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DOE OSTI2020

Expanding the Field of Climate Finance

Over the past twenty-one years, the Financial Innovations Roundtable (FIR), located at the Carsey School of Public Policy at the University of New Hampshire, has worked to address problems related to access to capital for low- and moderate-income consumers and communities. Since 2014, the event has been co-hosted by the Federal Reserve Board. The FIR works with a range of financial institutions, government agencies, foundations, and trade associations to access their expertise for problem-solving discussions. The 2020 FIR focused on the expanding field of climate finance and was co-hosted by the Federal Reserve Bank of San Francisco and The Climate Safe Lending Network. The event was originally slated to be in-person in San Francisco in May 2020 but was postponed due to the pandemic and shifted to an online event hosted November 16‒17, 2020. A significant amount has happened in 2020 on climate finance, racial justice, the economy, and COVID-19. The shocks and stresses of climate change are creating risks in low- and moderate-income communities as well as in the financial sector broadly. The 2020 FIR offered an opportunity to discuss the challenges and opportunities banks and Community Development Financial Institutions (CDFIs) face as they address these risks and how these institutions can help increase individual, institutional, and community-wide resilience. The program explored new and modified products that address climate risk in communities and how those products can be scaled. Conversations focused around: • The progress that has been made in the climate finance field and the challenges that lie ahead for financial institutions’ climate impact and climate-related risk. • Promising opportunities to decarbonize investments and finance low-carbon technology and infrastructure. • How lenders, insurers, housing organizations, and the public sector can work together to reduce housing instability due to climate-related factors and increase the climate-resilience of homes and neighborhoods. • Solutions to help communities address a wide range of related issues, including home weatherization and disaster preparation, home insurance loss, and climate gentrification and displacement. • Discussing lessons learned from other sectors such as renewable energy in order to design both people-based and place-based finance solutions that promote racial and economic inclusion. 1 • The need for all financial institutions to acknowledge that climate risks and racial inequity are systemic risks affecting their bottom line. • The role that bank regulators can play in promoting collaboration across the financial sector and in leading by example with regard to climate finance. • Mapping out concrete action-item initiatives including policy and industry pathways to climate safe lending as well as building a financing platform to provide clean energy to low-income communities. • More broadly, in order to systemically address climate risks, we will need to work together as a range of stakeholders across sectors and collaborate on shared goals and projects.

14 SOLAR ENERGY↗
DOE OSTI2021

Systematic Enterprise Risk Management by Integrating the RISMC Toolkit and Cost-Benefit Analysis (Final Report)

The goal of this research is to theorize and quantify the relationships between safety and the financial performance of nuclear power plants (NPPs). The Socio-Technical Risk Analysis (SoTeRiA) theoretical framework, which connects the social aspects (e.g., safety culture) and structural features (e.g., safety practices) of an organization with organizational safety and financial risks, is used to theorize the direct and indirect relationships between safety and the financial performance of NPPs. An Integrated Enterprise Risk Management (I-ERM) methodological framework is developed to operationalize SoTeRiA to quantify NPP safety and financial performance in a unified platform where their underlying physical degradation mechanisms, coupled with maintenance performance (considering human and organizational factors), are explicitly incorporated to depict the interconnections and dependencies between safety and financial performance. In this study, NPP safety refers to both occupational safety and system safety (estimated from Probabilistic Risk Assessment, PRA), and financial performance refers to the monetary values associated with NPP operation and maintenance (O&M) strategies. This report covers a case study demonstrating the feasibility of the I-ERM methodological framework. More detailed development of one of the I-ERM modules, i.e., Probabilistic Physics-of-Failure (PPoF) analysis, and its connection with other I-ERM modules is demonstrated in a second case study. The outcome of this research will help NPP decision-makers create cost-saving maintenance strategies while maintaining safety by providing cost- and risk-informed recommendations regarding maintenance work processes and operational strategies.

