News Release

U.S. Department of Energy Approves Technical Assistance

For Immediate Release | 3-1-2021

Media Contact | Nick Debus

Direct |  602-542-0728

E-Mail | NDebus@azcc.gov

U.S. Department of Energy Approves Technical Assistance for Arizona Corporation Commission to Collaborate with Lawrence Berkeley National Laboratory on a Proposal that will Allow Synchronization of Potentially Millions of Smart Devices on the Electric Grid

PHOENIX – The U.S. Department of Energy on Tuesday February 23, 2021 approved a request from the Arizona Corporation Commission to receive technical assistance from the Lawrence Berkeley National Laboratory on the development of a proposal that will allow Arizona Public Service Company (APS) and its customers to save money through the synchronization of potentially millions of smart devices on the grid. 

"The U.S. Department of Energy is pleased to provide technical assistance to Arizona for this innovative tariff that will allow aggregation of all types of demand-side resources, from energy storage to grid-interactive water heaters," said Acting Assistant Secretary for Energy Efficiency and Renewable Energy Kelly Speakes-Backman. "We are eager to work with states, utilities and other stakeholders to aid the delivery of clean, reliable, affordable power to homes and businesses."

The proposal would establish a new special contract or rate, also known as a tariff, which will compensate smart devices for the value each device provides to the grid, such as, in the case of at-home batteries when they dispatch extra energy to the grid during times when energy supplies are low, or in the case of smart appliances and smart thermostats when they draw excess power from the grid during times when energy supplies are high.

“The coordination of millions of devices that otherwise would be operating independently represents the future of Arizona’s electric grid,” said Arizona Corporation Commission Chairwoman Lea Márquez Peterson. “When these devices are aggregated into comprehensive portfolios, they have the potential to act as a virtual power plant, providing power and other benefits to Arizona Public Service Company and its customers, just like any other resource on the grid. Collectively, they should be treated just like any other resource in the utility’s energy mix.”

The balancing of supply and demand on the grid can help reduce the overall cost of providing power to customers because it can help to allow traditional power plants to run more smoothly, while millions of smart devices can help flatten the peaks and troughs of extreme market volatility, such as rare instances when Arizona’s most critical power plants go offline or during times of extreme heat or cold. It can also help reduce overall costs for customers by preventing the need to build multi-million dollar power plants that will be intended to run for only a few hours each year, such as to meet peak demand, which is the most extreme hour of the most extreme month of a year. 

“Since the Commission’s vote on February 18, the Commission has heard the proposal for an all-encompassing demand-side resource aggregation tariff is a ‘first of its kind’ in the nation and that Arizona might be leading in the industry,” said Chairwoman Lea Márquez Peterson. “After news of the proposal got out, the Commission learned about an opportunity to work collaboratively with the Lawrence Berkeley National Laboratory at no cost to the Commission. This funding would be provided by the U.S. Department of Energy. I would support all options of technical assistance offered by the National Lab. For me, it’s about customer savings and affordability, and the utilization of different smart technologies through this aggregated tariff, so customers can see a real advantage to participating in a program that works directly with APS.”

The Lawrence Berkeley National Laboratory first approached the Corporation Commission with the possibility to provide technical assistance at no cost to the Commission after the Commission voted last November to adopt the new tariff proposal, which is anticipated to be finalized by the Commission later this year. 

“What we see unique about this tariff is that it incorporates both distribution system values and bulk power system values,” said Lisa Schwartz of Lawrence Berkeley National Laboratory. “It’s not just solar here, which could be an unconstrained export on the grid. It’s solar working in tandem with storage, in tandem with various flavors of demand response, whether it’s the utility controlling the water heater or the customer with an automatic smart setting on the thermostat in response to a price signal. And all these aggregated demand-side resources together, providing more value to the utility and its customers instead of just a single distributed resource.”

During a meeting on February 18, the Commission voted 5-0 to accept the offer from Lawrence Berkeley National Laboratory, pending approval from the U.S. Department of Energy. The U.S. Department of Energy approved the request on Tuesday.

“I support the utilization of Berkeley Lab,” said Commissioner Sandra D. Kennedy. “I’ve had experience working with them in the past, and I’ve been very pleased with their work. So I would like the Commission to accept their services offered: the stakeholder and utility engagement; the technical review; and the tariff filing; and also their modeling. I am very much in support.”

As the collaboration between Lawrence Berkeley National Laboratory and the Arizona Corporation Commission moves forward, Lawrence Berkeley will be working according to the Commissioners recommendations to put together a final report. The report will provide valuable data as to how and in what way the devices will be able to be interconnected, and what value this type of system will provide to the grid.

“I have no problem accepting the offer to receive the technical assistance from the lab, particularly because it does not come at any cost to the State or to the ratepayers,” said Commissioner Justin Olson. “I look forward to the results of this effort. Hopefully, we can find something that is a win-win--a win for the adopters of the technology and a win for the system--that it’s not driving up costs to the rest of the ratepayers as folks adopt this tariff and the technology that will be included in this tariff. And I think that that’s achievable. So hopefully that will be the outcome, and I look forward to supporting it if it is.”

“I’m supportive of moving forward in having Berkeley be part of the process,” said Commissioner Anna Tovar.

“I thank Lawrence Berkeley Lab for their very generous offer to us,” said Commissioner Jim O’Connor. “I’d like to see an immediate and vigorous engagement with the Commission staff in this process. I’d like it to be rather robust in this regard.”

Stakeholders are encouraged to work with APS prior to and following the company’s April 1 proposed tariff filing deadline to contribute to the development of the tariff and its rate design, including the compensation values and eligible technologies included in the tariff. This will help to ensure a robust stakeholder process so that APS customers will receive the greatest benefit possible. This development was a result of an amendment from Commissioner Sandra D. Kennedy which requires stakeholder engagement in tariff development.

The proposed tariff is subject to approval by a majority of Commissioners at a future Open Meeting.

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