This session is part of the Clean Energy Regulators Initiative Webinar Programme. Theme 1 - The Evolving Role of Network Regulators. Module 1: Defining Structure and Roles of Regulators and Institutions Power systems around the world are quickly evolving, and the role of power sector regulators is growing substantially more complex. This webinar will provide an overview of global forces shaping power sector transformation, discuss the evolving role of the regulator to harness such forces, and then zoom-in on a particular transformative force – variable renewable energy – to discuss specific regulatory aspects and approaches. This webinar is based on the reports "The Evolving Role of the Power Sector Regulator" and "An Overview of Variable Renewable Energy Regulatory Issues".

1. Clean Energy: Structure and
Roles of Regulators
Owen Zinaman
U.S. National Renewable Energy Laboratory
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2. Brief Profile
Owen Zinaman is an International Power
Sector Analyst at the U.S. National
Renewable Energy Laboratory based in
Colorado (USA), focusing on deploying
the next generation of energy planning,
policy, and regulatory constructs. He has
worked in a diverse range of countries on
economic, financial and policy aspects of
renewable energy development, including
in Africa, Asia, and the Americas.
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3. Outline
Brief Overview of Power Sector Transformation
The Evolving Role of the Power Sector
Regulator
An Overview of Variable Renewable Energy
Regulatory Issues
Moving Forward: CERI Resources
3

4. Outline
Brief Overview of Power Sector Transformation
The Evolving Role of the Power Sector
Regulator
An Overview of Variable Renewable Energy
Regulatory Issues
Moving Forward: CERI Resources
4

5. Power Sector Transformation is Happening
Today
• How countries envision, plan, and
regulate the power system is evolving.
• Long-held beliefs are evolving:
• Renewables are now a cost-
effective resource in many
locations and have been proven
not to require 1-to-1 reserves.
• Distributed generation is not
tantamount to the “utility death
spiral.”
• Planning, operational, and
regulatory strategies must evolve
but do not necessarily cost more
to implement.
• Networks can be cost-effectively
expanded from the bottom up.
• Utilities can sell more than just
electrons. Source: GridWise Alliance, U.S. Department of Energy
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6. Trends Driving Power System Evolution
Adapted from: Zinaman et al. (2015). Power Systems of the Future. 6

7. Outline
Brief Overview of Power Sector Transformation
The Evolving Role of the Power Sector
Regulator
An Overview of Variable Renewable Energy
Regulatory Issues
Moving Forward: CERI Resources
7

8. The Evolving Role of the Power Sector
Regulator
Available:
http://www.nrel.gov/docs/fy14osti/61570.pdf
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9. • Power sector regulators are frequently “where the rubber hits
the road”
• Regulators seek to:
– understand emerging trends in policy, technology, planning,
operations, and finance
– understand the technology implications of executing a policy
goal
– evaluate new technology solutions and how they impact existing
and emerging objectives
– navigate a multitude of evolving objectives (both legacy and
new)
• The objectives (and therefore the role!) of regulators is
quickly evolving
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10. • Evolving regulatory objectives drive a new
role for regulators
– Existing objectives are growing more
complicated
– New suite of emerging objectives poses a
novel set of challenges
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11. A Constellation of Objectives
Design and Manage
Electricity Tariffs
Meet Demand
Growth and Expand
Electricity Access
Ensure Financial
Health of Utilities
Facilitate Private
Investment
Protect the Interests
of the Poor
Support Technical
Safety and
Reliability of the
Power System
Enhance Energy
Security and Manage
Risk
Reduce Health and
Environmental
Impacts of Power
System Operation
Meet Rapidly
Growing Demand
While Minimizing
Environmental
Impacts and Risk
Support
Procurement of
Renewable Energy
Integrate Renewable
and Distributed
Generation
Resources to Grid
Incentivize Energy
Efficiency, Demand
Side Management
and Smart Grid
Technologies
Utilize Microgrid
Technology to
Bolster Reliability
and/or Access
Facilitate Consumer
Participation in
Power Markets
Enhance
Cybersecurity and
Protect Consumer
Privacy
Manage Increased
Interactions with
Other Sectors
Existing Objectives Emerging Objectives
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12. Ex: Distributed Solar Programs
Design and Manage
Electricity Tariffs
Meet Demand
Growth and Expand
Electricity Access
Ensure Financial
Health of Utilities
Facilitate Private
Investment
Protect the Interests
of the Poor
Support Technical
Safety and
Reliability of the
Power System
Enhance Energy
Security and Manage
Risk
Reduce Health and
Environmental
Impacts of Power
System Operation
Meet Rapidly
Growing Demand
While Minimizing
Environmental
Impacts and Risk
Support
Procurement of
Renewable Energy
Integrate Renewable
and Distributed
Generation
Resources to Grid
Incentivize Energy
Efficiency, Demand
Side Management
and Smart Grid
Technologies
Utilize Microgrid
Technology to
Bolster Reliability
and/or Access
Facilitate Consumer
Participation in
Power Markets
Enhance
Cybersecurity and
Protect Consumer
Privacy
Manage Increased
Interactions with
Other Sectors
Existing Objectives Emerging Objectives
Pressing Objectives:
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13. Ex: Minigrid-based Electrification
Design and Manage
Electricity Tariffs
Meet Demand
Growth and Expand
Electricity Access
Ensure Financial
Health of Utilities
Facilitate Private
Investment
Protect the Interests
of the Poor
Support Technical
Safety and
Reliability of the
Power System
Enhance Energy
Security and Manage
Risk
Reduce Health and
Environmental
Impacts of Power
System Operation
Meet Rapidly
Growing Demand
While Minimizing
Environmental
Impacts and Risk
Support
Procurement of
Renewable Energy
Integrate Renewable
and Distributed
Generation
Resources to Grid
Incentivize Energy
Efficiency, Demand
Side Management
and Smart Grid
Technologies
Utilize Microgrid
Technology to
Bolster Reliability
and/or Access
Facilitate Consumer
Participation in
Power Markets
Enhance
Cybersecurity and
Protect Consumer
Privacy
Manage Increased
Interactions with
Other Sectors
Existing Objectives Emerging Objectives
Pressing Objectives:
13

