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Opportunities and Challenges for Distributed Energy Resources

For over a decade, consumers have had the ability to bypass utilities and generate their own power through rooftop solar and other distributed energy resources (DERs). So it’s not a surprise that utilities see the integration of DERs as both a challenge and an opportunity.

For instance, customer-centric DERs can cost utilities significant revenues. They also create problems with the grid.

“Distributed generation feeds power back into the utility system, meaning utilities must adapt the grid to handle two-way power flows. Distribution circuits designed for one-way flows can get overloaded by solar systems, threatening reliability when they feed back into the grid,” explains Utility Dive’s 2017 State of the Industry Survey.

However, the more than 600 utility executives throughout the U.S. and Canada who responded to Utility Dive’s survey said they’re now seeing opportunities, along with the challenges. Not only are they confident that DER initiatives will create more revenue for their utilities, but they also overwhelmingly want their utilities to invest in DERs.

“But just as in years past, utility executives revealed little consensus when considering the business model changes needed to take advantage of the growth of DERs,” the survey noted. “While a majority indicated their utilities have some level of investment in distributed resources, respondents showed interest in a variety of ownership models for DER deployment.”

Top DER growth opportunities

radio-tower75Survey respondents were most bullish on grid communication technologies like smart inverters. More than 80 percent expected at least moderate growth in this category, and 32 percent thought growth would be significant. Leading the way were West Coast and New England utilities, likely because states in these regions are implementing grid modernization initiatives for utilities.

sun75Rooftop solar came in second, with 78 percent of respondents predicting moderate growth and 27 percent expecting significant growth. New England respondents were the most confident in this growth, and South and Southwest respondents were the least confident.

growth75Three quarters of respondents, led by the West Coast, Great Plains & Rockies and New England regions, forecasted moderate to significant growth in demand-side management.

meter75Behind-the-meter storage finished in fourth place, with 70 percent growth predictions. New England and the West Coast, which both have high retail electric prices, were the most bullish. Lower-priced regions like the Midwest and South & Southeast had lower expectations.

community75Two thirds of respondents predicted moderate to significant growth in community-shared renewables. “Respondents from New England, the Great Plains & Rockies and the West Coast were most confident, reflecting strong policymaker support for shared renewables in states like Massachusetts, Colorado and California,” the survey stated.

wind75Consumer demand for distributed wind, distributed geothermal resources and combined heat and power was expected to stay constant in the future, making these categories poor investment opportunities at the present time.

Overall, 60 percent of utilities said they have incorporated demand response and demand-side management into their core operations or pilot programs. Another 43 percent have already invested in smart inverters and other grid communications technology, and 34 percent said they’re planning to invest. And 46 percent have rooftop solar operations, while 17 percent expect to invest in these initiatives.

“For most DERs (excluding distributed wind and CHP), respondents were more likely to indicate an expectation of future investment or a move into DER pilot projects than to indicate the technology has already been deployed in core utility operations,” the survey noted. “This suggests that most utilities are still learning how to integrate these emerging resources into the grid and build sustainable business models around their growth.” To learn how Franklin Energy is integrating DERs with demand response and more, download our Integrated Demand Side Management ebook.


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Greg Wassel
Written by Greg Wassel

Greg Wassel understands that grid optimization is key to our industry’s future. He is responsible for identifying new and innovative approaches to integrated demand side management programs, forging partnerships with industry-leading companies to enhance operations and developing new products and services for clients. Greg also leads our grid optimization product line and monitors demand response and other distributed resources program performance, ensuring quality every time. Greg supports our existing clients and business development teams by conducting regular best practice and innovation meetings to ensure that each client is kept up to date regarding the rapidly changing demand side management industry. He has a master’s degree in geography from the University of Georgia and is a certified energy manager (CEM).


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