Smart device flexibility aggregation tariff under development in Arizona

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The Arizona Corporation Commission and Lawrence Berkeley National Laboratory are to develop a proposal for an aggregation tariff for grid connected smart devices.

The aim is to open the way for potentially millions of devices including home storage batteries, smart thermostats and smart appliances to be synchronised to the electricity grid with compensation for the value that each provides to the grid.

The utility regulator, the Arizona Corporation Commission, will receive technical assistance from Lawrence Berkeley National Laboratory following approval from the US Department of Energy.

The proposal, which will be subject to final regulatory approval, would then be implemented by Arizona Public Service Company (APS) enabling its customers to earn, and potentially save, through their participation in the energy markets.

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“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 Lawrence Berkeley National Laboratory first approached the Corporation Commission with the possibility to provide technical assistance at no cost following its November vote to adopt the new tariff proposal. It 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. It’s solar working in tandem with storage, in tandem with various flavours 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.”

The new tariff is expected to be a first in the US. As regulators, utilities and aggregators across the world are grappling with these issues, the outcomes will be awaited with much interest.