Via Smart Grid News, a call for a transparent market that includes end users:
Distributed Energy Resources, or DER, is a trend to watch. DER adoption across the country, and in hot spots like California and the North East in particular, is growing. Declining costs and improved performance for several technologies — solar photovoltaic and energy storage in particular — combined with large technical potential for DER technologies, suggest this trend will continue.
Where will this go? On September 18, the NYISO released a report by global energy advisory firm DNV GL detailing the DER landscape today and the key questions that will dictate its future.
Aligning grid operators and customers
A significant opportunity lies in leveraging DER technologies to support grid needs, in other words, to align the goals of the grid operator and the customer. The challenge boils down to a) how we value benefits and costs brought to the grid by various DER technologies and b) how to best enable the financial transaction of these values.
DER installations, at the local level, serve to meet customer needs such as reliability, sustainability and cost. The economic signals to the customer are many, and vary greatly by location, technology and even time of day. The customer needs to understand how to leverage available incentives and rebates at utility, state and federal level, how the DER technology fits with the customer load profile and tariff, and what other potential revenue streams may be available in the energy market. In addition, various regulations dictate environmental requirements, interconnection procedures and any metering and telemetry requirements. In other words, a lot goes into the balance when a customer installs DER technologies and decides how to operate them.
At the aggregate level on the other hand, DERs combine to affect peak loads, transmission and distribution capacity needs, emissions profiles and power quality. This in turn will affect long-term planning for generation, transmission and distribution investments as well as operation of the grid and energy market.
Industry at a crossroads
The utility industry is at a crossroads. If we start engaging end users as players in the overall energy economy, and create a platform for two-way flow of electrons, dollars and information, we can shape a better energy future.
However, there are several hurdles along the way and we can expect some growing pains. Not all interests can be aligned, for starters, and the pace and direction of this evolution will not be determined by a single player. The success of new policy initiatives, notably the recent NY DPS REV proceeding, will depend on collaboration from industry stakeholders, continued improvement of technologies and costs, and successful rollout of early initiatives to create good momentum. New market participants may have a tricky balancing act developing cutting edge solutions while at the same time being prepared to scale production at the right moment. Established players may face challenges transitioning to new business models or supporting long-term investments in a shifting environment.
The next few years will be indicative of our ability to create a flexible and transparent energy market that will truly leverage the potential of DERs. Successful pilots of innovative solutions will increase confidence and create momentum. If a common framework emerges for how to value the benefits and support the value transactions between end users and grid operators, solutions can be replicated and scaled. And at the end of the day, we can hope to bring these solutions to cities and communities facing challenges such as severe weather events, growing costs or new energy needs.
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