- Executive Summary
- Why Value of DER Matters, Today and in the Future
- How Utilities and Customers Can Benefit from Accurate Value of DER Analysis Today
- Valuing DER Up to Now
- Valuing DER Today—Best Practices
- Case Study: Pioneering New Methods for a California Utility
- Benefits and Next Steps for DER Portfolio Development
- Conclusion and Key Lessons
How Utilities and Customers Can Benefit from Accurate Value of DER Analysis Today
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Conclusion and Key Lessons
Our experience with DER benefit/cost analysis and with clients like our partners in the case study discussed above suggests several takeaways for utilities, regulators, and other stakeholders engaging in the question of determining the “true” value of DER.
- Locational net value is key. Getting the net value of DER right opens up opportunities for delivering greater value, lowering cost, ensuring reliability, and investing wisely. This is important for customers and utilities, and will be increasingly critical in a high DER-adoption future.
- Structured DER adoption is essential. Aligning DER rate designs for Net Energy Metering (NEM) and others as proposed in CA) and incentive mechanisms to hosting capacity and locational value analysis is essential to scale customer adoption of DER. Failure to account for locational value will likely lead to unnecessary capital expenditures to address unstructured (ad hoc) adoption and very challenging operating conditions.
- Analysis needs to improve. Our evaluation of locational value demonstrates that DER value within a system is variable, that methodologies applied until recently and mostly to value of solar are inadequate, and that inaccurate and inconsistent approaches have real consequences.
- This is hard, but achievable. Determining a value of DER—on a locational basis factoring in hosting capacity, scenario-based planning, and probabilistic methods—is hard. However, our experience shows that better approaches are rapidly being developed and can yield smarter results to inform utilities’ investments and demand-side resource programs.
- Scalable. The results of our case study, for example, using a consistent and rational true value of DER framework, can be applied across an entire distribution system. Over time, the aggregation of locational value can improve system-wide planning and provide the basis for new market mechanisms and utility business models. We will examine these themes in future papers.