21 SPECIFIC NUCLEAR REACTORS AND ASSOCIATED PLANTS↗
DOE OSTI2023

Near-Term Electricity Requirement and Emission Implications for Sustainable Aviation Fuel Production with CO 2 -to-Fuels Technologies

Aviation contributed approximately 10% of the U.S. transportation sector's greenhouse gas (GHG) emissions and about 3% of the nation's total GHG production before the coronavirus disease (COVID-19) pandemic (EPA 2022). Unlike the ground transportation sector, which can be decarbonized by using batteries and hydrogen fuel cell powertrain technologies, the technical and economic challenges of aviation electrification open the opportunity for CO 2 utilization (CO2U) using clean power sources. The U.S. government set a goal to produce 3 billion gallons per year of sustainable aviation fuels (SAF) by 2030 and scale up the production to 35 billion gallons per year by 2050 (Bioenergy Technologies Office 2022). In this report, we examine three potential locations, in California, Iowa, and Louisiana, for SAF production using two production pathways that are expected to be available by 2030. We analyze the electricity cost to satisfy 10% of the SAF production potential for the select locations. Specifically, we consider (1) retail electricity cost from the default local utility in each location; (2) physical power purchase agreement (PPA) for renewable power and battery storage hybrid systems with preset prices; (3) financial PPA from a dedicated renewable plant; and (4) estimated real-time pricing (RTP) from the wholesale power market with utility delivery adders. Retail rates are available for the three potential locations; however, the developer should negotiate with the local utility in Iowa for new tariff riders, because the load of the proposed SAF plant (1.4 GW) is significantly higher than the current industrial tariff structure requirement (200 kW). The developers are not able to claim federal credits (i.e., the Inflation Reduction Act of 2022) when sourcing electricity from local utilities. Developers could consider prioritizing physical and financial PPAs as purchase options. While physical PPAs can be imported out of state, this structure imposes availability issues as developers must locate in the same electricity grid regions. Financial PPAs do not have the same location restrictions and provide the same cost savings as physical PPAs, but financial PPAs impose financial risks in the event of system curtailment and grid interruption. RTPs are available for customers in California with flexible load and hourly load management capability; however, utilities in our studied regions in Louisiana and Iowa only offer time-of-use and curtailment programs to incentivize lower energy usage in peak hours. These utilities do not currently offer RTP programs, and the developer may need to have further negotiations with the local utilities to access RTP programs. The results show that purchased electricity prices may range from 2.6 cents/kWh to 7.1 cents/kWh for the three studied plants.

02 PETROLEUM↗
DOE OSTI2020

Distributed Solar Utility Tariff and Revenue Impact Analysis: A Guidebook for International Practitioners

Depending on a range of technical, economic, policy, regulatory, and market-related factors, the adoption of DPV may have a net positive or negative financial impact on utilities and ratepayers. This guidebook provides a methodological approach for quantifying the net financial impact of DPV on utilities (in the form of “net revenue losses”) and ratepayers (in the form of “net tariff impacts”). Written for technical staff at utilities, regulatory bodies, energy ministries, research institutes, and civil society organizations who wish to better understand the financial impacts of DPV in their jurisdiction, this guidebook can be used to inform important decisions regarding DPV compensation, tariff design, and regulatory cost allocations, among other aspects. It is focused exclusively on customer-sited DPV systems and adopts a primarily cost-based (as opposed to an equally valid value-based) perspective to understanding DPV financial impacts. The approach for calculating net revenue losses can be applied in nearly any utility jurisdiction, regardless of institutional arrangements, business models, or regulatory paradigms.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗
DOE OSTI2023

Unlocking the Value of Deep Energy Retrofits

This publication is based on an extensive study conducted on behalf of the New York State Energy Research and Development Authority (NYSERDA) and the U S Department of Energy (DOE) to explore financial and risk products to accelerate the implementation of deep energy retrofit (DER) solutions to reduce costs These financial products are intended to speed market development via three fundamental themes: reallocating risk from building owners and lenders to insurers, quantifying and monetizing previously unrecognized value associated with DERs, and providing building owners and lenders with confidence in the performance of building systems Findings are based on a comprehensive analysis and characterization of 100+ existing DER case studies, and more than 40 qualitative interviews with industry experts, including insurers, researchers, building owners, and policymakers In addition, a quantitative model of overall project economics with baseline, high, and low cases was developed This data informed the analysis that resulted in three recommended financial product solutions, which were evaluated for their potential to raise projected cash flows and finance DERs: 1) Building System Performance and Energy Savings Guarantee; 2) Trade Credit Insurance; 3) Ancillary Revenue Contracts. This report identifies many value streams associated with DERs and introduces these three potential financial products, which aim to reallocate risks and reduce barriers to the adoption of advanced envelope DERs.

ancillary renenue contracts↗
DOE OSTI2024

Quantifying Investment Risk: Analysis of the Purchase Decision of a Nuclear Power Plant (Presentation)

