Nearly 20 years after regional stakeholders commenced a series of convenings to frame regulatory changes in PJM, policy and technology are converging to expand the power of demand-side resources to clean the U.S. grid.
Though the term isn’t recognized much outside of the power sector, chances are that most energy consumers in the U.S. are already familiar with one or more examples of distributed energy resources, or DERs: A neighbor’s rooftop solar. A battery storage unit in a garage. Your smart thermostat. The EVs charging at the grocery store. Insulation added to a house, upgraded windows, or many other manifestations of energy efficiency.
DERs represent the mix of technology, investment, and regulatory policy capable of maximizing cost-effective energy efficiency; integrating renewable sources of power generation; and using electric end-uses as resources for the grid. ‘Distributed’ means that power generation sources — renewables like solar, wind, and hydropower — are not centralized, or under the complete control or ownership of utilities. These small-scale resources are located close to energy end-uses.
DERs are multifaceted solutions — a veritable Swiss Army Knife — for cleaning the grid, and contributing to its overall reliability and resiliency, by generating non-carbonized electricity and reducing the need for fossil fueled power. While DERs do incur costs, they avoid the need for massive, more expensive infrastructure projects requiring billions of dollars in public utility funding from captive consumers. DERs also avoid the associated land use and environmental effects of such projects.
Today, viewing DERs as viable alternatives to fossil fuels is mainstream among power sector professionals. But this consensus is only recently true. It is no accident that technology, finance, and regulatory policy are converging this decade to expand DER use and benefits across the U.S.
The DER evolution is more than 25 years in the making, and RAP sits firmly in the center of it.
Prior to 2000, DER issues beyond energy efficiency were largely ignored by, or at best — at the periphery of, most power sector decisionmakers. In wholesale electric markets, they were almost completely overlooked. That started to change in the early 2000s, when regional transmission organizations (RTOs) were established in U.S. regions like New England, the mid-Atlantic, and California.
PJM Interconnection, which operates the bulk power grid in the mid-Atlantic region, was organized as the nation’s first RTO and competitive wholesale electricity market operator. While states in the PJM were benefitting from wholesale market competition, they were struggling to introduce competitive retail energy supply. In fact, its market rules represented barriers to DER participation and deployment. PJM wanted to address DER barriers in the name of functional markets for end-users and consumers.
Energy regulators in the original PJM states — New Jersey, Pennsylvania, Maryland, Delaware, and the District of Columbia — believed that DERs should compete with grid-level (that is, centralized) generation and transmission to ensure grid reliability and a fully functioning wholesale electric market. Part of the problem was that, outside of the formal stakeholder meetings hosted by PJM and contested cases before state utility commissions and the Federal Energy Regulation Commission (FERC), no forum existed to work collaboratively through these challenges.
With dedicated funding through the U.S. Department of Energy (DOE), an initiative known as the Mid-Atlantic Distributed Resources Initiative, or MADRI, was formed in 2004 specifically to accelerate the deployment of DERs like distributed power generation, demand response, energy efficiency, and energy storage in the Mid-Atlantic region. Public utility commissions in PJM states, along with U.S. DOE, U.S. Environmental Protection Agency (EPA), and FERC created MADRI as the forum to develop, learn, and facilitate the deployment and operation of distributed resources.
“MADRI’s legacy shows that innovation happens in a collaborative environment much better than it happens in an evidentiary proceeding.”
From 2005 to 2019, RAP was responsible for organizing and facilitating MADRI meetings, events, and convenings where multiple stakeholder groups — including regulators, transmission operators, distribution utilities, public advocates, suppliers, researchers, academics, and other interested parties —collaborated on this mission.
As PJM grew, so did MADRI, as PUCs in Ohio and Illinois also opted into the initiative. What set MADRI apart was the breadth and depth of topic areas covered and the multitude of perspectives in the room.
According to Janine Migden-Ostrander, a former RAP Principal who co-led MADRI efforts, “It was an opportunity to really go to the next level and deal with issues with the kind of depth that was useful for staff and commissioners who were trying to grapple with and get their arms around cutting-edge DER issues. That was the real value of MADRI.”
“One of the things that was great about MADRI was its capacity to bring innovators and government people together to talk in depth about emerging opportunities in ways that couldn’t happen in a structured hearing (in front of a Public Utility Commission) or a PJM committee,” adds Richard Sedano, RAP President and CEO. “I think MADRI’s legacy shows that innovation happens in a collaborative environment much better than it happens in an evidentiary proceeding. And that’s proven over and over again, but it was demonstrated within MADRI.”
MADRI collaborations helped shape the decisions directly leading to new grid design, operations, and regulation in the PJM Interconnection and beyond. Outputs like reference tools, best practices, standards, and lessons learned have helped expand DER deployment across the U.S. and even influenced the formation of similar forums in the Midcontinent Independent System Operator (MISO) and in the non-RTO Pacific Northwest (as part of the Northwest Power and Conservation Council’s Five-Year Planning process).
As electrification expands across every major sector in the U.S., integrating greater amounts of DERs will be critical to sustaining a cleaner, smarter, and more reliable power grid capable of sustaining future demand growth. With better understanding of the value that distributed energy resources can bring, especially in combinations like solar and storage or electric vehicles and storage, governments can make greater progress toward their climate goals. Just as it has done for over 25 years, RAP continues advising public utility commissions to help tear down archaic barriers to clean energy resources.