New York “REVs” Up Microgrid with Big Plan

April 30, 2014
A microgrid here, a solar panel somewhere over there, a little energy efficiency throughout. That’s been the kind of electric grid revolution we’ve seen so far – a leaves-floating -in-the-wind sort. But New York’s about to change all that…

Credit: Glen Duncombe

A microgrid here, a solar panel somewhere over there, a little energy efficiency throughout. That’s been the kind of electric grid revolution we’ve seen so far – a leaves-floating -in-the-wind sort.

But no more. At least not in New York. The bellwether state last week put forward a declaration that at last gathers the disparate pieces into something that truly looks like a new grid – one that significanlty elevates distributed energy as a resource.

The proposal is called REV, short for Reforming the Energy Vision. It was proposed April 24 by the staff of the Department of Public Service. The Public Service Commission voted the same day to begin honing the plan into new policy.

The proceeding begins with a fascinating premise: Create a grid operator that manages distributed energy much the way independent system operators now manage bulk power markets in the United States.

We have grid operators for wholesale power, why not the same for distributed energy?

This PSC is calling this new manager, for now, a Distributed System Platform Provider, or DSPP. (PSC chairman Audrey Zibelman recommended they consider a more pronounceable acronym.)

The DSPP becomes a kind of market platform where regulated and competitive distributed energy players buy and sell. The distributed grid operator would create markets, tariffs, and systems to monetize energy efficiency, microgrids, combined heat and power, energy storage, demand response, distributed generation, building management systems, and other forms of distributed energy. It also would target distribution grid needs, measure programs, and handle payments and transactions.

Getting Microgrid Right

Also interesting – the plan specifically calls out microgrids as an element of distributed energy in need of attention. A keen interest exists in microgrids, but they are hampered by a lack of clear policy or regulation to direct the market. Microgrids don’t always receive payments for services they provide; the revenue streams don’t exist or microgrids aren’t allowed to partiicpate in the markets. These are problems not just in New York, but in states nationwide.

So, New York intends to tackle them by developing consistent policy for microgrids. This is especially important now because the state has created a $40 million competition to jump-start at least 10 community-based microgrids. (New York distinguishes between regular microgrids and community microgrids, which are “a style of microgrid that supports many customers in an area, including critical customers as well as businesses and residents.”)

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Here are some of the microgrid questions the New York PSC intends to take on.

  • What changes in current rules (e.g., interconnection and standby rates) are needed to enable microgrids and community grids?
  •  What are the issues regarding the relationship between utilities and microgrids (e.g., ownership of distribution lines within the microgrid, and regulatory status of microgrid owners as sellers of power)?
  •  What role do microgrids play in the DSPP planning function, related to system needs as well as critical facility resilience?
  •  Where microgrids serve critical facilities should this be reflected in pricing of utility services?

A lot of microgrids use energy storage, and New York will take a close look at how it handles this resource. But it intends to go a differenet route than California. New York will not set a numeric target as California did with its requirement that utilities secure 1,100 MW of storage by 2020. Instead, the New York DSPP and market participants “will identify economic applications of storage, including, facilitation of clean intermittent generation.”

Energy Efficiency as a Tool

Credit: Francisco Diez

The plan also overhauls the traditional way New York handles energy efficiency. Right now, the state incentivizes energy efficiency through various programs funded by a dedicated charge to utility ratepayers.

But under the new approach the DSPP “will integrate energy efficiency into its system planning, targeting efficiency where it will produce maximum system value,” says the plan.  The state would do away with the dedicated charge to fund energy efficiency, and instead treat it like any other part of the utility’s revenue requirement.

Of course the big question becomes who gets to be the DSPP. The staff report recommends that utilities play the role. It will be interesting to see how competitive players react to this idea as they submit comments to the PSC in the coming months. On the one hand, it is widely acknowledged that it’s better to have utilities as market allies than enemies, and crippling them economically will do no one any good. On the other hand, competitive players often complain that regulators give utilities too strong a hand.  Much will depend on how New York rethinks utility ratemaking, another big part of the plan.

New York Governor Andrew Cuomo, a strong proponent of distributed energy and microgrids, has blessed the plan.  It now undergoes review, discussion and possible change. The commission hopes to start putting policies in place next year. It will set ground rules and set a schedule for the proceeding at a meeting May 12 in Albany, and hold a public symposium to describe the plan  May 22, also in Albany.

This proceeding is tackling issues that are under debate in several states. It will be interesting to see how it influences the national discussion.

About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is the editor and founder of She is co-founder and former editor of Microgrid Knowledge.

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