2.3   What Are the Issues on DER Technologies Affecting Regulations?

2.3.4 What Can Regulators Do to Incentivize Win-Win DER Implementations?

In the big picture, it is clear that the implementation of DER systems could be a win-win for both utilities and customers, including those customers who do not own DER systems.  DER systems can support environmental requirements including Renewable Portfolio Standards (see 3.1.3). The renewable energy credits can be exchanged (see 3.9.1) or traded in an energy market (see 3.9.2). Customer loads can be reduced and more efficiently spread out over time through different tariffs (see 3.10.1 and 3.10.4 ) and market incentives (see 3.10.2, 3.10.3, and 3.10.7). Utilities can defer upgrade and maintenance costs (see 3.3.3). Even customers without DER systems may be able to benefit from the increased efficiency of energy production and transport, thus paying lower rates for their electricity. But how can this win-win situation be achieved?

No single answer or set of regulations can solve this complex set of scenarios. However, one task could be to require all DER systems to have a minimum set of advanced DER functions (see 3.4.1), including communications capabilities (see 3.7.5). Another task could be to ask utilities to develop “Distribution Resource Plans” (see 3.6) that plan for high penetrations of DER and that include incentives for siting different types, sizes, and capabilities of DER systems at specific locations.  A third task could be to address the market fairness issues (see 3.10.8) with different types of tariffs.