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.