The POWER Interview: Driving the Development of Distributed Generation

The use of distributed energy resources (DERs), which can include solar panels, wind turbines, batteries, fuel cells, and more, is increasing as the power generation sector becomes more decentralized. The future of the distributed energy generation market is promising, as more commercial and industrial customers, along with residential electricity users, look for cleaner sources of energy. Order 2222, issued by the Federal Energy Regulatory Commission in 2020, also supports DERs after opening U.S. wholesale energy markets to these technologies. Alan Robertson, head of development at Sunrock Distributed Generation, a developer, owner and operator of commercial solar and storage projects, recently provided POWER with his insight about distributed power generation and the future of distributed energy resources. POWER: What government (local, state, federal) policies will support future growth in DERs?Robertson: The key to creating a successful runway for any DER program is predictability, as this builds developer confidence in long-term projects. As long as developers can foresee a clear, multi-year roadmap, they can commit to substantial, long-lead-time projects. This is especially important since many large DER projects, regardless of technology, take several years to build. Federal and state policies primarily drive this predictability, as any meaningful developer of DERs is not just focused on one town, but rather, at the very bare minimum, one whole state, and usually, an entire region. Federal-level policies that we’ve had to support DERs mainly revolve around tax benefits—for example, the ITC (investment tax credit). Future policies should focus on ensuring that we do not lose the 10-year roadmap that was implemented in the IRA (Inflation Reduction Act). It is the reason the industry attracted so much investment,  because for the first time in a long time we had a 10-year federal roadmap. [caption id="attachment_227232" align="alignnone" width="229"]

Alan Robertson[/caption] At the state level there are policies such as net metering that can be helpful to support DER deployment. However, while the way in which different states implement credit systems for energy sent back to the grid varies, the key factor, much like at the federal level, is to provide a long enough runway for stakeholders to invest significant dollars. I’ll point to two different programs. The state of Massachusetts had a Solar Renewable Energy Credit (SREC) incentive, which led to a significant increase in deployed assets. They also had a strong net metering policy at the time. Eventually, they switched to a declining block program, which I’m not particularly fond of, but it still provided a runway that gave investors confidence to continue to commit their dollars. Maine had a program that was probably too good. They went from next to no DERs to practically 60% market penetration within a few years. They expanded a net energy billing program to accommodate larger projects that had limited guardrails upon its enactment. As a result, a lot of people flooded a lot of money into submitting projects for interconnection, only for the legislation to repeatedly amend the program. So, there was a roadmap but due to several amendments the program has slowed to just short of a stop. However, they went from basically no market penetration to 60% in a few years, which is well on the way to meeting the state’s renewable portfolio standard goals. It takes some states a decade or more to get to that point. POWER: What DERs hold the most promise for helping meet commercial/industrial and residential power demand?Robertson: New DER technologies can be challenging to deploy initially, but the ones that are most likely to succeed in the future are those that have already gained traction over the past 10 to 20 years. These include solar energy, and for larger-scale DERs, both offshore and onshore wind energy. Solar will remain a vital part of the DER landscape over the next 10 years, just as it has been over the past decade. Lawmakers, regulators, local building departments and developers have a solid understanding of the technology and its deployment, so they know exactly what they are getting into. Furthermore, significant investments in manufacturing, supply chains, and infrastructure over the last decade have made it easier to integrate solar panels within the existing built environment. Solar is customizable and effectively the same technology for both residential and commercial applications, which further simplifies its deployment. Another DER that has been somewhat quiet in the conversation but will become a louder voice as we move forward is battery storage. As battery technology becomes more deployable and easily integrated with solar energy systems, it holds significant promise. Investments at the state and local level, along with a growing understanding among lawmakers of how to regulate this technology, have increased its viability. For demand response, where predictable and easy-to-deploy solutions are necessary, solar alone isn't sufficient. Pairing solar with battery storage enables a more reliable, flexible solution to meet power demands. POWER: Could you supply an example of a successful deployment of DERs?Robertson: Green Mountain Power in the state of Vermont is a good example of a utility that has created a storage program—probably one of the most progressive in the U.S. They realized that distributed batteries were a meaningful solution for them and incentivized ratepayers in the state to have batteries that could then be deployed as required for demand response and other ancillary services. Another example is California. While the state's NEM 3.0 net metering policy may not be an exemplary model for others to follow, California does offer different approaches that other states have yet to explore. Typically, incentivizing DERs is associated with financial incentives. However, California has taken a different approach by mandating that most residential new constructions either be co-located with or ready for solar systems. There are exceptions to this rule but it sets an expectation and tone in the state that has helped maintain growth in the solar sector in the past. The state has also established streamlined permitting process guidelines, assisting with consistency and predictability for new solar installations. As noted earlier, predictability is crucial for the development of DERs. With NEM 3.0 discouraging overproduction, California effectively incentivizes the use of battery storage. This approach highlights that incentives for DERs need not always be financial. Instead, reducing friction in the permitting process can also serve as a powerful motivator for adoption and development. POWER: Should electric utilities be involved with supporting the owners/operators of DER projects?Robertson: The short answer is yes. Utilities can play a crucial role in supporting DER project owners by minimizing obstacles during the interconnection process, which can often be a major hurdle. Legislative decisions around DERs are typically made at the state level by lawmakers who may lack experience with the inner workings of public or private utilities, and may not fully grasp the complexities of deploying DERs. Direct collaboration between DER developers and utilities can speed up the deployment of these assets. Equally important, though less obvious, is the significant role DERs can play in enhancing the grid. They help address ongoing challenges such as frequency regulation, demand response, and other ancillary services. By staying involved in the conversation and the legislative process, utilities can maximize the potential benefits of DERs for the grid. —Darrell Proctor is a senior editor for POWER.