National Grid seeks approval of non-wires alternative pilot in Massachusetts

Massachusetts Electric and Nantucket Electric d/b/a National Grid is seeking approval of a proposed non-wires alternative (NWA) pilot to evaluate the effectiveness of NWA initiatives in which non-traditional utility solutions and customer-side methods and technologies are targeted to a specific geographical area in order to reduce peak electric demand in that area, with the goal of deferring or reducing the scope of a traditional transmission or distribution investment for a period of time.

The company also told the Massachusetts Department of Public Utilities in its Jan. 11 filing that it has identified that Nantucket Island’s forecast peak load situation presents itself as an excellent first opportunity to test NWA initiatives.

The company said its most recent load forecast indicates that Nantucket Island will have very high load growth in the near term and moderately high load growth in the long term, leading to a projected need for a distribution system infrastructure investment (a third undersea supply cable) within the company’s long-term planning horizon of 20 years. Based on the historical load growth and the most recent load forecasts, National Grid said it estimates that an additional submarine supply cable will be needed to reliably serve the electric demand on the island during a contingency period by about 2029.

National Grid said that the goals of the NWA pilot are to create economic, comfort-related, and environmental benefits for customers through the installation of energy efficiency measures and new technology, minimizing use of diesel generation as contingency support should one of the undersea supply cables that currently supply electricity to Nantucket Island fail, and deferring the construction of a distribution system infrastructure investment (here, a third undersea cable), all at a cost that is less than the cost (in net present value, or NPV) of the infrastructure investment that would otherwise be required.

The goals also include learning from those initiatives as part of the NWA pilot, which could be applied in other areas within the company’s service territory, the company said.

National Grid said that its proposed NWA initiatives on Nantucket Island for the years 2016-2018 include:

  • Enhanced energy efficiency initiatives
  • Demand response events through Wi-Fi thermostats on central air conditioning units and hot water heating units
  • A thermal energy storage/load shifting initiative, which will focus on shifting air conditioning load from peak to off-peak hours
  • An electric vehicle off-peak charging initiative
  • Installation of Volt VAR Optimization (VVO) technologies, including intelligent centralized controls and distribution levels devices, which optimize voltage and VAR (reactive power required), and which can lower overall energy use and peak demand
  • Customer education, outreach and engagement.

The company said that it has proposed including the energy-efficiency measures that are part of the NWA pilot in its three-year energy efficiency plan, which is pending before the DPU in Docket D.P.U. 15-168. National Grid said that it has proposed that the incremental energy-efficiency related costs for the NWA pilot for 2016-2018 be paid for through the company’s 2016-2018 energy efficiency plan.

Lindsay Foley, senior project manager on the New Energy Solutions team with National Grid USA Service Company, in pre-filed direct testimony, said that National Grid is continually evaluating the adequacy of its distribution system across its service territory to be able to identify and make decisions that will allow it to provide safe and reliable electric delivery service to its customers.

The company also evaluates areas in which the need for distribution system investment exists in the medium term to assess whether there are opportunities to deploy other technologies and initiatives to address local area load growth in a cost-effective manner, Foley said. As a result of that continued evaluation, the company has identified the Island of Nantucket as an area displaying the characteristics that the company believes would make the location a viable one for the proposed pilot.

Nantucket provides electric supply to its customers by two undersea cables and three 6 MW emergency diesel generators, Foley said.

Noting that for planning purposes, the company defines contingency situations throughout its service territory, Foley said that for Nantucket, a contingency situation could consist of a loss of one of the two undersea cables that deliver electricity to the island during a peak period of electricity demand. Foley said that if a contingency situation should occur in which there is a loss of one cable system during a peak period of electricity demand, the total demand on the system could exceed the capacity of the remaining cable system and the existing on-island generation.

Foley said that if the electricity demand exceeds that additional amount, emergency roll-on generators can supplement the available capacity, noting that those generators must be physically brought to the island before they can be connected to the distribution system and are each capable of serving 1.68 MW. Current load forecasts will require the mobilization of three additional emergency roll-on generators if one cable system were to fail on peak, Foley said, adding that the peak demand is projected to continue growing each year above the baseline.

The Nantucket distribution system supplied by the undersea cable systems delivers electricity to about 12,000 customers, and the average demand for electricity is about 19 MW; therefore, under normal conditions, the entire island’s electricity demand can be served by one cable. However, Foley added, during peak times, the electricity demand is much higher than the annual average and has been growing each year since 2008, Foley said, adding that in 2015, the peak demand was the highest ever recorded for the island, reaching about 43.9 MW.

On how the estimated costs of the pilot compare to the estimated costs of a wires alternative for the island, Foley said that a conceptual level estimate approximates the cost of the third undersea cable system (i.e., the wires alternative) to be $75m to $100m.

By anticipating that the company may be able to defer that investment seven years, the company calculates that the estimated NPV of the annual, avoided revenue requirement over that period is about $23.4m – in other words, in deferring the investment by seven years, the company estimates it will cost about that much less, Foley said. That is the amount that is compared to the NPV costs of the NWA pilot, which, at $20.6m – for 2015-2036 – indicates that the NWA pilot is the preferable alternative, Foley said.

National Grid is proposing to recover actual costs of the pilot from all of the company’s retail delivery service customers through a reconciling mechanism as provided for in a proposed NWA provision. Foley also said that for any capital-related costs, National Grid would calculate a revenue requirement associated with the capital investment beginning with the year of investment and continuing through the life of the asset until it is fully recovered or until its recovery is reflected in another of the company’s rates. The company is proposing to recover costs incurred by proposing NWA factors after the calendar year in which the costs are incurred, in a filing to be made by March 15 in the following year, requesting NWA factors effective for usage on and after May 1, Foley said.

National Grid is a subsidiary of National Grid plc.

About Corina Rivera-Linares 3279 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 16 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines. She can be reached at clinares@endeavorb2b.com.