Cost overruns are an ill-fated part of the deployment history of nuclear power plants (NPPs) in the United States, and yet studies increasingly show the important role nuclear technologies must play in decarbonizing the U.S. economy. Paradoxically, then, a key piece of a coherent decarbonization strategy depends on attracting investor action to a purchase where historical cost overruns have been sizable. To address this challenge, this study aims to develop a financial model that quantifies the risk of cost overruns in the decision-making process for purchasing advanced reactor concepts. Using the concept of value at risk (VaR), the model is built to evaluate financial risk nuclear construction with the aim to identify risk mitigation strategies. The objective is to identify strategies to mitigate cost-risk challenges and assess the potential reduction in investor risk exposure. This paper presents the initial development and preliminary verification of the financial risk analysis model. The development of this model involved a comprehensive approach to estimating financial risk over the operating life of NPP that stems from construction uncertainties. By utilizing net present value (NPV) with discounted cash flows, the model captures the complex interconnections of project costs, construction timelines, revenue, and uncertainties. Verifying the model involved testing historical data from previous reactor construction projects against the construction project of Vogtle 3 and 4. This paper’s results present the comparison of the preconstruction cost overrun prediction with the current cost estimates from a nearly complete Vogtle 3 and 4.

22 GENERAL STUDIES OF NUCLEAR REACTORS↗
DOE OSTI2026

Demand response event simulator and risk-aware bidding tool for industrial customers

Incentive Based Demand Response (IBDR) program participation delivers financial benefits to the consumers and resiliency benefits to the electricity grid. Effectively participating in these programs as an industrial consumer requires bidding strategies that balance financial risk with operational constraints. Existing bidding tools tend not to fully incorporate stochastic IBDR event modeling, program specific baseline and payment/penalty calculations, or demand reduction process control schemes that account for the cascading impacts of shutdown in complex facilities. Here, this work presents an IBDR event simulator and risk-aware bidding framework tool integrating three key components: a flexible, parameterized demand response event generator that rigorously accounts for program structures and stochasticity, a demand response operational simulation model that generates explicit control strategies for load reduction, and a Monte Carlo simulator to evaluate financial risk for varied capacity bids. A case study at a wastewater treatment plant participating in PG&E's Capacity Bidding Program demonstrates the framework's utility. In the peak capacity price month of August, optimal bidding by the wastewater treatment plant nets a mean IBDR benefit of $101,000 (67% of the August electricity bill) with 0.4% probability of a financial loss. This framework enables industrial operators to make informed bidding decisions, negotiate better program terms with demand response load aggregators, and analyze energy flexibility investments at their facilities. Ultimately, this work reduces participation barriers in IBDR programs and supports the broader goal of enhancing grid reliability and renewable energy integration.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗
DOE OSTI2025

De-Risking High-Recovery Brackish Water Desalination via Flow Reversal and Feed Flushing Using Techno-Economic Assessment

Novel desalination technologies have demonstrated enhanced performance and improved financial metrics over existing processes adopted by industry. Establishing quantitative performance targets is essential for achieving financial benefits over the current state of the art. Herein, we demonstrate how WaterTAP, a techno-economic assessment (TEA) tool, can be used to identify minimum performance metrics necessary to achieve financial benefit over using existing processes. This study evaluates the feasibility of increasing water recovery at the Chino Desalter I above 90 % through the addition of a third variable configuration reverse osmosis (VCRO) stage. Sensitivity analyses revealed flow reversal frequency, feed flushing volume (used as a cleaning step), and membrane lifespan are key factors influencing the financial viability of the VCRO process. The TEA analysis demonstrated that the system must achieve a recovery of 84 % and a 1-year membrane lifespan to have a breakeven LCOW, while achieving 90 % recovery can ultimately reduce the LCOW by 16 %. Notably, a trade-off between decreasing frictional losses and increased osmotic pressure across the recovery range, resulted in a stable specific energy consumption across the recovery range, enabling meaningful LCOW reductions without an energy penalty, a key finding that contrasts with conventional RO. This work demonstrates how TEA can guide system design by identifying key performance targets and exploring trade-offs, enabling data-driven decisions to de-risk innovative processes. These findings underscore the importance of leveraging TEA to evaluate scaling mitigation strategies and optimize inland desalination systems for sustainable and cost-effective operation.

