Increased Distributed Energy Resources Will Challenge Utilities
There is a major push from a variety of sources for wider adoption of distributed energy resources (DER), and electric utilities will need to figure out how to manage this transition. Improvements in DER technologies, growing consumer adoption, and pressure from regulators are just a few of the forces that will inevitably drive change in this area.
Why Utilities Need to Embrace Distributed Energy Resources
The harsh reality is that, when it comes to distributed energy resources, the train has already left the station. The combination of declining costs and improved technology around things like solar power and energy storage means that increasing consumer adoption is inevitable. Efforts to fight this trend will be futile. Really, the only choice we have is to get on board.
For example, solar installations have increased by ten-fold in the past decade, and growth in solar will certainly continue for the foreseeable future thanks to drivers like the regulations in California that require new homes to be equipped with rooftop solar.
And due to a decline in net metering, solar consumers will have a greater incentive to use their generated solar power for their own benefit, which will spur increased demand for battery storage. In fact, according to the U.S. Energy Storage Monitor, there were more residential storage deployments in the 3Q2019 than the entire second half of 2018.
The challenge for utilities is going to be figuring out the most efficient and effective way to manage this transition. And this is a 2-part challenge.
One the one hand, utilities need to facilitate the transition in a way that minimizes their financial hit – demand will certainly decrease going forward as more and more DERs are installed, and this revenue loss will need to be offset by something. One the other hand, there is an opportunity for these technologies to be utilized by utilities in ways that can add tremendous value to the grid.
The degree to which utilities can adopt matters greatly from an emergency planning perspective. If utilities fumble during the transition, it’s likely that reliability will take a hit, increasing outages.
There’s no doubt, distributed energy resources are the wave of the future, and it will definitely be interesting to see how this plays out for utility companies in the coming years.
