DERs: Déjà vu all over again

Those of you who worked over the last couple decades in wind and then solar integration may find a familiar scene being played out with DER integration today. Compensation for wind and solar was initially based on 20-year projected avoided costs which often ended up being wrong. There were battles over integrating wind and solar into the resource planning process which eventually led to all-source bids. Wind and solar were initially treated as must-take resources; curtailments, primarily for congestion, were manual. Essential reliability services were confusing, with manufacturers sometimes including sophisticated controls (eg voltage regulation) that weren’t used or understood by many transmission operators.

As Yogi Berra once said, “it’s like déjà vu all over again”. Regulators complain that DERs need to be viewed as a potential resource option in the resource planning process and as an alternative to traditional infrastructure investments in the distribution planning process. Utilities complain that net energy metering, which is used to compensate much of the rooftop PV in the US, is a crude method for compensation that does not reflect utility costs because rates don’t align with utility cost structures. Utility-scale PV owners complain that when PV must be curtailed because of oversupply across the system, it is utility-scale PV that is curtailed because distributed PV lack the controls, communication and contracts to be curtailed. System operators complain that with the exception of newer installations in CA and HI, DERs do not tend to provide essential reliability services (eg, voltage and frequency ride-through, voltage regulation).

Similar to how wind and solar have become mainstream in the power sector, DERs are likely to follow a similar path. And similarly, we may want to consider how to treat DERs on a level playing field with other resources in all aspects of generation, transmission and distribution planning. In contrast to wind and solar integration, a level playing field for DERs is likely to be much more difficult because 1) they are able to provide so many different types of services and 2) procurements are only one way to source DERs. A vision for the future with high penetrations of DERs might be:

  • An open marketplace where DERs are treated on a level playing field with centralized resources in the resource planning process
  • Consideration of DERs on a level playing field with traditional infrastructure investments in the transmission but especially the distribution planning processes
  • DERs are treated on a level playing field with other resources when they are compensated for services they provide
  • During operations, DERs are good citizens of the grid and provide essential reliability services when appropriate including ride-through, curtailment, voltage regulation, frequency response. DERs are no longer must-take but rather respond to security-constrained economic dispatch like any other resources

Customer choice, and the falling costs of technologies that enable it, are driving a major paradigm shift to a high DER future in some regions. This paradigm shift will likely require more fundamental change in the industry than even the 100% clean energy goals of many states and utilities.

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