Modernizing California’s Electric Grid With DERs Focus of New Proceeding

A new rulemaking launched by the California Public Utilities Commission (CPUC) in late June will allow regulators to take a closer look at modernizing the electric grid in anticipation of a wave of distributed energy resources (DERs). The Commission’s goal is to develop a framework that will improve the integration of DERs into the California grid, including solar, storage and electric vehicle charging.

At present, unreliability of the grid can be traced to wildfires and, in some cases, the lack of generation due to the state’s forced transition from fossil fuel generation under the state’s decarbonization effort. The expansion of the DER sector, while posing problems for distribution planning and demand management, also offers opportunities for large and industrial end users, providing more flexibility while increasing resiliency and reliability.

DERs could also play a valuable role in local reliability. Mostly seen as a way to reduce load, DERs may present an opportunity to provide supply from behind the meter. DERs are anticipated to reach a total installed capacity of 387 GW by 2025, according to research cited by the CPUC.

For industrials, improvements in local reliability will be a major draw. Currently, electric utilities rely heavily on demand response, where large customers are paid to reduce their energy usage during times of short supply and may require facilities to shut down or curtail production in order to reduce energy use.

But an increase in DERs comes with a price. It will cut into utility service to customers with the usual impacts on electric rates and utility ratepayers. As more businesses, and possibly wealthier residential ratepayers, invest in DERs, regulators will need to figure out who is going to pay for the system that is left behind. Reallocation of those costs to protect low-income ratepayers is expected to be a major issue in the proceeding.