Distributed energy resources (“DERs”), such as rooftop solar and other technologies like batteries and advanced inverters, can bring enormous benefits to the power grid as a whole. A new white paper, published today by our Grid Engineering team, describes in detail how embracing DERs offers a superior economic alternative to today’s centralized grid design.
For example, we calculate that if California and its utility sector were to fully embrace distributed resources like rooftop solar, the state would see net societal benefits of more than $1.4 billion annually — for solar customers and non-solar customers alike . Those societal benefits include improved flexibility in grid planning and operations, increased affordability and consumer choice, and improved grid reliability and efficiency, not to mention less reliance on fossil fuels.
Over $1.4 billion per year in net societal benefits from DERs
But to realize these benefits, the existing regulatory landscape needs to change. Today, utilities earn money by building their own infrastructure, and then recouping the costs — plus a sizable rate of return — by passing the financial burden onto customers. Perversely, utilities avoid using resources they don’t own, even if those resources (like DERs) would deliver higher benefits at a lower cost to utility ratepayers.
It makes abundant economic sense for utilities to take advantage of DERs’ full capabilities — such as supplying additional power supply at peak times, maintaining the right voltage for power delivered to your home, and extending the life of electric distribution equipment in your neighborhood. But to unlock this potential, regulators need to make sure that utilities have the right incentives and employ rational approaches to grid planning.
Everyone – consumers, regulators, legislators, utilities, DER providers, and industry stakeholders – should value a cleaner, more affordable, safer, and more resilient electric grid. By adjusting our approach to embrace, rather than tolerate DERs, we can achieve those goals to everyone’s benefit. For more details on how to get there, download the white paper: “A Pathway to the Distributed Grid.”