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EE379K/EE394V Smart Grids:

Building A Smart Grid


Architecture – Lecture 1/4
Andres Carvallo, Ross Baldick,
CMG Consulting Department of
Westlake Energy Electrical and
Computer Engineering

Spring 2017
Copyright © 2017 CMG Consulting LLC. All Rights Reserved.
1
US Power Grid

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Lecture 1 Outline
n  1.0 Introduction to Smart Grid Architecture.............13 slides
n  1.1 How Smart Grid Architecture Can Be Used..........2 slides
n  1.2 Why Smart Grid Architecture Should Be Used......4 slides
n  2.0 Selected Architectural Representations
of the Existing Grid ..................................................1 slide
n  2.1 Macro Structure...............................................11 slides
n  2.2 Industry Structures ...........................................6 slides
n  2.2.1 Vertically Integrated Utilities............................2 slides

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1.0 Introduction to Smart Grid Architecture
(1/13)

n  System architecture is a discipline for describing, analyzing, and


communicating structural representations of complex systems. Some
uses of system architecture include:
1.  Managing complexity and risk
2.  Identifying gaps in theory or technology
3.  Communication among stakeholders (internal and external)
4.  Untangling emergent ambiguity in organizational roles and
responsibilities related to new functions
5.  Enabling prediction of system qualities
6.  Reducing or eliminating structural barriers to functionality
and value stream formation (i.e. silo optimized = enterprise
sub-optimized)
7.  Determining convergences, and analyzing changes to
system structure
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1.0 Introduction to Smart Grid Architecture
(2/13)

n  System architectures consist of architectural elements and


system qualities as shown in Figure 1 below.

Figure 1 – Relationship of Architecture to Qualities

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1.0 Introduction to Smart Grid Architecture
(3/13)

n  System architectures consist of descriptions of abstract components, structures, and externally visible
properties of a real or proposed system. These are combined to provide a system with a defined set of
system qualities (aspirational requirements or goals).
n  The relationships among these elements are shown in Figure 2 below.

Figure 2 – Architecture Development Process Inputs and Outputs

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1.0 Introduction to Smart Grid Architecture
(4/13)

n  Grid architecture is the specialization of


system architecture for electric power grids.
1.  Information systems
2.  Industry, regulatory, and market structure
3.  Electric system structure and grid control framework
4.  Communications networks
5.  Data management structure
6.  Customer side elements: buildings, electric vehicles,
merchant distributed energy resources (DER), and
microgrids.

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1.0 Introduction to Smart Grid Architecture
(5/13)

n  System architecture in general and grid architecture


specifically should make use of a set of
architectural principles, or rules, to guide
architecture development and aid in evaluation.

n  Where possible, system architecture also makes use


of rigorous bases for architectural structure, thus
minimizing the “artistic” aspects of the architecture.

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1.0 Introduction to Smart Grid Architecture
(6/13)

n  For grid architecture, following the principles is


crucial, because managing and changing the grid
necessarily cuts across multiple disciplines such as
control engineering, market operations, and industry
structure.
n  Grid architecture starts (as any architecture does)
with the needs of the end users of the grid. These are
shaped by public policy and that combination leads to
a set of desired grid qualities and capabilities.
n  The architecture development process flows from this
point.
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1.0 Introduction to Smart Grid Architecture
(7/13)

n  Basic system architecture is driven by a set of principles that


include (1/2):
1.  A good architecture is one that meets (1) the needs of the stakeholders
(especially the users) to their satisfaction, (2) does not violate
established principles of system architecture, and (3) takes into account
the relevant future proofing by allowing for maintenance, evolution,
further development, embedding, etc. as the customer requires.
2.  Good architectures have (1) conceptual integrity (intellectually clean of
unnecessary complexities or 'exceptions,' similar problems are solved in
similar ways, etc.), can direct a builder to (2) cost-effective structures
that can be completed within a reasonable time frame, conceptually
pleasing to all stakeholders (especially the user), and provide some (3)
special advantage (such as a competitive advantage) or utility service to
the customer.

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1.0 Introduction to Smart Grid Architecture
(8/13)

n  Basic system architecture is driven by a set of principles that


include (2/2):
3. The architect must be cognizant of the global system when optimizing
subsystems.
4. Stakeholders should be involved in the process as much as possible,

giving frequent and honest feedback on all aspects of the system


architecture.
5. Each component should be responsible for only a specific feature or

functionality, or aggregation of cohesive functionality. Therefore,


component responsibilities should not be allowed overlap or conflict due to
structural reasons.
7. The system architect is not a generalist, but rather a specialist in
managing complexity.

