By Kerry Lakatos-Hayward, OSEA representative
Distributed energy resources (DERs) are playing an increasingly important role in Ontario’s electricity supply, surpassing 10% of connected load. With technology costs for DERs decreasing and a desire by customers to have more choice and control over their energy, distributed energy resources are forecast to continue this upward trend. Against this backdrop, the Ontario Energy Board (OEB) has commenced a comprehensive review of all aspects of DERs, and is undertaking a number of parallel reviews to address Distributed Energy Resources Connections Review (EB-2019-0207), Utility Remuneration (EB-2018-0287), and Responding to Distributed Energy Resources (EB-2018-0288).
OSEA fully supports the transformative role that distributed resources are playing in Ontario’s new energy economy, being an important creator of “green jobs”, economic development and exports. We are taking an active role in the OEB proceedings, including providing written comments and participating in Stakeholder Consultations. Specifically, we are representing you, our membership, by advocating for inclusion of all green energy technologies and innovation as sources of distributed energy resources, as well as the need to adopt a local/community approach to energy planning and climate change/ greenhouse gas mitigation efforts.
In our submissions, we have emphasized the following points:
- Distributed Energy Resources (DERs) are a vital part of community energy planning and provide local competitive advantage via economic development. We cited the City of Toronto and Brant County as positive examples of local energy planning, specifically Brant County which in fact produces more electricity than it consumes.
- We encouraged the OEB to provide clear definitions of DERs and regulatory rules; however, we cautioned that a principles-based approach is preferred to additional regulation, as there is no optimal one size fits all and that local stakeholders should not be restricted by “central fiat” Instead, we are advocating for a clear set of principles and policy direction, creating a level playing field for DERs and encouraging innovation.
- We recommended that the value of DERs as reflected in rates and pricing should recognize full societal benefits which are specific to localized marginal values; and,
- With respect to interconnection standards, we recommended that local LDCs should create processes and timelines, guided by agreed-upon principles and adhere to them. IESO/CSA/ESA should provide oversight to ensure compliance with NERC, particularly for reliability.
There was significant interest in the Stakeholder Consultation process with numerous presentations and written submissions made by different groups. And, while there was not consensus on all points, numerous themes did emerge:
- Customers must come first in consideration of rules regarding DERs and that reliability, sustainability and affordability are key objectives.
- Stakeholders need to develop a shared understanding of the issues related to DERs (the what and the why). This includes agreeing on common definitions of DERs (value / service types / customers) and key principles.
- Existing assets should be optimized to minimize the stranding of assets.
- The evolution of the energy sector needs to be outcomes and performance-based, where costs follow benefits and the specific value of DERs reflect full localized benefits.
- With respect to interconnection processes, clear direction is required on who pays for connection and how are connection costs recovered, in order to send right risk/reward and limit cross-subsidization for customers who do not put in DERs.
- Regulatory and policy solutions must reflect the Ontario context. Ontario has a large number of LDCs, with public ownership of transmission and distribution as well as generation assets. Additionally, there is a backdrop of the Global Adjustment charge and Industrial Conservation Initiative, carbon pricing and Ontario’s unique, supply/demand mix and PBR framework. Experience in other jurisdictions, for example Hawaii, California and New York, can inform the discussion but it cannot directly translate into solutions for Ontario.
- The role of the OEB is to ensure that regulation is proactive and puts the right rules in place to enable market competition. Regulatory change is recognized as evolutionary not revolutionary, should be technology agnostic, and not protect utilities but address barriers to change by providing incentive and penalties for LDCs.
- There was recognition that utilities need to be encouraged to make the right investments in a time when the concept of a natural monopoly may no longer be completely relevant. There was significant debate on the utility ownership question, with some stakeholders calling out the mismatch between the LDCs role as being a gatekeeper for DERs with LDCs desire to participate in the DER marketplace. There was also recognition that the Affiliate Relationship Code needs to be updated.
- Utility planning to replace and upgrade wire and pipe assets must be neutral between hard wire pipe assets and fully consider other options, including DERs energy efficiency and demand response.
As a next step, the OEB is considering the facilitation report and submissions of all stakeholders. In the meantime, it is initiating a DER Working Group to consider technical requirements, process and cost related aspects of connecting new storage and generation to distribution systems, both in front and behind the meter. OSEA attended the initial meeting on December 4 and will look to join the working group to continue to advocate on behalf of our members.
If you have any comments or perspectives on the role of distributed energy resources in Ontario’s energy future, OSEA would appreciate hearing from you. Please contact the author of this article, Kerry Lakatos-Hayward who is representing OSEA at the DER Working Group.
Ontario Energy Board
IESO Innovation Paper
Exploring Expanded DER Participation in the IESO-Administered Markets Part I – Conceptual Models for DER Participation