Is DER competitive with traditional utility investments, and if so, what are the costs and benefits?
Eugene L. Shlatz is an associate director in Navigant Consulting’s Energy Practice. Contact him at eshlatz@navigantconsulting.com. Steven Tobias is a senior consultant in Navigant Consulting’s Energy Practice. Contact him at at stobias@navigantconsulting.com.
The role of distributed energy resources (DER) in electric-utility planning continues to foster robust debate.1 Despite best efforts, utility planners and policy analysts often are stymied or unable to reach consensus in attempts to capture the range of values that DER might provide as an alternative to traditional utility solutions.
Driven by public-policy initiatives, utilities are responding to recent mandates to integrate nontraditional resources into their distribution systems. In several states, renewable portfolio standards (RPS), and incentives—tax and end-user direct—are driving photovoltaic (PV) and wind-system growth. California has a 33 percent RPS goal by 2020 and its related Solar Initiative has a PV goal of 3,000 MW by 2017; investor-owned utilities have a mandate to achieve 5 percent of peak supply via demand response by 2007. Utilities throughout the United States are making large investments over the next several years in distribution. To manage a budget that could reach several billion dollars within years, utilities will make hard tradeoffs regarding which investments offer greatest value. Specifically, utilities will need to use innovative methods to quantify DER value when integrated into the electric-utility distribution grid.