In 2016, $55 billion was spent on new “wires and poles” infrastructure in the United States ($20 billion on high-voltage transmission lines and $25 billion on low-voltage distribution lines) and spending on infrastructure has been consistently increasing for the last couple of decades. This is double what was spent on new generation, and to move toward clean energy as quickly and affordably as possible, we must find ways to reduce our reliance on this infrastructure. Here are some terms to help you understand this corner of the clean energy conversation.
Non-Wires Solutions (NWS) have more typically been called Non-Wires Alternatives (NWA), but Rocky Mountain Institute has started using the former term to promote its consideration as an integral part of energy resource planning rather than an optional one. NWS are means by which we can meet electricity demand without building more transmission and distribution infrastructure.
Distributed Energy Resources, or DERs, refer to any strategies used to generate, store, reduce, or shift energy use at the customers’ end, “behind the meter” as it’s often referred to. Because these are the methods by which NWS are realized, NWS and DERs are largely synonymous (yes, NWS doesn’t have the “s” and DERs does, don’t ask us why). DERs include battery storage, energy efficiency, and the resources below.
Distributed Generation includes any generation behind the meter: rooftop solar, community solar gardens, microgrids, etc. One concept not described in our microgrid article from last month is Combined Heat and Power (CHP), or cogeneration, which is the practice of using the waste heat from distributed electricity generation for building heat (or cooling, by running chillers). It is 65-75% efficient compared to about 50% efficiency for separate electric and heat systems, which provides a benefit even when the same fuel source as a centralized generator is used.
Demand Response (DR) – Demand is the amount of electricity needed at any given time. Peak Demand is the most electricity needed that day (or month, or year, etc., depending on context). It follows a daily and yearly cycle: in the summer, peak demand tends to be in the afternoon when air conditioning is most needed, and in the winter it’s usually in the evening when more lighting is used. To avoid service interruptions, utilities must always be able to meet peak demand, often firing up more expensive natural gas “peakers” every day. Demand Response is a technique to lower peak demand. For consumers, this is often implemented by using “smart” thermostats – these are thermostats that the utility can control, raising them a few degrees on hot summer days. The consumer usually gets a credit for agreeing to use one. Asset-Backed Demand Response is a relatively new concept where consumers use local generation to ease demand from the utility rather than reduce electricity use.
Load Flexibility, Load Management, Demand-Side Management – there are a number of terms referring to shifting energy use to times of lower demand. This can be encouraged through rate structures and incentive programs and automated by shifting time-agnostic loads, like charging electric vehicles, as the need arises. It has also come to include not just shifting peak demand, but balancing the variability in renewable generation to avoid voltage spikes, overgeneration, etc. The description of Demand Response is becoming used as a larger umbrella to include these concepts as well.
Load has a variety of meanings depending on the context and the speaker, but generally relate to the things that consume electricity. It can be synonymous with demand, total consumption over a time period, total electricity needed if all electric items were turned on at the same time, etc.
A Virtual Power Plant (VPP) is the management of hundreds or thousands of DERs (typically distributed generation and storage) as a combined resource in order to sell electricity on the market (usually to the local utility), often to support Demand Response. Aggregated DERs and Grid of Microgrids are similar concepts.
Performance-Based Ratemaking (PBR) – And finally, to relate these concepts to utility regulation: to make it more attractive for investor-owned utilities to embrace NWS, the way they make money needs to change. Instead of getting a return on capital investment – centralized generation, transmission, and distribution infrastructure – they need to be rewarded based on how well they satisfy customer needs: reliability, fair rates, efficiency, and environmental sustainability. They will then be incentivized to reduce energy use rather than create more – and take advantage of all that NWS has to offer.