City staff recommend education and monitoring, not new incentives, in reliability and resiliency plan update

Jonathan Abenshein, the City’s Assistant Director for Climate Action, presented a status update Aug. 22 on the Reliability and Resiliency Strategic Plan (RRSP), summarizing cost-benefit analysis of time-of-use (TOU) rates, demand-response measures, battery storage, solar-plus-storage and potential microgrids.

Abenshein said consultants analyzed supply-cost and short-term-resiliency benefits and found that, under current capital and policy assumptions, most incentive-backed measures (residential demand response, residential battery incentives and many commercial storage programs) do not generate net benefits to the community’s supply costs. He said commercial solar-plus-battery projects show more favorable cost-benefit results primarily because short-term resiliency has higher value for commercial customers. The analysis used current capital costs (capital equipment priced in present-day dollars) and utility supply-cost projections; consultants noted that federal tax incentives such as the Investment Tax Credit (ITC) materially affect project economics.

Abenshein and consultant Julian Parsley (Buro Happold) described a limited distribution-deferral analysis focused on transformers eligible for deferral (transformers less than 20 years old and not on imminent feeder upgrades). The staff simulation used AMI meter data and Monte Carlo runs to model combinations of electrified homes on transformers and concluded the number of transformers realistically eligible for deferral was small (about 362 candidates). Even in optimistic scenarios, the analysis estimated that deferring transformer replacements with storage would require roughly 2,400 residential batteries and would not produce sufficient savings once program costs were included.

On time-of-use rates, staff reported national and state studies showing residential peak reductions in the 1%–6% range (one California study cited 4.6%) and suggested TOU rates could be a cost-effective way to reduce peak demand; committee members urged robust outreach and guides on how residents and small businesses can respond to TOU pricing.

The city evaluated a proposed solar-plus-storage microgrid at the airport sized at approximately 7 MW of solar and associated storage. Abenshein said that even with avoided transmission and capacity value, the airport microgrid’s modeled power-purchase price with the ITC included remained higher than importing remote renewables. Staff recommended holding further microgrid study while the Regional Water Quality Control Plant (RWQCP) completes its analysis of backup-power alternatives because the RWQCP’s backup-power needs and options strongly affect the microgrid value proposition.

Staff presented a recommended approach to the committee: 1) promote measures that reduce peak-period load once TOU rates launch (education and barrier reduction), 2) do not initiate broad incentive programs for demand response, residential storage or vehicle-to-grid at this time but monitor cost-benefit changes, 3) pursue case-by-case commercial solar and storage projects and utility-scale renewables, and 4) continue studying long-term resiliency and keep the airport microgrid analysis “warm” while awaiting RWQCP analysis. The Utilities Advisory Commission provided largely supportive feedback on the proposed recommendations.

Ending

Committee members said they were generally aligned with staff’s focus on outreach and monitoring rather than immediate incentives; they asked staff to incorporate forward-looking projections of capital-cost declines (particularly for storage) and retail-price trajectories into future cost-benefit updates.