Electricity-grid vulnerabilities were deeply exposed in the wake of Superstorm Sandy and its associated storm surge, as a single outage at a substation caused a sweeping black-out across downtown Manhattan, New York. Making matters worse, climate change science anticipates that future storms will be both stronger and more frequent. To facilitate and improve the security, resiliency, and reliability of the macrogrid system, the U.S. Green Building Council (USGBC) has developed PEER, Performance Excellence in Electricity Renewal, the nation’s first comprehensive, consumer-centric, data-driven tool for evaluating power system performance.

Modeled after the Leadership in Energy and Environmental Design (LEED) certification program, PEER seeks to incentivize the development of smarter buildings and communities by adopting a rating system that addresses power quality and supply availability, ability to manage interruptions and mitigate risk, and increase restoration, redundancy, and microgrid capabilities.

The expectation is that as a critical mass of buildings and developments achieve PEER certification, the electricity-grid system will become stronger and more resilient, thus preventing disasters caused by extreme-weather events.

PEER Will Help Create a Market to Capture the Benefits of Smart Grid Capabilities

Today, there are no adequate markets and metrics to capture the benefits that smart grid capabilities and smarter buildings provide to the larger electrical system, although proceedings like Reforming the Energy Vision (REV) in New York are attempting to tackle this challenge. PEER helps fill this major market gap by providing an opportunity for power technologies, systems, and other innovations to gain competitive advantage.

The PEER program also may serve to assist in the creation of monetization pathways for service providers seeking to enable grid secure benefits. For example, once the PEER rating system is used more broadly, commercial tenants and buyers may demand resiliency benefits for which they may be willing to pay a premium to reduce exposure to power-outages, business interruptions, and other grid losses. For instance, a Whole Foods may be willing to pay an energy premium for the security that its refrigerators and air-conditioning will not lose power in a storm event, hedging the risk of spoiled stock. Similarly, an investment bank with on-site servers may also be willing to pay the premium for the security that their servers will not stop trading—preventing potential losses from reconciliation events. Thus, PEER may bring new participants into the energy mix such as main street corporates and traditional real estate firms as they learn about the benefits of and opportunities provided by expanded demand response capabilities, distributed renewable generation, and smart grid readiness.

Projects eligible for PEER certification may involve everything from retrofits to existing buildings and infrastructure, to a newly developed business campus. Projects first must be registered with the Green Business Certification Inc. (GBCI), which administers the LEED certification program, as well as several other performance standards rating certifications. GBCI provides a toolkit for developers to self-screen projects and prepare their application for certification. To achieve certification, projects are considered against four metrics: (1) reliability and resiliency; (2) energy efficiency and environment; (3) operational effectiveness; and (4) customer contribution. The PEER process is relatively new, with only a few projects working their way through the new program, but once the new standard catches on certifications are expected to increase.

Microgrids, the Nation’s Capital, and PEER

A particular concern for national security is the susceptibility of the District of Columbia to flooding and black-outs due to its close proximity to several rivers. This concern has prompted the White House to announce significant targets for federal buildings to combat grid vulnerabilities and the D.C. Public Service Commission to further examine grid modernization through an open case, Formal Case 1130.

Earlier this month, USGBC and GBCI, in partnership with Urban Ingenuity, sponsored a meeting to support the District of Columbia’s efforts to encourage the development of microgrids, generally a localized, self-contained, contiguous power generation system within close proximity to demand. Microgrids provide grid efficiencies and resilience because they can “island” themselves off from larger macrogrid disturbances. Thus, during a stress event on the macrogrid, microgrids can help service the larger system, isolate the event and prevent it from causing sweeping outages, and serve as a “power oasis” to the affected public.

The development of microgrids are the kind of project that will be supported by a PEER evaluation and certification. The availability and widespread acceptance of PEER’s metrics will serve as a tool to incentivize the development of microgrids and other types of energy innovations that help facilitate movement of the electrical system towards a smarter-grid marketplace.

The Energy Finance Report will continue to monitor PEER as the program matures.