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1.0 Introduction to Smart Grid Architecture
(9/13)

n  For a grid architecture, we must add some specifics to the


prior list (1/4):

1.  The grid not just an electric circuit; is a network of


structures, highly coupled and replete with constraints.
Changes to grids must account for impact across the set of
structures, not just in limited siloes.
2.  Grids are not just complex; they must be viewed as Ultra-
Large-Scale Systems with the attendant characteristics and
implications.
3.  Grid architecture in the US is brownfield. Legacy exists and
must be dealt with.
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1.0 Introduction to Smart Grid Architecture
(10/13)

n  For a grid architecture we must add some specifics to the


prior list (2/4):

4. Work Through the Tiers—as a consequence of the brownfield nature of


US grid architecture, given the physical, geographic, and regulatory
structures, scaling issues suggest that hierarchy will continue to play a role.
5. Grid architecture involves a wide range of disciplines needed due to the
variety of structures that are involved, including regulatory rules, electric/
power systems, control systems, communications, sensing and
measurement, computation, data management, and increasingly, non-utility
elements such as buildings, microgrids, transportation, and fuel systems.
6. A primary focus in grid architecture is on control and coordination; this is
partly a result of ultra-large scale complexity issues.

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1.0 Introduction to Smart Grid Architecture
(11/13)

n  For a grid architecture we must add some specifics to the


prior list (3/4):

7. Grid control and coordination are strongly related to industry structure


and to markets where they exist.
8. Coupling through the grid, as well as through other modes, place
significant constraints on feasible functionality. Constraints may be cut,
but this must be planned, not assumed.
9. Bottom-up approaches to changing the grid result in much more
emergent behavior than rigorous systemic approaches; emergent
behavior and its consequences are not desirable in a highly connected
environment that is shared by many users and is dedicated to reliability
and predictable performance. In other words, emergent behavior
shouldn’t.

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1.0 Introduction to Smart Grid Architecture
(12/13)

n  For a grid architecture we must add some specifics to the


prior list (4/4):

10. Local Optimization Inside Global Coordination—grid control make take many
forms, but a means for coordination across system and organizational
boundaries must be provided. Such a means must have the following properties:
a. Control federation—combining and resolving multiple competing and possibly
conflicting objectives
b. Control disaggregation—decomposing broad control commands into forms
suitable for local consumption, taking into account local constraints
c. Boundary deference—explicit recognition of system and organizational
boundaries, with means to accommodate rather than override such boundaries
d. Local selfish optimization—means to enable local optimization goals and
constraints within the global coordination framework

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1.0 Introduction to Smart Grid Architecture
(13/13)

n  Figure 3 illustrates the process. The detailed process involves mechanisms for stakeholder input and
validation along the way not illustrated here.

Figure 3 – Architecture Process Flow

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1.1 How Smart Grid Architecture
Can Be Used (1/2)

n  The fact that grid architecture operates with certain


abstractions does not mean that it is just an
academic exercise.
n  It is in fact a very practical tool for obtaining
insights at the system level across multiple relevant
domains (grid, market, control, industry roles, etc.).
n  The industry has recognized that the complexity of
the power grid has passed the point where intuitive
or siloed approaches to changes are workable.

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1.1 How Smart Grid Architecture
Can Be Used (2/2)

n  Grid architecture provides the disciplines and


methods to view the grid from a system
standpoint, and to share those views with
stakeholders.

n  It organizes information in ways that provide


significant insights not available through other
means.

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1.2 Why Smart Grid Architecture Should
Be Used (1/4)

n  The power of grid architecture is ultimately in its ability to aid in


managing complexity.
n  The dangers of not using grid architecture are:
n  Increasing risk of creating unintended consequences

detrimental to resilient operations, such as those emerging at


the interaction of certain grid functions previously considered
in isolation.
n  Increasing risk of massive stranded investments in

infrastructure.
n  Blockage of energy innovation and resultant value streams

associated with new products and services.


n  The mismatch of policy directives and operational realities

associated with the grid, which have emerged in the context


of certain early market approaches.
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1.2 Why Smart Grid Architecture Should
Be Used (2/4)

n  Conclusion:

Use of grid architecture is the difference between being able


to actively shape the grid of the future based on sound
representation of a multiplicity of structures and the
interactions involved, versus passively allowing the grid to
evolve in an accidental and bottom-up manner and waiting to
see what emerges.

