Distributed Energy Resources: The Role of Regional Planning, New Benefit-Cost Methodologies and the Competitive Landscape

Abstract

What does the advent of distributed energy resources (DERs) mean for electricity systems in Ontario and beyond? Our latest report offers a comprehensive analysis of the opportunities and challenges presented by DERs, and analyzes what utilities and regulators should do in response. DERs are smaller-scale electricity-producing and storage resources or controllable loads directly connected to a local distribution system or a host facility within the local distribution system. They can include solar panels, combined heat and power plants, electricity storage, small natural gas-fuelled generators, electric vehicles and controllable loads, such as HVAC systems and electric water heaters. The report analyzes how DERs affect traditional regional planning, the use of net metering in electricity systems, competition within electricity systems, and customer choice. It emphasizes the importance of subjecting DERs to rigorous benefit-cost analysis. And it highlights the financial risks and rewards DERs present to local distribution companies and regulatory factors impacting DER support from them. The report concludes that DERs may offer an opportunity for the renewal and transformation of traditional electricity system, but that care needs to be taken to ensure that their integration is appropriately assessed and evaluated from a system benefit/cost point of view. The most reliable vehicle for achieving this opportunity is a regional planning activity that enables the focused participation of all stakeholders within a transparent valuation