14 SOLAR ENERGY↗
DOE OSTI2020

TEAL

TEAL is a financial performance calculator plugin for the RAVEN code, framework, resolving around the computation of Net Present Value and associated financial metrics. TEAL can make use of inflation rates, taxation, escalation factors, capital expenditure economy of scale scaling factors. The unique feature of TEAL is the capability to be linked with RAVEN external models and build corresponding cash flows using the variables computed by those external models. In addition to be able to use the capability to generate cash flows derived from complex physical models generated by RAVEN, another distinctive feature of TEAL is the capability to provide financial risk/probabilistic metrics that can empower RAVEN to perform optimization/analysis driven by financial risk augmentations. Optimization, robust optimization, parametric studies, large parallel simulations, sensitivity analysis, data mining, etc. are just some of the capabilities that can be leveraged.

Alfonsi, Andrea↗
DOE OSTI2022

A System Approach to Deep Heating Savings Through Measurement, Management, and Motivation

Across multi-tenant commercial office and multifamily buildings, centrally metered fuel use represents a substantial fraction of whole-building energy use. Energy audit practitioners understand that improving heating distribution efficiency is typically more of an opportunity than combustion efficiency and that differing thermal comfort preferences between tenants are the bane of operators across these building typologies. There is an unmet market need for retrofit technologies that allow for the delivery of the right amount of heat to the right spaces, at the right time. The Energy Management and Information System (EMIS) package fills this gap through enhanced controls and metering, incorporating low-cost sensors and wireless communication infrastructure to provide a platform for ongoing commissioning and tenant feedback, including heat cost allocation. With support from the US DOE Building Technologies Office, Steven Winter Associates, Inc. (SWA) partnered with Sentient Buildings, E Source, building owners, and utility and policy stakeholders, to demonstrate a market viable EMIS that achieves a reduction in space heating energy use by reducing heating load, improving control, and positively impacting behavior while providing an acceptable financial return. In this study, EMIS packages were implemented in two New York City multifamily rental buildings. Both buildings conducted basic mechanical work (e.g., repairing steam traps) to ensure the heating system was operating well before any tenant feedback was layered in. Heating Energy Use Reports (HEUR) were created to provide tenants with social comparisons and energy savings tips to influence their behavior; these were provided monthly to all tenants in both buildings. Additionally, one building allocated heating costs to a portion of the tenants. Heat cost allocation (HCA) has a long history in the European Union (EU), although it is not common in the US or in steam-heated buildings. SWA leveraged existing EU best practices and stakeholder feedback to develop a Heat Cost Allocation algorithm that was considered equitable and intuitive. Energy use and tenant behavior impacts were tracked throughout the study. The basic mechanical repair work saved between 11-20% of heating energy. Those savings rose to 17-24% with the addition of tenant feedback. While it may not be possible to precisely determine the impact of COVID-19 on research studies like this, there may have been additional savings realized had the study taken place in a period of normal occupancy patterns. These types of central heating systems have been a blind spot for utilities, who have traditionally had little visibility into detailed behind-the-meter gas usage. Heating energy savings stayed consistent during the coldest months, indicating the potential for utilities to utilize EMIS packages for peak gas demand reductions or demand response programs. Tenant comfort was also improved. Post installation, room temperatures more closely matched thermostat set points. Perhaps due to this greater level of control, the vast majority of tenants being billed for heating were accepting of the allocation costs. And tenants receiving heat cost allocations were more likely to reduce their thermostat setpoints than tenants receiving behavioral feedback without financial impacts were. Variation in building specifics makes it difficult to provide precise energy and financial savings estimates. But within the range of expected conditions, the study identified a few key variables that can have the greatest impact on financial returns: the cost of fuel, the ability and willingness to allocate heating costs to tenants, and a well-functioning heating system as a starting point. This study focused on two multifamily buildings, but additional use cases, such as commercial buildings and affordable housing, should be explored to better understand the full market potential. While this type of upgrade has the potential for deep energy reductions and cost savings, future projects should take into account the balance of costs and benefits between owners and tenants, especially in the affordable, regulated, or other low-to-moderate income (LMI) segments of the market. Rent credits, utility allowances, or a shared savings program are possible options to accelerate adoption of this strategy in these market segments.