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1.2 Why Smart Grid Architecture Should
Be Used (3/4)

n  Architectural Insight 1

n  Grid architecture provides the discipline to manage the


complexity and the risk associated with changing the
grid in a manner that significantly reduces the likelihood
of unintended consequences.

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1.2 Why Smart Grid Architecture Should
Be Used (4/4)

n  Key Question 1 - Where Does the Discipline of


System Architecture Come From?
n  System architecture has arisen from the development of complex
systems in several fields, and key work on the methods has been
done at institutions such as The Open Group, Zachman, IBM,
Microsoft, Cisco, National Institute of Standards and Technology,
Smart Grid Interoperability Panel, GridWise Alliance Architectural
Council, Industrial Internet Consortium, and Carnegie Mellon
University’s Software Engineering Institute.

n  Grid architecture is a specialization of system architecture that


includes elements from control engineering, communications/
networking, data management, organizational structure, energy/
power markets, customer systems, and utility regulatory structure.

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2.0 Selected Architectural Representations
of the Existing Grid (1/1)

Figure 4 – US Grid Interconnections

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2.1 Macro Structure (1/11)

The US electric power system is widely understood to be complex, but is


rarely represented in its entirety with appropriate regional and industry
segment variations; nor is the control structure of what is commonly
referred to as “the grid” available in a single depiction.

Certain aspects are widely depicted, however, as illustrated in Figure 4 on


the prior slide. The US power grid is divided geographically at many
levels, the top three of which are interconnections, reliability
regions, and balancing authority areas.

Each interconnection is a single synchronous machine, and the three


interconnections in the contiguous states are controlled separately,
although power exchanges between interconnections are provided via
inter-tie stations.

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2.1 Macro Structure (2/11)

Within interconnections, grids are divided into reliability regions, with reliability
coordinators overseeing each.

Reliability coordinators have an event-driven kind of control function, in which


they continuously monitor grid state within their regions, and perform various
operational and contingency analyses, issuing alerts and directives when certain
reliability issues occur or are forecasted to occur.

Within the reliability regions, grids are further broken into Balancing Authority
Areas, each with a Balancing Authority (BA) that performs certain control
functions, including generation dispatch and balance, interchange scheduling with
neighboring balancing authority areas, and load frequency control. Various
changes to BA structure have been investigated.

Note: There is also a smaller interconnection in Alaska, and a major Canadian


interconnection in the northeastern part of North America.

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2.1 Macro Structure (3/11)

Figure 5 – Reliability Regions and Balancing Authorities


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2.1 Macro Structure (4/11)

Figure 6 – US Grid Demand By Region


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2.1 Macro Structure (5/11)

n  A wide variety of entities designated as electric utilities operate


within this geographic structure, and many non-regulated entities
operate in connection with the electric utilities.
n  There are 3,200 power distribution utilities in the US. They are
segmented in three groups: IOUs (about 400), MOUs (about
2,000), and Co-Ops (about 800). IOUs are Investor Owed Utilities
(privately held like Energy Future Holdings or publicly held like
Exelon and NRG). MOUs are Municipality Owned Utilities (a.k.a.
Owned by cities - like Austin Energy owned by the City of Austin).
Co-Ops are rural utilities owned by its members, which were
created to electrify the entire country. There are only thirteen (14)
competitive states plus Washington, DC with retail energy
providers (REPs) – CT, DC, DE, IL, ME, MD, MA, NH, NJ, NY,
OH, PA, RI, TX.

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2.1 Macro Structure (6/11)

n  Because the upper tier structure is geographic in basis, the


entire power grid has a rough geographic encapsulation
structure (rough because there are specific situations when
the geographic boundaries are crossed by certain utility
assets or entities

n  For example, some amount of overlap exists in certain reliability


regions due to the fact that distribution companies and their service
areas may reside in one reliability region while the transmission
companies and some of their assets may reside in a neighboring
reliability region)

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2.1 Macro Structure (7/11)

n  Architectural Insight 2

n  The number of Balancing Authority Areas in the US has dropped from


well over 100 to about 75 presently, more than 30 of which are in
the Western Interconnection.
n  Improved coordination, realignment and possible consolidation of
Balancing Authority Areas would contribute to better integration of
bulk wind and solar energy with Distributed Energy Resources by
improving fast coordination of more widely aggregated assets.
n  Further consolidation of Balancing Authorities would help with
Renewable and DER resources.

