IEEE Power & Energy Magazine - March/April 2022 - 33

How Do We Capture
the Value of Distributed
Energy Resources?
In this article, we use the results from a recent study
by the Sacramento Municipal Utility District (SMUD) to
show that, although the theoretical value of DERs can be
signifi cant, capturing it will require new thinking and
methodologies for distribution planning. These insights
should be broadly applicable for distribution utilities
facing signifi cant growth of DERs over the next decade.
For SMUD, a careful assessment of DERs is of particular
importance since it adopted an ambitious zerocarbon
plan in 2021 to fully eliminate the use of fossil
fuels in its power supply through the use of distributed
and grid-scale renewable energy, storage technologies,
and distributed resources. DERs and electrifi cation are
important building blocks in that journey to decarbonize
SMUD's power supply and also contribute to an economy-wide
reduction of greenhouse gas emissions.
A Case Study of DER Values
SMUD is a municipal electric utility serving about
514,000 customers in the Sacramento metropolitan area
in California. The utility district has about 900 mi of
distribution lines and more than 600 substations. SMUD
rolled out smart meters to all customers in the 2009-2012
period and is currently implementing an advanced distribution
management system (ADMS) and distributed
plan and road map that recognizes the critical importance of
gaining experience and an understanding of DER values and
their impact on the distribution system. Austin Energy and
the Los Angeles Department of Water and Power (LADWP)
have both worked for years on capturing and integrating the
value of DERs.
Austin was among the fi rst utilities to adopt a value-ofsolar
tariff that recognizes the value of DERs compared
to grid assets, and the LADWP has developed pilot tariffs
to incentivize DERs to defer up to 10 MW of capacity
upgrades in its distribution system. LADWP is also
among the growing number of utilities that have formed
special planning departments for DERs, different from
other transmission and distribution or resource planning
functions. Utilities in the eastern United States, such as
Eversource and ConEd, have deployed DERs as nonwire
alternatives to system upgrades, and Puerto Rico, in its
efforts to rebuild its electric system, is looking closely at
DERs, microgrids, and nonwire alternatives to support
resilience and reliability.
march/april 2022
resource management system (DERMS) that will be fully
operational in the next 12 months. The service territory is
relatively circular, urban, and well-integrated, which allows
for multiple electric paths to serve load in most areas of the
service territory, thus providing flexibility while minimizing
down-time in case of equipment failure. In the spring of
2021, the utility adopted a goal to eliminate all greenhouse
gas emissions from its power supply by investing in renewable
energy, DERs, storage, and emerging technologies by
the year 2030.
A 2020 study performed by SMUD called the Integrated
Distributed Resource Plan (IDRP), laid out a 10-year perspective
on the distribution system and identifi ed the investments
needed to support the growth of DERs and EVs. The
study also estimated the potential value of DERs in deferring
conventional distribution system investments for substations,
transformers, and reconductoring. The fi ndings show that, by
utilizing the capabilities of DERs to support voltage and provide
capacity, the total investment needs over 10 years could
be reduced up to 10%.
ieeepower & energy magazine
33
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IEEE Power & Energy Magazine - March/April 2022

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