Integrate to zero: Policies for on-site, on-road, on-grid distributed energy resource integration
To meet decarbonisation goals, global renewable power capacity will need to more than triple by 2030, according to leading energy agencies. Centralised renewable generation will not deliver this level of change on its own, nor should it. Distributed energy resources (DERs) such as heat pumps, electric vehicles, small-scale solar generation and battery storage are essential to ensuring that clean power is the most affordable and reliable option for all countries.
Distributed energy resources must be effectively integrated with the grid if they are to fulfil their potential. Integration allows them to be used flexibly to draw power from or feed power into the grid according to the value their flexibility provides to the electricity system. This reduces carbon emissions from fossil generation used to meet peaks in electricity demand, increases system resilience, and benefits all consumers through the lower prices resulting from avoided generation and network capacity costs.
RAP sets out four key policy approaches that will help promote the effective integration of behind-the-meter distributed energy resources:
- A strong set of enabling policies can remove barriers to DER integration. Together, they augment the flexibility potential of DERs and enable their participation in power system optimisation.
- Price signals should reflect power system optimisation needs. Payments for energy services should vary in proportion to how much, when and where they are used or delivered.
- Cost-reflective price signals should be combined with fair market access for distributed energy resources. With nondiscriminatory access to energy service markets and with pricing that reflects the full value of DERs, third-party service providers can shield consumers from price volatility in return for flexible management of DERs within agreed boundaries.
- International collaboration among policymakers and regulators can spread best practice. Cross-border knowledge transfer among regulators is a growing phenomenon and can help each place to find its own way, guided by local circumstances, politics and experience.
The authors explore each of these insights in greater detail. They also highlight best practices from around the world, with contributions from RAP colleagues Raj Addepalli, Max Dupuy and Jessica Shipley.