems and required metering for larger systems.
While preserving the integrity of NEM programs
designed to promote renewables is important, there are
also other beneficial services that netting arrangements
for storage systems may be able to promote. For example,
customers that install storage systems have the ability to
store the excess daytime generation, which could be
deployed in a helpful manner during peak periods,
regardless of whether it was generated by an on-site
rooftop PV system or taken directly from the grid. Where
there is a need to reduce peak demand or increase generation during certain periods, there could be some benefits to allowing customers with storage systems to export
energy onto the grid in exchange for bill credits even if
they are not eligible for a renewable-based NEM program.
The bill credit and program components could mirror the
renewable NEM programs or be established with specific
storage-only rates and parameters. Creating a separate
NEM program for storage systems could help reduce
electric costs overall, while not eating into the renewable
NEM program caps.

Creating a separate
NEM program for
storage systems
could help reduce
electric costs
overall, while not
eating into the
renewable NEM
program caps.

Net Energy Metering
One of the fastest-growing markets for distributed storage
is for residential and small commercial customers that
already have, or are simultaneously installing, net energy
metered (NEM) solar PV systems. Although NEM policies
vary state by state and utility by utility, most offer customers full retail rate credits for excess energy generated
on-site by qualified renewable generators. Many NEM programs restrict the individual system capacity (i.e., systems
must be 1 MW or smaller in California and must be sized
to primarily offset on-site load), and a few of these programs also put a limit on the aggregate capacity of the
program as a whole (i.e., 5% of a utility's peak load). Partly
because of these program limitations and the increasing
debate about the appropriate rate that NEM customers
should be credited, there is a concern that storage systems
colocated with NEM systems might undermine NEM programs if they are used to store power not generated by the
renewable generator and then discharge that energy back
onto the grid for a full retail credit.
The primary concern is that customers could be getting NEM credits for energy not produced by the on-site
renewable generator, which could undermine one of the
key policy intents behind NEM programs-increasing the

Energy Storage in Broader
Distribution Planning Efforts
As the pressure grows to integrate higher penetrations of
DERs onto the distribution grid at reasonable costs, states are
starting to recognize that fundamental changes to distribution planning and operation may be necessary. These considerations are particularly important when it comes to identifying the best way to deploy energy-storage technologies
IEEE Electrific ation Magazine / S EP T EM BE R 2 0 1 5

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

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