By Carmen Best, Director of Policy & Emerging Markets at Recurve, and Former Head of EM&V for the California Public Utilities Commission
Regulatory oversight is a critical part of how we manage our evolving energy infrastructure and serves a very important role in the implementation of distributed energy resource policies across the country. In many states, performance-based regulations, which require setting metrics and judging outcomes, have made it possible to reimagine regulatory models. However, conducting regulatory oversight on performance-based systems without a replicable, verifiable and open standard of measurement creates a number of challenges.
As someone who managed measurement and verification at the California Public Utilities Commission, I have experienced these challenges of transparency in the regulatory process first hand. It is also why I am excited to now be supporting the development of open source approaches in the market as a way to address many if not all of these challenges.
Successful performance-based regulation, according to the Regulatory Assistance Project, requires clear measurement methods and an approach that monitors outcomes, not just input metrics such as spending on well-intentioned programs. Executing on this best practice can be challenging without the right tools and structures in place. Open source constructs help fill this gap by ensuring that clear and transparent measurement methods and monitoring are used to support regulatory tools like performance-based regulation.
What is Open Source?
Open source software is everywhere. At least 37 percent of web servers run on Linux, and the Android operating system is installed on more than 76 percent of mobile devices globally. Open source approaches have transformed countless sectors, including regulated industries such as finance; in 2018, it revolutionized the telecommunications industry with AT&T, Verizon, China Mobile, DTK, and others embracing open source to modernize legacy technologies. Now open source is coming to the energy sector in a big way. Software solutions continue to play a more prominent role in the energy industry, and understanding what open source is, how it’s being used today in the energy sector, and its full potential in the future, is critical for regulators so that they can most efficiently and effectively implement a wide range of clean energy policies in their states and across regions.
Open source software development is a model that encourages goal-oriented, open collaboration by a loosely coordinated community of peers who work together to create a product or service which they make freely available to anyone to use, inspect, or modify ,along with any source code, blueprints, and documentation.
Open source is not foreign to the energy industry--it’s in everything. In fact, in the 2019 report from Synopsys on Open Source Security and Risk Analysis, 100 percent of audited codebases for Energy & Clean Tech have some open source inside. Among the audited codebases, many contained more open source than proprietary code. Energy & Clean Tech industry, when combined with some other major industries, averaged roughly 64 percent open source. Major software players like Google both generate and use open source software to support interoperability and recognize the value of cooperation to create higher returns for everyone.
Open source software was inspired by the limitations of the proprietary, closed development model. The same type of limitations exists in the energy industry for proprietary models that generate different results for what should be a commonly understood value (such as a unit of energy savings). Reliance on proprietary models places significant administrative burdens on the system by, for example, requiring the development and re-development of measurement protocols that may not change more than the title page and the lead evaluation consulting firm each time. Even more importantly, non-transparent, proprietary systems create costly uncertainties that limit investment and scale.
Open Source Won't Fix Everything--But it's a Critical Step
I experienced many of these limitations while I was at the California Public Utilities Commission (CPUC). In our efforts to implement a transparent system of accounting for energy savings and share results from third-party evaluations of energy efficiency programs, we struggled to create a common understanding of performance. We brought on experts to help develop protocols and methods and introduced multiple levels of peer review. Technical advisors oversaw the work of evaluation experts, who in turn oversaw the work of field technicians. All of it was rolled up into multi-layered evaluations and feedback loops to improve estimation and forecasting.
Accountability for this process was all on the regulator. The utilities and other stakeholders relied on the CPUC to set rules and guidelines and enforce them to keep everyone on the same page. When the Promise of Performance fell short, we had major problems.
Open source approaches alone would not have saved the day, but they would have mitigated many of the core issues around common expectations and access to quantification methods used in judging performance.