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2.1 Macro Structure (8/11)

In addition, electric
utilities may have
geographically inter-
penetrated services
areas where
significant
disaggregation has
been pursued,
particularly in
restructured markets
such as Texas (see
Figure 7).

Figure 7 – Texas Distribution Utilities Service Areas

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2.1 Macro Structure (9/11)

Nevertheless, the
geographic
encapsulation view
is useful as a
starting point.
Figure 8 shows an
approximate model
for this
encapsulation.

It is a rough model
because there are
some exceptions
where boundaries
are crossed by
infrastructure, by
business entities,
and regulators.

Figure 8 –
Geographic
Encapsulation

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2.1 Macro Structure (10/11)

n  Architectural Insight 3

n  The geographic-based structures shown above are


artifacts of the evolution of the electric power industry
over the past century. Customers and their assets do not
have to follow any such geographic encapsulation, even
for distribution. This can become important as more non-
utility assets interact with the grid, raising questions
about both reliability coordination and grid control in a
merchant DER and prosumer environment.

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2.1 Macro Structure (11/11)

n  Policy Implication 1

n  If customers and the assets they control reside in distinct physical


parts of a single region or within distinct geographic encapsulations,
and there are physical exchanges (or coordination in the production
and consumption) of electricity among them, or with other parties,
regulatory issues must be addressed governing aspects of the
scheduling and control of the physical exchanges/coordinated
actions.
n  An improved approach may include managing assets across
jurisdictional lines and include consumers. This will require new
regulatory approaches, changes in state and local laws and agreed
protocols for communication and interoperability.

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2.2 Industry Structures (1/6)

n  The utility industry of today has a structure that is closely related to an


electric system structure, a control framework structure, and a
regulatory structure.

n  For architectural purposes, an industry structure is represented in Entity-


Relationship (ER) diagrams. In such diagrams, each box represents a
class of entities and each line represents a relationship between classes
of entities.

n  Position of an entity box on the chart has no particular significance; it is


the interconnection of entities via relationships that matters here. Note
that these are not controls diagrams although some relationships are
about various kinds of grid management.

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35
2.2 Industry Structures (2/6)

n  Generally speaking, the models are similar in that they


contain the same basic sets of functions: generation,
transmission, distribution, retail, etc.

n  They are subject to many of the same emerging trends and


issues, although there are certainly regional differences that
emphasize the trends differently.

n  Overall, the models are more alike than different but there
are important differences, too.

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36
2.2 Industry Structures (3/6)

n  The models differ in terms of whether functions are divided by simple


internal organizational boundaries or are split out into separate business
entities. In some ways this difference is quite significant, but for
operational purposes, especially related to coordination and control, the
difference is small: once an organizational barrier is established, it may
have to be respected by the control systems whether it is internal or
external.
n  It is preferable and often possible to alter organizational boundaries, but
for those cases where it is not, the control and coordination framework
must be capable of accommodating those boundaries while meeting its
primary goals of reliability and safety.
n  The larger issue is how coordination occurs - in the following
organizational diagrams the red lines follow the principle lines of
coordination and are one of the areas where 20th Century approaches
are becoming inadequate for the 21st Century grid.
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37
2.2 Industry Structures (4/6)

n  A second difference is in how utilities are regulated. Regulatory structure


for utilities is complex, and some challenges tend to be jurisdictional and
hence structural as opposed to rule-based.
n  As pointed out in the previous section, many aspects of grid structure
derive from geographic considerations. These structures may merit
reconsideration given the emerging changes in generation mix, and the
rise of responsive/interactive loads that have differing geospatial
characteristics.
n  Due to the relationships between regulatory structure and emerging
needs for new types of coordination, the nature of the interplay between
regulatory structure and reliability responsibility and management are
coming under scrutiny in the industry. As such, clear models for these
relationships are needed.
n  The following sections detail models of utilities in various regulatory
settings.
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38
2.2 Industry Structures (5/6)

