Streamlined pilot projects overcome developmental barriers AND regulatory gaps that impede smooth rollout of emerging technologies.

Collaborative “generic” non-rate case dockets that focus on broad topics and bring stakeholders together for non-litigated consideration of potential reforms have begun to include work on pilots.

Utilities and other frequent docket participants like consumer advocates are prepared for litigated proceedings, but “technology providers may come with data and not understand why it is questioned,” the Regulatory Assistance Project’s Sedano said. In generic dockets, like New York’s years-long Reforming the Energy Vision, or REV, regulators have helped participants “find shared interests” and “changed the way utilities work with stakeholders,” he recalled.

Generic dockets can establish “foundational policies with guardrails” for proposals like pilot projects “that allow implementation in each utility’s unique way,” Sedano added.

Collaboration with other stakeholders is “the right thing” for electric utilities, the IEI authors wrote. It allows regulators to structure pilots and programs that are “win-win-win” for technology providers, customers and utilities, IEI’s Cooper added.

Traditional regulatory processes like rate cases were not meant to be “innovation labs,” Michigan Commissioner Phillips said. “They regulate utilities’ use of ratepayer funds.”

Michigan Gov. Gretchen Whitmer’s, D, generic 2019 MI Power Grid initiative was a “proactive response to the demands climate change and decarbonization are imposing,” he said. It included extensive work on energy programs and technology pilots, he added.

The overall initiative was “to facilitate the energy transition instead of waiting to address it in rate cases and rulemakings” and “missing the opportunity to see it more holistically,” Phillips added. Stakeholders identified important areas the commission and utilities had not considered, including Michigan automakers’ call for transportation electrification pilots, he said.

Hundreds of pilots have been proposed in multiple Michigan proceedings, but the generic docket gave the commission a “more effective, efficient, and timely” approach to them, he said.

For pilot proposals requesting funding through rate recovery, there should be a “streamlined pilot review process” that evaluates pilots with “objective criteria,” according to the September 2020 Michigan Public Service Commission Staff’s Utility Pilot Best Practices and Future Pilot areas report resulting from the initiative.

Pilot proposals should detail the need, design, evaluation metrics, goals, costs, timeline and stakeholder engagement plan, the report said. And its recommended Michigan Pilot Directory database to catalog all proposals and their outcomes, now in development, “may be the first in the nation,” Commissioner Phillips said.

Commission-required pilot criteria can be easily uploaded to the database, allowing regulators, utilities and the public “to determine if a pilot proposal will add new information or is ready to be scaled,” he added.

“Both MI Power Grid and the NY REV showed the value of generic processes in driving change,” Sedano said. “The problem with pilots is that people are fed up with dead-end pilots that don’t have scaling plans built into them, but we shouldn’t be fed up with pilots, we should get better at designing them,” he said.

A lot of power system stakeholders are thinking about better pilot designs.

The priority of a utility pilot design is typically to obtain approval and cost recovery through rates, Sunrun’s Hoskins said. But regulators can also support pilot designs that plan for scaling new technologies or new rate structures that reduce customer costs, she said.

Traditional regulation requires investments to prudently balance the needs of utility shareholders and customers, but it is not keeping the power system reliable and affordable, agreed Build Edison’s Barbato. “Regulators need to recognize that early-stage pilots can scale more effectively in steps, with lessons learned from real-world challenges as each step’s core benefit.”

If new pilot designs include “a specific initial strategy, evaluation metrics, and cost recovery mechanisms for each step, failing early could be compensated and lead to failing smaller,” Barbato said. That would mean “faster learning and faster scaling,” she added.

Early small-scale energy storage projects in California showed that resilience, though difficult to quantify, “can change overall system risk in a tangible economic way,” she said. “Now utilities and their regulators are deploying energy storage at scale for that resilience value.”

Collaborative workshops in Oregon’s planning process led to the 2019 Portland General Electric multi-pilot Smart Grid Test Bed to test distributed resources for reliability, Commissioner Mark Thompson of the Oregon Public Utility Commission told Utility Dive. Requirements for the pilots’ designs incorporated best practices developed by LBNL that recognized “failures can allow quick learning and contain costs,” he said.

Oregon’s Smart Grid Test Bed is “a success story for regulators supporting innovation,” agreed PGE Senior Director of Resource and Regulatory Strategy and External Engagement Nidhi Thakar, a former DOE and California Public Utilities Commission staffer. It shows “the important role regulators play.”

But even the best-designed pilots must be proven before being scaled and too many await that next step, the DOE paper’s authors said.