Leveraging the Power of Pre-Competitive Collaboration
The energy efficiency evaluation community has a long history of collaboration, primarily through standard protocols and methods but also through documentation and peer review. They generally recognize that when all stakeholders can agree upon methods, communication improves and clarity emerges around what we mean by performance. Many states have models for doing this well, within or alongside their regulatory processes. But as software takes a more prominent role in our industry, to enable grid integration of distributed energy resources, collaboration needs to step beyond a general practice protocol to ensure consistent results.
LF Energy, a new initiative of the Linux Foundation (the undisputed leader in fostering open source collaboration) opens the next level of collaboration for the energy industry by providing a neutral environment in which to build the digital foundations for the energy system of tomorrow. Much like the transformations seen in the telecommunications industry, this energy transition will be based on a distributed computing paradigm requiring standardized communication layers to facilitate faster integration and more rapid scaling of distributed energy resources.
In this collaborative process, every idea and entity is welcome to contribute to building and growing a better product that all can use for free. The Linux Foundation’s model of collaboration has transformed other regulated industries and is poised to do the same for energy.
Distributed energy resources, in particular, cannot afford to leave all options open for calculation approaches. Doing so will continue to be a distraction and cost time and money when we need to focus on scaling investment into these resources to improve resilience and meet carbon reduction goals. Regulators can no longer afford to be the sole line of defense in “reviewing” methods and code to determine whether or not they are creating a reliable result. Instead, regulators should focus on enabling innovation by encouraging industry to develop open standards for core calculations that are available to everyone for inspection.
Over the past few years, I have been supporting the development of the open source CalTRACK methods and OpenEEmeter codebase to standardize meter-based savings calculation for energy efficiency. These projects have recently become part of the LF Energy ecosystem, alongside several other projects that address the open source, information and communication technology (ICT) components of renewable energy, electric vehicle, and grid modernization. Through this community of members and participants, these projects can continue to grow and adapt with a governance structure that rewards the technical contributions of participants, via a “do-ocracy.” Projects will evolve within a ready network of potential users and contributors to help accelerate their adoption.
Finding a Friend in Open Source
Regulators will find a familiar ethos of accountability and public service among the die-hards of the open source community. They can leverage the enthusiasm of this community to bring expertise forward with improved transparency, more democratic access to information, greater consistency in implementing industry norms, and less costly repetition. Open collaboration creates an environment in which:
- All parties have confidence in clear and transparent measurement methods to track outcomes.
- Transaction costs and uncertainties are drastically reduced for all parties.
- Regulators and utilities have equal access to timely results to enable informed decision making and effective oversight.
- Industry prioritizes collaboration on what is really important and competes on services to customers (not the savings calculations) to keep costs low and markets healthy to support procurement models that confidently include demand-side resources.
To take advantage of these and any number of open source projects to come, regulators can take steps to support the principles of transparency and consistency through open source development and pre-competitive collaboration to power the future. They can embrace this new wave of industry collaboration by:
- Requiring open source software as a foundation of transparent market policies and programs.
- Encouraging participation in relevant open source projects and foundations that support the necessary transformation across regulatory boundaries.
- Supporting the use of open source code across jurisdictions through adoption by reference to maximize the value of consistency and comparability to drive scale in the energy industry, and simultaneously maintain transparency for oversight.
Transparency is an essential element of the regulatory environment (especially the performance-based regulatory environment), and open source is a path to implant that core principle across energy markets to create an ecosystem of innovation and collaboration to drive a clean energy economy. I am thrilled to be contributing to this transition. Join me!
Want to find out more about how Open Source code is transforming the regulatory environment for energy efficiency? Contact us.
*CalTRACK specifies a set of empirically tested methods to standardize the way normalized meter-based changes in energy consumption are measured and reported at the meter, but standard methods are not sufficient for reproducibility. Standard methods must be implemented through open source software such as the OpenEEmeter with full details of compliance with the method. The OpenEEmeter is being used to support the procurement of energy efficiency, electrification, and other distributed energy resources. The methods and software are currently being used in California, New York, Massachusetts, and Oregon to run pay-for-performance programs and to monitor the savings impacts of C-PACE projects.