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Distributed Energy Resources

Lee Hall

Published 2023 in Green Energy and Technology

ABSTRACT

In a shift from the traditional electric power paradigm, utilities and utility customers are installing distributed energy resources (DERs), including distributed generation (DG) facilities that employ small-scale technologies to produce or dispatch electricity closer to the end use of power. Driving this exponential growth is the dramatic decrease in the price of DER technology, as well as state, federal, and utility incentives for DER installations and state renewable portfolio standards/clean energy standards. Use of DERs may offer numerous benefits, including avoided generation capacity costs (e.g., less need to build new generation), avoided transmission costs, less need for backup power, and reduced air emissions, but it may also pose operational and economic challenges to electric utilities and their customers. The American Public Power Association (APPA) believes that DERs can play an important role in helping meet energy needs and achieving environmental goals so long as customers pay their fair share of the costs of keeping the grid operating safely and reliably. However, rate design and regulatory requirements for DERs must take into account a utility’s technical limitations and geographic considerations. APPA also believes that DER implementation policy and rate design are matters of state and local retail regulation and therefore Congress and federal agencies should refrain from imposing federal standards, such as mandating that DERs be allowed to participate directly in wholesale electric markets without the consent of state and local regulators.

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