32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATI↗
DOE OSTI2020

Deciphering Degradation: Machine Learning on Real-World Performance Data

The solar investment community is in need of up-to-date and data-derived system degradation rates to use in financial models that calculate the risk and expectation of energy revenue. To date, financial models choose degradation rates from past studies that are limited and may not be representative of solar projects in development today. As the solar industry expands in all sectors (residential, commercial, and utility), there is a growing amount of energy generation data available to analyze. With the help of the open source degradation analysis code (RdTools) it is now possible to derive degradation on an ongoing basis and continuously provide up-to-date durability statistics to the investment community. Ongoing and accurate statistics of fielded photovoltaic systems allows financial stakeholders to constrain energy revenue projections, lower financial risk, and increase the bankability of solar. This presentation will provide a mid-term progress update on a 2 year SETO-funded degradation project that involves applying RdTools analysis on kWh Analytics’ industry database. With results from the RdTools analysis in hand, machine learning methods are employed to quantify how much variance of system performance degradation can be explained by predictor variables such as environmental factors, equipment bill of materials characteristics, and system design information. The goal of this presentation is to promote the usage of RdTools on an ongoing to data owners and to solicit feedback from researchers and stakeholders on how to maximize impact of the SETO-funded kWh Analytics degradation project.

14 SOLAR ENERGY↗
DOE OSTI2024

Quantifying Investment Risk: Analysis of the Purchase Decision of a Nuclear Power Plant

Cost overruns are an ill-fated part of the deployment history of nuclear power plants (NPPs) in the United States, and yet studies increasingly show the important role nuclear technologies must play in decarbonizing the U.S. economy. Paradoxically, then, a key piece of a coherent decarbonization strategy depends on attracting investor action to a purchase where historical cost overruns have been sizeable. To address this challenge, this study aims to develop a financial model that quantifies risk of cost overruns in the decision-making process for purchasing advanced reactor concepts. Using the concept of Value at Risk (VaR), the model is built to evaluate financial risk nuclear construction with the aim to identify risk mitigation strategies. The objective is to identify strategies to mitigate cost-risk challenges and to assess the potential reduction in investor risk exposure. The paper presents the initial development and preliminary verification of the financial risk analysis model. The development of this model involved a comprehensive approach to estimating financial risk over the operating life of NPP that stems from construction uncertainties. By utilizing net present value (NPV) with discounted cash flows, the model captures the complex interconnections of project costs, construction timelines, revenue, and uncertainties. Verification of the model involved testing historical data from previous reactor construction projects against the construction project of Vogtle 3 and 4. The results of this paper present the comparison of the preconstruction cost overrun prediction with the current cost estimates from a nearly complete Vogtle 3 and 4.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗
DOE OSTI2024

A deep learning-based battery sizing optimization tool for hybridizing generation plants

Hybrid generation and energy storage systems offer the ability to increase flexibility of the combined asset. This flexibility can be used to increase provision of services already provided by the generation asset, such as timing sale of electricity to the energy market during high price periods, and also enable provision of additional services, such as ancillary services or contribute to resource adequacy. From a generation asset owner perspective, the decision to hybridize includes selecting an energy storage system that, among other factors, maximizes financial performance of the energy storage investment. Yet, existing tools to optimize energy storage sizing are either too rudimentary (i.e., based on “rules of thumb”) or too complex to implement (i.e., require specialized engineering and software knowledge and a high-performance computer to run). This work presents a novel deep learning-based battery sizing optimization tool that is designed to help generation asset owners easily assess preliminary sizing considerations for potential battery investments to hybridize their generation facility. The tool uses deep learning to predict revenue over a broad search space of potential battery sizes, estimates capital and operating costs (including accounting for battery degradation), and computes financial performance of each potential battery system investment, recommending a system with maximum financial performance. The tool is tested and validated for hydropower assets. Finally, this tool will help a greater cross-section of industry consider investments in battery systems, increasing their revenue and helping them compete in rapidly evolving electrify markets.

13 HYDRO ENERGY↗
DOE OSTI2020

Benefits and costs of a utility-ownership business model for residential rooftop solar photovoltaics

The rapid growth of rooftop solar photovoltaic systems can pose a number of financial challenges for electric utility shareholders and their customers. One potential pathway to resolving these perceived challenges involves allowing utilities to own and operate rooftop solar systems. However, the financial benefits and costs of this business model are not well understood. Here we model the financial performance of a large-scale utility-owned residential rooftop solar programme. Furthermore, over a 20 yr period, the programme increases shareholder earnings by 2–5% relative to a no-solar scenario, compared to a 2% earnings loss when an equivalent amount of rooftop solar is instead owned by non-utility parties. Such a programme could therefore be attractive from the perspective of utility investors. The impacts on utility customers, however, are more mixed, with average bills of non-solar customers increasing by 1–3% compared to the no-solar scenario, similar to the 2% increase under traditional, non-utility-ownership structures.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗
DOE OSTI2023

