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High electricity rates impede crucial but costly technology investments to manage rising DER levels: utilities

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The clean energy transition makes the question of how distributed energy resources, or DERs, fit in the future energy mix particularly urgent, utilities and DER advocates agree.

The technical potential of DER like rooftop solar, batteries, electric vehicles, and flexible industrial and building loads like smart water heaters and heat pumps could “play a significant role” in a 100% clean energy mix, an August Department of Energy study found.

With adequate “distribution system visibility and control” of DERs, they can “help protect system reliability and resiliency,” agreed Xcel Energy Colorado President Robert Kenney. But “the cost of new technologies to manage those resources threatens rate affordability and slows deployment because regulators and utilities face the responsibility to balance stakeholder concerns,” he added.

Integrating high DER penetrations into power system operations will ultimately require significant investments in technologies like Advanced Distribution Management Systems, or ADMS, and Distributed Energy Resource Management Systems, or DERMS, utility representatives and DER advocates acknowledged. The question is how and when those investments are made.

Transportation and building electrification, constraints on bulk system resource delivery, and consumer demand “require addressing DER growth,” Generac VP, Markets and Programs, Josh Keeling, a former Portland General Electric executive, said. But a staged deployment of technologies to manage them “can reduce their costs and burdens and benefit customers and power systems over the long term,” he said.

A “national initiative” and stakeholder dialogue can build a framework for that staged DER integration to protect affordability and reliability for customers, according to recent papers from a group of DER advocates. But advocates underestimate the urgency of investments in distribution system situational awareness for managing DER and limitations of the nation’s divided regulatory jurisdictions to approve them, utilities said.

A DER framework

A “broadly inclusive” national initiative could engage federal and state regulators, investor-owned, municipal and cooperative utilities, DER advocates, and their national associations, according to January and August 2022 papers from the Energy Systems Integration Group, or ESIG, DER Task Force, a committee of the non-profit organization focused on independent analysis of the power system’s future.

The initiative’s objectives are “a common vocabulary, framework, and vision,” for stakeholders that leads to near-term, “least-regrets strategies” and a “structured dialogue” on longer-term challenges of integrating customer-owned resources into the utility-controlled distribution system, ESIG said.

The proposed work could build on DOE’s 2019 distribution system studies, Federal Energy Regulatory Commission Order 2222 work on integrating DER into wholesale markets, and the NARUC-NASEO task force effort to make DER more useful and safer for distribution system operators, ESIG added.

DER penetrations, regulation, and goals vary by regulatory regimes, localities, and technology types but DER are transforming the meaning of reliability everywhere, ESIG said. A national initiative to safely and cost-effectively integrate DER can recognize jurisdictional autonomy and enable new stakeholder opportunities by identifying commonalities in current “disparate standards, terminology, and approaches,” the group added.

A first track would start with “relatively minor changes” to existing DER integration practices, it said. A second track would be about using current best practices to develop new national standards for integrating DER with “fundamental changes” to federal and state regulation, markets, and system planning, ESIG said.

A long-term third track could lead to new utility regulation and business models, ESIG added. The power sector is “too diverse and complex” for one solution, but a key decision point in each jurisdiction will be whether DER aggregators, load-serving entities or distribution system operators manage and coordinate DER with bulk markets and systems, ESIG said.

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