Locational Marginal Value of Distributed Energy Resources as Non-Wires Alternatives

Abstract

In this paper, we address the issue of valuating Distributed Energy Resources (DERs) as Non-Wires Alternatives (NWAs) against wires investments in the traditional distribution network planning process. Motivated by the recent literature on Distribution Locational Marginal Prices, we propose a framework that allows the planner to identify rigorously the short-term Locational Marginal Value (LMV) of DERs using the notion of Marginal Cost of Capacity (MCC) of the best grid investment alternative to monetize hourly network constraint violations encountered during a yearly rate base timescale. We apply our methodology on two actual distribution feeders anticipated to experience overloads in the absence of additional DERs, and present numerical results on desirable LMV-based generic DER adoption targets and associated costs that can offset or delay different types of grid wires investments. We close with a discussion on policy and actual DER adoption implementation.