United States: Status Of Distributed Generation In Maryland And The District Of Columbia

Last Updated: May 10 2017
Article by Van P. Hilderbrand Jr

Over the last several years, significant strides have been made to advance the development and implementation of distributed energy generation resources in the mid-Atlantic region. So much so that we thought it worthwhile to summarize this progress based on our knowledge and experience, as well as what was learned at a recent and informative panel entitled "Distributed Generation Resources in the DC/Maryland/Virginia Region." The panelists were Jon Kucskar, Senior Commission Advisor, Maryland Public Service Commission, Willie L. Phillips, Commissioner, District of Columbia Public Service Commission, and Wendy Stark, Vice President and General Counsel, Pepco Holdings.

What is Distributed Generation?

Before we get too far, let's define distributed generation. Distributed generation, also called DG, on-site generation, or decentralized energy generation, refers to the generation of electricity at or near where the electricity will be consumed. Instead of electricity being generated at a large, traditional power plant many miles from the points of electricity use, the electricity is generated and delivered locally, thus increasing efficiency and reducing loss from lengthy, higher voltage transmission and distribution lines.

Because the generation sources are located near consumers, the sources tend to be low or zero carbon emitting. In the residential sector, these distributed energy resources (DERs) or technologies include solar photovoltaic panels (e.g., rooftop panels), small wind turbines, and natural-gas fueled fuel cells. In the commercial sector, resources include solar photovoltaic panels, wind, combined heat and power systems, hydropower, biomass or waste combustion, advanced batteries, and fuels cells, among others. DG increases energy security, grid reliability, and lessens the impact on the environment due mainly to increased energy efficiency, reduced grid disruption, and reduced carbon emissions from cleaner energy sources.

DERs may serve a single structure, such as a residence or commercial building, or it may be part of a microgrid. A microgrid is a smaller grid system that carries locally generated electricity along local distribution lines. Microgrids can disconnect or "island" themselves from the traditional electric microgrid, thus improving resiliency as events that could disrupt the macrogrid will not jeopardize power reliability within the particular microgrid. These systems are prevalent at major industrial facilities, military bases, or large college campuses.

Distributed Generation in Maryland

There are several major ongoing initiatives in Maryland, including:

Targeted Review of Electric Distribution System, PC44: The Maryland Public Service Commission (PSC) launched a proceeding late last year, known as Public Conference 44 or PC44, to review the state's electric distribution grid and systems to ensure they are customer-centered, reliable, environmentally sustainable, and that customers are offered affordable electricity and a choice in generation sources. The review, which is partially funded by a $500,000 commitment from Pepco Holdings/Exelon Corp., focuses on achievable goals and metrics, including: (1) setting just and reasonable rates; (2) developing electric vehicle rate options; (3) enhancing competitive markets and customer choices; (4) improving and streamlining the interconnection process; (5) exploring and better utilizing energy storage; and (6) focusing on future distribution system planning. Each area is being addressed through a separate workgroup which is open to public participation. According to Mr. Kucskar, "we see Maryland's grid modernization process as an opportunity for all parties to provide meaningful input and develop consensus solutions. Ultimately, we hope to implement demonstrable changes to the electric system that will benefit all stakeholders."

Maryland joins several other states--New York, California, and Hawaii--and the District of Columbia, which are looking at their existing utility business model, distribution grid system, and how they can incorporate more DG, storage, and clean energy into their energy mix. Such a review is important to address technical issues (e.g., distribution lines being overwhelmed with new generation) as well as pricing issues. The initial public comment period is closed for PC44, but the listed initiatives are currently being explored by technical consultants and public workgroups and a report may be published as early as 2018. In addition, rate design pilot programs will likely be proposed in the second half of 2017. The findings of this review may result in an expansion of the aggregate capacity of the state's net-metering program, which is currently capped at 1,500 megawatts (MW).

Community Solar Pilot Program: The Maryland PSC provided final regulations and guidance to initiate a three-year Community Solar Pilot Program, which was enacted by the legislature in May 2015 (HB 1087). Shared renewable programs are growing in popularity in the U.S. and refer to local distributed, renewable energy generation systems (in Maryland's case – solar) that allow several energy customers, who would not otherwise have access to renewable energy, to share the benefits. Under these programs, customers who don't own their rooftops (e.g., renters) or who can't afford the upfront costs of installing rooftop panels can subscribe to communal renewable energy systems and get credits on their utility bills. Customers usually can come from any rate class, including residential and commercial.

Maryland's Community Solar Pilot Program will add projects that are 2 MW or less to the electric grid up to an aggregate capacity of 193 MW. This means that a large number of projects will be piloted. There are some restrictions, however. The solar energy system must be located in the same electric service territory as its subscribers. Further, the pilot program is looking for a diverse set of projects divided among the service territories, including systems on brownfields and reserves 31 percent (60 MW) of the capacity for systems that benefit limited-income subscribers. Participating utilities are Baltimore Gas & Electric (BGE), Delmarva Power & Light, Potomac Edison, and Potomac Electric Power Company (Pepco). Subscribers can earn full retail rate credit for the generation from their share of the system.

