Distributed Energy Resources

New report outlines advantage of public power utilities in serving DERs

As more people install solar and storage systems in their homes, and even with declining prices in these technologies, staying connected to the electric grid remains a more economical and practical option for customers, according to the Value of the Grid, a report released July 16 by the American Public Power Association.  

In a conference call with reporters to discuss the report, Paul Zummo, director of policy research and analysis at the Association, cautioned that this value does not mean that utilities can continue with business as usual to accommodate these technologies.

“Overall, electric utilities should have a more integral role in managing the grid,” said Zummo. “We’re going to need better communication systems so that distributed resources can work in sync with each other and with existing resources,” he added.

Zummo pointed out how increased electrification of items such as water heaters, cars, and space heating will not only bring increased electric load, but also require utilities to take on a more complex role in balancing the energy use of these items.

“Electrification, along with DERs, are going to bring up operational concerns for utilities,” said Zummo.

Incorporating DERs such as residential solar and storage into the grid will not only help utilities in managing load but is also beneficial to DER owners in that utility experience in monitoring voltage quality and harmonic distortion can extend the useable life and efficiency of the technologies.

“There should not be, and most certainly will not be, one model for the utility of the future,” said Zummo. The report outlines how public power utilities, as local, not-for-profit institutions, have distinct advantages in being able to incorporate DERs into the grid. Public power utilities are well-positioned to adapt based on what their customers want because they have local control and are answerable only to their local communities. Plus, the public power business model is not threatened when customers own DER assets. Rather, utilities should instead be mindful that rate and service offerings reflect and recognize the real economic costs of alternatives.

Although people in most states will see cost parity in terms of energy for distributed generation and electricity from the grid in the next several years, the cost to reproduce the value of the grid is not economically feasible for most people.

Citing the Electric Power Research Institute, the report notes five benefits DER customers derive from the grid: reliability, startup power, voltage quality, efficiency, and energy transaction. The estimated cost to re-create these services, which would be on top of the cost of the DERs, runs anywhere from $165-$430 per month. 

The report talks about a few emerging models and roles for utilities in managing the future grid, such as the concept of the distribution system operator. For example, New York’s Reforming the Energy Vision roadmap defines a key utility role as a “distributed system platform provider,” which coordinates customer activities. The report also gives a few examples of how public power utilities are beginning to adjust to this and other roles to incorporate DERs.

The report was developed as part of the Association’s Public Power Forward strategic initiative. Download the full report here.