According to the United States Environmental Protection Agency (EPA), there are well over 12 million distributed energy resources (DER) connected to the grid right now with plans to keep adding more. Utilities are developing a clearer direction of how to plan for future DER growth and take advantage of present day opportunities. When we look at these changes in connection with the recent FERC ruling (Order No. 2222) paving the way for DER to more easily enter the wholesale market, these resources can provide benefits and opportunities to the power grid, environment, and traditional utility companies.
Distributed energy resources offer several benefits to the electric grid as a whole. On the most basic level, every DER connection makes the grid itself more valuable. For every added connection and customer, the grid becomes greater than the sum of its parts. But more than inherent grid value, DER also increases the grid’s reliability by bringing power generation sources closer to the load they are serving, while allowing customers to access more power when they need it most. With the right DER management, these energy resources can supply power generation during situational outages or help manage times of high demand. In addition to generation, DER offers the grid the value of energy storage, mitigating load and managing dynamic rates. Let’s not forget that many DER add value to the grid by eliminating “line loss” on transmission and distribution lines, which benefits our environment as well.
Based on the Wood Mackenzie report, solar power made up 37% of all new generating projects in the first half of 2020 and new solar power purchase agreements grew as well. Solar power is predicted to continue to outpace traditional fossil-fuel generation and claim two thirds of the U.S. DER market by 2025. The wind industry also reported strong numbers during the same time frame. Utilizing solar and wind, whether as DER or centralized generation, allows utilities to deliver clean and reliable power, reaching more customers as we move to cleaner renewable primary sources for electricity. All combined, these measures benefit our environment at a time when discussions of climate change are front and center.
With FERC Order No. 2222, RTO (regional transmission organizations) and ISO (independent systems operators) can now open their markets to DER, allowing them to compete in the wholesale market. While the full effects of Order No. 2222 are not yet known, the rule embraces the continuing trend of distributed energy resources while seeking to lower consumer costs and increase electric reliability. This provides utilities with new opportunities to engage in not only innovation but also new partnerships. Many utilities are developing and utilizing assessment methods for DER looking at the cost and benefits of different locations and providers while planning for forecasted load growth and economic feasibility. As avenues for new associations and modernization continue to develop, look for power utilities to explore these favorable circumstances providing more efficient and reliable electricity to their customers.