n  The Public Utility Holding Company Act of 1935 (PUHCA), also


known as the Wheeler-Rayburn Act, was a law that was passed by
the US Congress to facilitate regulation of electric utilities, by either
limiting their operations to a single state, and thus subjecting them to
effective state regulation, or forcing divestitures so that each became a
single integrated system serving a limited geographic area.
n  Another purpose of PUHCA was to keep utility holding companies that
were engaged in regulated business from engaging in unregulated
businesses.
n  As a result, when a state utility commission regulated a utility in a
particular state, the rate payers of that state would pay only the share of
any common service company expenses associated with that state's
electric company allocated to it under SEC-approved formulas to prevent
a holding company from double recovery of its expenses when it
operates in more than one state.
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39
2.2 Industry Structures (6/6)

n  However, on August 8, 2005, the Energy Policy Act of 2005 passed both
houses of Congress and was signed into law, repealing PUHCA.
n  The repeal became effective on February 8, 2006. It was replaced by a set
of laws called the "Public Utility Holding Company Act of 2005", which gave
the FERC a limited role in allocating the costs of multi-state electric utility
holding companies to individual operating subsidiaries.[6] There were
consumer, environmental, union and credit rating agency objections to the
new law.
n  The 2005 Act had many provisions that applied to just electric subsidiary to
the exclusion of natural gas subsidiaries of holding companies.
n  On December 8, 2005, FERC recommended that Congress amend the 2005
Act to give FERC cost allocation authority over gas subsidiaries, and greater
enforcement authority over gas subsidiaries, but Congress has not acted on
FERC's request.
n  2010’s FERC Order #1000 is a Final Rule that reforms the Commission’s
electric transmission planning and cost allocation requirements for public
utility transmission providers.
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40
2.2.1 Vertically Integrated Utilities (1/2)

n  Vertically integrated utilities (IOUs and MOUs) are found in most regions
of the country, notably in California, Northwest, Southeast, Texas, and
Midwest. In such utilities, primary functions are carried out by
departments, and various functional system boundaries will be found
within the individual utility.

n  Areas dominated by vertically integrated utilities may or may not have


wholesale energy or power markets; however, the utility generally will
engage in energy transactions with various merchant power producers,
markets, and other utilities.

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2.2.1 Vertically Integrated Utilities (2/2)

In Figure 9, the shaded area


represents the vertical utility:
generation, transmission,
distribution, retail, and balancing.

The utility may interact with


wholesale markets and various
merchant providers.

While the utility has many sub-


organizations, it has the ability to
coordinate across and even
modify internal boundaries
somewhat more easily than can
happen in a disaggregated
industry structure.

Figure 9 – Vertically Integrated Structure Model

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Lecture 1 Summary

n  1.0 Introduction to Smart Grid Architecture


n  1.1 How Smart Grid Architecture Can Be Used
n  1.2 Why Smart Grid Architecture Should Be Used
n  2.0 Selected Architectural Representations of the
Existing Grid
n  2.1 Macro Structure
n  2.2 Industry Structures
n  2.2.1 Vertically Integrated Utilities

Copyright © 2017 CMG Consulting LLC. All Rights Reserved. 43


Homework exercises:
Due Thursday Jan 26
2
A.  How many generating units are in ERCOT?
B.  Suppose that an individual dispatch (that is, target generation
level) instruction consisting of a 1kbyte package was sent to each
generator every 4 seconds. What would be the bandwidth needed at ERCOT
to send this information?
C.  How many consumers are there in the ERCOT service territory?
D.  Suppose that 1% of those consumers had solar panels. Suppose that an
individual dispatch instruction consisting of a 1kbyte package was sent to each
inverter every 4 seconds. What would be the bandwidth needed at ERCOT?
E.  What if 30% of consumers had solar panels?
F.  Can you suggest an alternative to avoid directly controlling each inverter
individually? (Hint: how might local optimization as discussed on slide 15
be coordinated to reduce the needed bandwidth at ERCOT?)

Read here for some answers


http://www.ercot.com/content/wcm/lists/114739/ERCOT_Quick_Facts_11117.pdf
Copyright © 2017 CMG Consulting LLC. All Rights Reserved. 44
Suggested Reading

1.  Is Your Solar Inverter Smart Enough For California’s Grid?


http://solarindustrymag.com/is-your-solar-inverter-smart-
enough-for-californias-grid
2.  Analysis Methodology for Balancing Authority Cooperation
in High Penetration of Variable Generation
http://www.pnl.gov/main/publications/external/
technical_reports/PNNL-19229.pdf
3.  FERC Order 1000 -
https://www.ferc.gov/industries/electric/indus-act/trans-
plan.asp

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