14. Ex: Demand Response Program
Design and Manage
Electricity Tariffs
Meet Demand
Growth and Expand
Electricity Access
Ensure Financial
Health of Utilities
Facilitate Private
Investment
Protect the Interests
of the Poor
Support Technical
Safety and
Reliability of the
Power System
Enhance Energy
Security and Manage
Risk
Reduce Health and
Environmental
Impacts of Power
System Operation
Meet Rapidly
Growing Demand
While Minimizing
Environmental
Impacts and Risk
Support
Procurement of
Renewable Energy
Integrate Renewable
and Distributed
Generation
Resources to Grid
Incentivize Energy
Efficiency, Demand
Side Management
and Smart Grid
Technologies
Utilize Microgrid
Technology to
Bolster Reliability
and/or Access
Facilitate Consumer
Participation in
Power Markets
Enhance
Cybersecurity and
Protect Consumer
Privacy
Manage Increased
Interactions with
Other Sectors
Existing Objectives Emerging Objectives
Pressing Objectives:
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15. • Prioritization and harmonization of a
multitude objectives is the essential
challenge of power sector regulation
• Emerging trends in policy, technology,
planning, operations, and finance are driving
an evolution of regulatory objectives
– The “information asymmetry” is evolving as well
• Regulators are uniquely positioned to
accelerate modernization/transformation
Key Messages
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16. Outline
Brief Overview of Power Sector Transformation
The Evolving Role of the Power Sector
Regulator
An Overview of Variable Renewable Energy
Regulatory Issues
Moving Forward: CERI Resources
16

17. An Overview of Variable Renewable Energy
Regulatory Issues
Available:
http://www.nrel.gov/docs/fy14osti/61350.pdf
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18. • vRE Generation
Procurement
• Ensuring Adequate Grid
Infrastructure
• Ensuring Short-term
Security of Supply
(Flexibility)
• Ensuring Long-term
Security of Supply
(Resource Adequacy)
Framework for Categorizing vRE Regulatory Issues
vRE
Generation
Grid
Infrastructure
Resource
Adequacy
Flexibility
The Four Main Categories of
VRE Regulation
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19. • Early Stages
– Normally less than 5%
VRE annual
penetration
• Intermediate Stages
– Typically between 5-
20% VRE annual
penetration
• Advanced Stages
– As VRE surpasses
20% annual
penetration
3 Stages of vRE Regulation
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20. vRE
Generation
Grid
Infrastructure
Flexibility Adequacy
Early Stage
(vRE approx. < 5%)
Establish appropriate VRE
support mechanisms
Establish queue
management
Establish efficient siting
processes
Simplify interconnection
protocols
Initiate data collection
efforts that will facilitate
formal grid integration
studies
Initiate data collection
efforts that will facilitate
formal grid integration
studies
Intermediate Stage
(vRE approx. 5-20%)
Refine VRE support
mechanisms if necessary
Refine siting and queue
management
Establish VRE grid codes
and designated
transmission zones
Coordinate generation and
grid planning
Establish distribution
network standards for VRE
Initiate formal grid
integration study
Improve forecasting
Broaden balancing-area
footprints
Improve system operation
methods
Initiate formal grid
integration study, with
capacity credit or resource
adequacy components as
needed
Advanced Stage
(vRE approx. >20%)
Encourage alignment
between demand and VRE
production
Incentivize VRE
dispatchability
Expand grid
interconnection and market
coupling
Employ locational pricing
Incentivize active
network management
Employ advanced system
operation
Incentivize demand
response (DR)
Incentivize flexible
generation and/or storage
Improve adequacy
mechanism in accordance
with predominant paradigm
(e.g., capabilities market;
strategic reserve
requirement; full scarcity
pricing)
Issues & Actions at Different Stages of vRE Deployment
Increased
Interdependency
= Priority Area =
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21. Early Stage vRE Regulatory Issues
Early Stage
(vRE approx. < 5%)
vRE
Generation
Grid
Infrastructure
Flexibility Adequacy
Establish
appropriate VRE
support
mechanisms
Establish queue
management
Establish efficient
siting processes
Simplify
interconnection
protocols
Initiate data
collection efforts
that will facilitate
formal grid
integration studies
Initiate data
collection efforts
that will facilitate
formal grid
integration studies
= Priority Area
21