Quantum computing for finance

Quantum computers are expected to surpass the computational capabilities of classical computers and have a transformative impact on numerous industry sectors. Here, we present a comprehensive summary of the state of the art of quantum computing for financial applications, with particular emphasis on stochastic modelling, optimization and machine learning. This Review is aimed at physicists, so it outlines the classical techniques used by the financial industry and discusses the potential advantages and limitations of quantum techniques. Finally, we look at the challenges that physicists could help tackle. Quantum computers are expected to surpass classical computers and transform industries. This Review focuses on quantum computing for financial applications and provides a summary for physicists on potential advantages and limitations of quantum techniques, as well as challenges that physicists could help tackle.

97 MATHEMATICS AND COMPUTING↗
DOE OSTI2021

Assessing Machine Learning as a Tool to Explain Variance in Deployed Photovoltaic (PV) System Degradation

Degradation remains a large uncertainty in forecasting production for PV plants, creating significant risk for developers and financiers. This study aims to quantify the distribution and drivers of degradation across 10,000 PV systems deployed for distributed or utility generation by training a machine learning model to predict year-over-year degradation rates from metadata characteristics. A combination of K-Means clustering and random forest regressor were found to associate multiple metadata features as potential drivers of degradation, including module characteristics, system design, and climate features. From this, it is inferred that if machine learning is able to find complex patterns between metadata features and system performance loss, such methods can be employed to help developers and financiers make data-informed decisions when estimating long-term energy production forecasts in financial models.

Dunn, Jimmy C.↗
DOE OSTI2022

Long-term impact of light- and elevated temperature-induced degradation on photovoltaic arrays

Low levelized cost of electricity (LCOE) has been identified as critical for widespread adoption of photovoltaics (PV) without subsidies. Maintaining decades-long high-energy production is often an under-recognized opportunity in meeting cost goals because component lifetimes are not fully quantified at the time of manufacture. Whereas certain standardized tests minimize risk of early failure, there is little guidance to quantitatively predict degradation (or lack thereof) over decades, based on accelerated tests. In this article, we move toward bridging the understanding between indoor accelerated tests and outdoor performance data, with the goal of predicting energy yield with enough accuracy to inform financial decisions. Light- and elevated temperature-induced degradation (LETID) in p-type Si modules is analyzed in terms of impact on long-term module performance and thus LCOE. A method to predict the progression of LETID, using fixed kinetic constants and a numerical solution to the basic reaction rate equations, is detailed. Predictions are compared against both published data and that new to this study. These data include both indoor accelerated tests and fielded modules. We use the results in financial models to derive LCOE of modules in different climates with varying amounts of LETID, including uncertainty. Cost models based on the predictions indicate that LETID has a significant and climate-dependent impact on LCOE. Finally, we show that - even given the uncertainties identified in the study - these financial calculations can provide useful guidance to quantify risk based on accelerated test results. The analysis serves as an example of developing a predictive approach to PV reliability using physics of failure.

14 SOLAR ENERGY↗
DOE OSTI2022

DSO+T: Valuation Methodology and Economic Metrics (DSO+T Study: Volume 4)

This report summarizes a rigorous valuation analysis methodology used by the Distribution System Operator with Transactive (DSO+T) study to estimate the financial benefits and costs of adopting Transactive Energy coordination of distributed energy resources for key stakeholders (for example distribution system operators and customers). This was achieved by modeling the value exchanges between stakeholders and determining the annualized costs and revenues experienced by stakeholders, enabling the evaluation of overall impact on stakeholder’s annualized cash flow. Extensive work was conducted developing methods to estimate the operating costs of distribution system operators at a level of granularity that would allow the financial impact of implementing a transactive energy approach to be estimated. This work included developing parametric models for labor and software costs, distribution system capital and maintenance costs, growth rates, and factors to determine annualized costs of capital investments. Simulation results were used to calculate wholesale energy costs and revenues from retail sales. Valuation analysis methods were also developed for other stakeholders including customers, the transmission system operator, independent system operator, and generators. The resulting capability allows a complete mapping of the flow of financial value between stakeholders that can be directly integrated with the results of demand flexibility simulations. Example results are provided for a business-as-usual case and compared to a transactive energy case as well as to actual cost data.

24 POWER TRANSMISSION AND DISTRIBUTION↗