-Aishwarya Gupta, Fellow
On September 14, 2016, New York Advanced Energy hosted their quarterly Stakeholder Breakfast focused on Technology, Buildings and Distributed Generation Optimization. H.G. Chissell the Executive Director of New York Advanced Energy moderated the conversation. At its onset, the presentations by all the different panelists shed light on critical concerns within each of the sectors. From the different mechanisms that ConEdison is employing to push for the integration of distributed resources to data driven approaches for customer acquisition and real time results, the panelists addressed a host of issues that are critical in paving the future of distributed energy resources (DERs), a critical issue in New York City that houses a large number of buildings.
Phyllis Kessler, Of Counsel at Duane Morris LLP, delivered the opening remarks. She set the foundation for the conversation by introducing the energy landscape in New York State. Established by the Public Service Commission, the landmark energy plan for New York State was put forward in REV. The state is looking towards a massive expansion in the renewable sector and a reduction in GHG emissions to 50% by 2030 and 25% by the end of 2017, a goal that Ms. Kessler highlighted as impressive. She stated that the 23% decrease in energy consumption that is required means that it is important to look at energy efficiency and consumption in terms of the technology in DERs, since reducing peak demand and adding renewables are not necessarily practical in a lot of the New York City buildings. At the broader utility level, she called attention to battery storage and the need to maximizing resources for stand by service. She closed her opening remarks by posing a question about what incentives will be given and how REV is looking to have utilities set up distributed platforms.
Following Phyllis Kessler, Stephen Wemple, Director of Utility of the Future for ConEdison spoke about keeping up with the Chair of the NY Public Service Commission, Audrey Zibelman. One of the key points Mr. Wemple spoke about was the importance of integrating distributed resources on a localized level, such as relying on existing resources instead of upgrading technology to somehow achieve the renewable mix that is necessary. Steve highlighted the biggest game changer as the Benefit Cost Analysis order and the recent Distributed System Implementation Plan because it changes how a utility thinks about resources, and explicitly calls for utilities to look at societal costs and externalities beyond traditional utility costs. Now NY utilities will also evaluate projects based on the carbon impacts in current wholesale price and the cost of complying with energy standards. According to Steve, the biggest challenge is to integrate holistic optimization into all of their decisions, inclusive of what can be deferred or avoided in distribution strategies. Mr Wemple posited that they might also be able to use resources like reactive capabilities of smart inverters but right now they don’t have the ability to do so. Critical to ConEd’s planning is infrastructure topography where distribution values can be much higher based on proximity to a given element of the system network. Mr. Wemple also outlined, the ConEd Brooklyn Queens Demand Management Program which was broken into four separate reverse auctions under the formal PSC filing. ConEd found this approach to be a great win because it captured wholesale and market value, externality value and enabled competitive contractual requirements. Wemple did emphasize the need to streamline the way of going to market for large acquisitions and having a market mechanism for feedback.
Jeffrey Davis, TITLE, of L&L Holdings put things into perspective by focusing on the development side of buildings. He pointed out that the age of the average commercial building in New York City is older than those in Paris or London. In a development project, the opportunity cost of taking commercial real estate out of service is very complicated as it aggravates the project economics but it has tremendous value to it in the long term. Building owners and managers always have to look at things in terms of what tenants want- and they are starting to see a significant shift in what tenants want in their work space. Part of this has to do with the millennial generation who are working differently using internet and social media. They also want outdoor spaces and the opportunity to create their own amenities. Satisfying these desires is possible when you look at three key aspects of DERs, which are smart buildings, temporary office space and utility of the future, which are almost consensual. On the supply side, there is still a need for compelling ways to innovate and participate in REV. According to Davis, the development cycle is 4-6 years to create a building, where reducing temporal and cost scope is important. But the problem on the development side is that technological development doesn’t always meet the needs of the developers that are faced with time and cost constraints.
To this point, H.G. Chissell informed the importance of utility rate design aligned with lease design, to foster a new level of cooperation between the utility and the building owner, provided the owner can get tenants to get on board. At the end of the day, the owners typically control less than half the amount of the electricity in a skyscraper and unless tenants can be strategically engaged and incentivized, bridging this divide will be difficult. Jeff Davis expressed the need for a change in strategic thinking and supportive stakeholder engagement with tenants to find viable win/win solutions.
Michael Norelli, the Strategic Director of GE Power, gave examples of how GE is engaging in cross-sector partnerships to ramp up installs. He started by speaking about how Combined Heat and Power has yielded positive results in specific projects like St. Bart’s Hospital, where they used the energy savings they had and invested it in cancer research. The problem is that building owners don’t have the resources to build out a new energy mechanism. In conjunction with the Bright Green Cities (BGC) program, GE provides a complete solution that includes design, technology, implementation and capital making things easier with no upfront capital costs transferring the risk to GE and BGC. To create demand, GE bought multiple different data sets to create qualification database for customers that included the amount they pay, peak demand, thermal load, industry type, outage area, etc. The strategic data driven approach allows GE to create prioritized and prequalified call lists resulting in lower customer acquisition costs and more targeted solutions.
Data driven approaches are similarly being utilized by NYSERDA. Josh Clyburn with the Strategic Initiatives at NYSERDA reviewed the Real Time Energy Management program. RTEM is a management system that rests on top of BMS to collect derivative data that can be pushed to the cloud for analysis. On the vendor side, NYSERDA has a Request for Quotation for various vendors of systems that include 13 different vendors. On the program side, they are looking to fund projects that work with systems providers for up to 5 years which can later be ingrained into day-to-day operations. NYSERDA is trying to accelerate the growth of the RTEM program five-fold because it will be essential to expansion of the smart grid. NYSERDA hopes that this data better inform capital and incentive structures. Using actuarial models and slicing and dicing data, Mr. Clyburn says it is possible to reduce customer acquisition costs. NYSERDA is also working with ConEd to get AMI data. Building automation providers will not be replaced but RTEM will be an additional layer working in tandem with the existing systems to increase efficiency and reduce costs. The New York Power Authority is also working with utilities to see the data through their energy management system.
The conversation engaged all participants present in the room and revealed many aspects that traditionally go unaddressed in bilateral discussions. This multi-sector approach has been pivotal in forging cross-sector partnerships that help address the unique needs of each city. New York Advanced Energy will continue to be at the forefront of leading these conversations in the energy sector through their quarterly breakfast series that are pivotal to meeting the energy needs and goals of all the different sectors involved.
On December 15th, New York Advanced Energy will convene its next Stakeholder Breakfast focused on Energy, Mobility and Transportation.