22. • 2006 series of legal and
regulatory clarifications for
vRE under 5 MW:
– Interconnection processes
– Remuneration schemes; cost
allocations
– Equipment standards
• Harmonizing interconnection
procedures with robust
technical standards can
encourage investment while
maintaining reliability
Snapshot – Guatemala Distributed vRE Interconnection
Source: CNEE (2006)
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23. Intermediate Stage vRE Regulatory Issues
Intermediate Stage
(vRE approx. 5-20%)
vRE
Generation
Grid
Infrastructure
Flexibility Adequacy
Refine VRE
support
mechanisms if
necessary
Refine siting and
queue
management
Establish VRE
grid codes and
designated
transmission
zones
Coordinate
generation and
grid planning
Establish
distribution
network standards
for VRE
Initiate formal grid
integration study
Improve
forecasting
Broaden
balancing-area
footprints
Improve system
operation
methods
Initiate formal grid
integration study,
with capacity
credit or resource
adequacy
components as
needed
= Priority Area
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24. • High-quality wind
resources are distant
from large load centers,
exacerbating a“co-
investment conundrum”
• Intensive stakeholder
consultations helped
identify CREZ regions;
• Transmission
investments financed by
utility customers
Snapshot – Texas “Competitive RE Zones”
Source: SNLFinancial
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25. Advanced Stage vRE Regulatory Issues
Advanced Stage
(vRE approx. >20%)
vRE
Generation
Grid
Infrastructure
Flexibility Adequacy
Encourage
alignment
between demand
and VRE
production
Incentivize VRE
dispatchability
Expand grid
interconnection
and market
coupling
Employ locational
pricing
Incentivize active
network
management
Employ advanced
system operation
Incentivize
demand response
(DR)
Incentivize flexible
generation and/or
storage
Improve adequacy
mechanism in
accordance with
predominant
paradigm
(e.g., capabilities
market; strategic
reserve
requirement; full
scarcity pricing)
Increased
Interdependency
= Priority Area
=
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26. • Ordered: 1,325 MW of
storage in operation by
2024 for three California
Investor Owned Utilities
• No more than 50% of
capacity owned by
Utilities
• Intention: Create a
mature storage market
that doesn’t require
targets
Snapshot – CPUC Energy Storage Decision
Source: CPUC (2013)
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27. • Unique forces at play in each regulatory
context
• Common issues and key ideas emerge
across contexts and at each stage of vRE
deployment and integration
• Regulating vRE presents a novel
landscape of challenges and opportunities
Key Takeaways
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28. Outline
Brief Overview of Power Sector Transformation
The Evolving Role of the Power Sector
Regulator
An Overview of Variable Renewable Energy
Regulatory Issues
Moving Forward: CERI Resources
28

29. Ask an Expert: Developing Solutions to Policy Barriers
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Ask-an-Expert: Our Experts in Action
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30. Engaging with CERI
Visit our website for more
information about CERI
publications, resources, and
current activities:
http://www.leonardo-
energy.org/projects/ceri-clean-
energy-regulators-initiative
CERI Webinar Programme:
http://www.leonardo-
energy.org/webinar/clean-
energy-regulators-initiative-
webinar-programme
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31. Thank you to the International Copper
Association for your support of this work, as
well as our partners at Leonardo Energy!!
http://copperalliance.org/
http://www.leonardo-energy.org/
Thank You!
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