The priority deadline for project applications to be reviewed and approved for development in the first year is May 5, 2017. So it is probably too late to submit an application and meet this deadline. The PSC plans to reserve 40 percent of the generation capacity for projects in the first year and 60 percent in the second and third years. If you are a developer interested in submitting an application for the later years, the PSC plans to set new application deadlines and criteria for projects based on the project mix approved for the first year. In other words, if the PSC approves a large number of projects on brownfields for the first year, it is not likely to choose those types of projects in the following years. Depending on the results on this pilot program, the PSC and a working group may recommend establishing a permanent shared renewables program.

Renewable Portfolio Standards: PC44 and the Community Solar Pilot Program are set to help the state diversify its energy resource mix and meet the state's Renewable Portfolio Standard (RPS). The RPS was established in 2004 and gradually increases the amount of renewable energy electricity suppliers must procure from renewable sources by 2020 to 25 percent. At least 2.5 percent of the electricity must come from solar resources that are located in Maryland. The remaining 22.5 percent can come from other renewable technologies such as wind, biomass, landfill gas, anaerobic digestion, and other approved technologies located in the wider PJM region.

All eyes are on these initiatives as the state moves to meet its goals and addresses unresolved local issues apart from interconnection, such as land use restrictions and the need for new or expanded zoning regulations.

Distributed Generation in the District of Columbia

The District of Columbia is also proactively pursuing the expansion of DG and microgrids to keep pace with the ever-changing energy sector.

MEDSIS: In June 2015, the D.C. PSC opened Formal Case No. 1130, called the investigation into Modernizing the Energy Delivery Structure for Increasing Sustainability (MEDSIS). According to the PSC, "the goal of MEDSIS is to increase sustainability for consumers, and in the near-term, make the renewable energy and distribution energy delivery system more reliable, efficient, cost effective, and interactive." The PSC is dedicated to working with all interested persons and stakeholders in a collaborative manner. There have been three workshops in 2015-2016 and a town Hall meeting in February 2017.

Similar to other major U.S. cities, the D.C. PSC is interested in DG and microgrids because it has an aging distribution energy delivery system infrastructure and there simply isn't enough vacant and available land to develop new large scale projects. For cities to modernize and upgrade generation to cleaner resources, DG in the form of residential and commercial rooftop solar, combined heat and power systems, and demand-side energy efficiency upgrades may be the only options. PSCs and cities must look to both incentivize the on-site generation resources and ensure their interconnectivity to the grid.

Renewable Portfolio Standards: D.C. also has a RPS. Late last year, D.C. extended its RPS target from 20 percent by 2020 to 50 percent by 2032, including a separate carve-out for solar of 5 percent by 2032. The technologies eligible to meet the RPS include geothermal, solar (both thermal and electric), wind, biomass, landfill gas, marine/hydrokinetic technologies, fuel cells using renewable fuels, and hydroelectric. Because D.C. has limited renewable capacity at this time, most of the 2015 and 2016 compliance targets were met by purchased renewable energy credits (RECs), which represent renewable energy generated outside D.C., namely in Illinois, Indiana, and Pennsylvania. The RECs were mainly from biomass generation, wind, and solar. The in-district generation came mostly from distributed solar systems (such as rooftop panels) because D.C. has no utility-scale renewable electricity generators. Findings from the MEDSIS formal case will help the PSC identify technologies and policies to meet its goals.

Participation with Other States

The Maryland and D.C. PSCs are not working in a vacuum. Commissioners and staff from the mid-Atlantic region and the wider PJM region regularly meet to discuss initiatives and policies through the Mid-Atlantic Distributed Resources Initiative (MADRI). Each PSC also closely follows each other's formal cases and initiatives. For example, Maryland is watching D.C.'s MEDSIS, D.C. is watching Maryland's PC44, and everyone is watching New York's Reforming the Energy Vision (REV) initiative. Although each faces its own unique challenges, there is much to be gained through collaboration and learning.

Distributed Generation and Utilities

The utility Pepco serves millions of customers in Maryland and the District of Columbia, and is responsible for maintaining distribution lines and connecting DERs to the grid. Requests for DER interconnections with the power delivery system have greatly increased in all its service jurisdictions in recent years. Requests are up 1000 percent over the last few years in Maryland and the District of Columbia. Requests are much higher in New Jersey due to the more established industry there.

This uptick is largely due to customer preferences and desire for more control over the way energy is produced and consumed, decreasing technology costs, public policy objectives, and incentives intended to incorporate greater amounts of renewable energy. It is also a result of Pepco's efforts to streamline the approval process with a more-user friendly portal, online application process, and decrease in application approval wait time (which are down to a few days at each approval milestone).

The challenge for Pepco and other utilities is to increase the quantity of DERs while addressing challenges in planning, designing, constructing, and operating the power delivery system. At the same time, utilities must maintain reliable, safe, and affordable electric service. Although DG is growing in popularity, only a small percentage of Pepco's customers have connected DERs to the gird. It was clear from the panel discussion that Pepco is working with stakeholders, including the PSCs, to balance all of these factors to meet consumer demands and provide reliable service to its entire customer base.

Conclusion

Driven by customer choice, reliability and security concerns, potential cost savings, and environmental benefits, DG is no longer a futuristic idea, it is happening today. Maryland and the District of Columbia are primed to be leaders as the electric grid we see and know today evolves into a smarter grid of tomorrow.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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