California FLEXvalue™: A New Set of Cost Effectiveness Tools for Transparent Valuation of Demand Side Resources
California has long been a leader in demand-side programs, including the development of computational tools for valuation. However, with the growing need for demand-side programs that can truly compete against an intensifying duck curve, the state needs a modernized approach to valuation that is capable of assessing and optimizing the actual hourly grid and carbon value of demand flexibility projects and portfolios. Transparent and flexible valuation is a critical bridge between today’s piecemeal programs and tomorrow’s coordinated, market-driven solutions.
The open-source FLEXvalue™ engine now provides California aggregators, program administrators, utilities, and regulators a pathway to consistently and transparently gauge the value of their projects, portfolios, and programs. The FLEXvalue™ Python codebase is universally accessible on GitHub, along with examples and documentation. This package currently utilizes the CPUC’s published avoided cost data and enables market actors across the state to assess demand flexibility value from either pre-defined or custom/measured load shapes, and to inform decisions in near real-time.
Recurve has publicly open-sourced the FLEXvalue™ Python codebase, complete with directions and examples, on GitHub. The FLEXvalue™
engine takes simple user inputs and computes the lifecycle grid and carbon value of measures, projects, or portfolios. Outputs are complete and transparent, and the software is easy to run.
The FLEXvalue™ engine operationalizes the key inputs to the current cost-effectiveness tool (CET) required for regulatory savings claims in the energy efficiency proceeding, including the CPUC’s hourly avoided cost values. But where the current CET input structure is built only for energy efficiency, FLEXvalue™ is capable of calculating the value and cost effectiveness of any combination of integrated behind-the-meter resources. Removing this technical barrier is critical to enabling the next generation of more holistic demand flexibility programs.
Recurve has extensively tested FLEXvalue™, comparing the results of hundreds of FLEXvalue™ scans against the current CET. Resulting Total Resource Cost (TRC) and Program Administrator Cost (PAC) values consistently match the CET to within 3% as shown in the figure below, which plots FLEXvalue™ TRC outputs vs the CET. Data points are differentiated by load shape but span a wide variety of climate zones, effective useful lives, net-to-gross values, savings and cost inputs and other important variables of the calculation.
Resulting TRC and PAC values consistently match the CET to within 3%.
See FLEXvalue™ documentation for details
FLEXvalue™ is not intended to just copy the CET.
Instead, FLEXvalue™ provides several important advancements including a simplified input and output structure that also includes emissions impacts, and full transparency with up-to-date and accessible documentation and an open source codebase. Importantly, FLEXvalue™ can compute grid and carbon benefits from measured or custom load shapes, an essential feature for any program seeking to optimize results. FLEXvalue also allows users to modify parameters such as discount rates to readily assess the impact that associated policy changes may have on cost-effectiveness. Finally, FLEXvalue fixes certain known computational anomalies found in the CET.
The FLEXvalue™ package extends beyond the calculation of important numerical values. To help members of the community who rely on these data, Recurve is also releasing a database that contains all of the CPUC GHG and marginal hourly avoided cost data by component for all utility/climate zone combinations. The FLEXvalue™ codebase also includes a package for users to simultaneously generate CET and FLEXvalue™ input files and then automatically parse and compare outputs. In addition, FLEXvalue™ produces a series of graphics that showcase a program’s benefits and provide insights on pathways to optimize.
FLEXValue™ Graphic: Savings and Net Benefit Value Based on CalTRACK Hourly Measurements.
Users also gain access to a clear price signal that all parties can utilize to connect observed program impacts to their grid and carbon value. With more adaptable and open source tooling, the FLEXvalue™ engine solves one of the biggest problems facing demand flexibility in California today. It provides streamlined access and a price signal tied to the current state-approved value stack. Aggregators and implementers can optimize their projects against the long-term recognized value of changes in energy consumption.
The FLEXvalue™ engine democratizes access to key information about the value of projects to the grid, which is especially urgent in the age of NMEC (Normalized Metered Energy Consumption) and third-party pay-for-performance opportunities in California. It opens a new horizon for accountability and alignment for implementers to build the bridge from customer actions to the grid value and be paid for measured performance delivered. Getting credit for real impacts grounded in hourly value streams is critical to effective decarbonization and can help put an end to the upfront handwringing on integrated program design.
When combined with open, meter-based methods and software such as CalTRACK and the OpenEEmeter, the FLEXvalue™ engine enables regulators and utilities to screen projects in advance, track if their programs are actually cost-effective during deployment, and generate the most accurate claim for the resources' actual impact to the grid.
The Value of the Open-Source Governance and Maintenance Model
Benefit-cost analysis (BCA) has been foundational to the demand-side program model in California since its inception. Publicly available tools have been the primary means for conducting cost-effectiveness calculations, but they have been the domain of consultants and regulatory compliance offices and difficult for implementers to use.
California's Public Utilities Commission staff has needed to frequently modify their existing cost-effectiveness tools to keep up with technological advances, new assumptions, or updated policies. Keeping up with these changes has created insurmountable IT contracting hurdles that have translated to real pain and delay for all stakeholders involved – and hobbling staff accountable for regulatory oversight.
Adopting a mutually agreed upon code-base, rather than a specific proprietary or even public software tool, helps remedy these issues. FLEXvalue™ will adopt an open governance model that allows those most familiar with the tool to work together to ensure that the code accurately and transparently reflects current cost-effectiveness policies. This collaborative process can foster a community of knowledgeable experts to contribute bug fixes, make annual updates in a timely manner and reduce the development burden for any individual organization. FLEXvalue™ can be version-controlled for each filing (forecast and reported savings), just as current tools are.
The FLEXvalue™ code is available without restriction on GitHub, and the technical function and documentation are maintained by a technical advisory committee using a charter modeled after the Linux Foundation's open-source projects. An example of this charter structure is available for the OpenEEmeter open source project currently maintained in the Linux Foundation Energy.
Regulators or others with formal authority can also contribute their expertise within the open-source community. The open-source codebase can be cited-by-reference for use in any relevant proceeding. Regulators have full control to review and verify compliance with policy direction and manage vintage control for the use in any of their cost-effectiveness processes. Cost Effectiveness analysis is required in multiple demand side proceedings and the IDER proceeding currently handles the updates for the avoided costs. More information on the current tools and proceeding are on the CPUC website.
We need modern tools built with modern code to modernize the grid — and we need to be working from the same page. When combined with open, meter-based methods and software such as CalTRACK and the OpenEEmeter, the FLEXvalue™ engine enables regulators and utilities to readily screen projects in advance, track if their programs are cost-effective during deployment, generate the most accurate claim for the resources' actual impact to the grid, and optimize going forward.
The FLEXvalue™ design team is also hosting two introductory webinar trainings to give users step by step support in getting the FLEXvalue™ engine up and running. Join us and get the answers to your most urgent FLEXvalue™ questions.
Apr 15, 2021 10:00 AM Pacific Time (US and Canada)
When: Apr 21, 2021 02:30 PM Pacific Time (US and Canada)
FLEXvalue™ gives us the start on demand-side resource valuation. Your contributions can help all of us along.