IEEE Power & Energy Magazine - March/April 2022 - 40

Fairly and accurately quantifying the value that each DER provides
to the grid is critical to developing a sustainable economic
model for the integration of future DERs.
developing a sustainable economic model for the integration
of future DERs.
Utilities have a unique responsibility in establishing a
coherent and public-minded methodology that fairly values
DER grid contributions. Such a methodology accomplishes
important and mutually beneficial objectives for electric
utilities and their customers. Specifically, a DER valuation
methodology can incentivize the deployment of DERs,
promote fair treatment of the integration of this technology
for both DER owners and other customers, and support
the achievement of broader public goals as established by
policy makers. ComEd, a utility serving 4 million customers
in northern Illinois (including Chicago), has developed
a software tool to establish DER valuation for solar, wind,
and storage that can be integrated into existing planning
systems. The motivations, methods, and lessons learned in
the tool's development are described in the following sections
to capture key considerations for DER valuation from
a utility perspective.
Incentivizing the Deployment of DERs
for Utility Service Territories
Quantifying the value that DERs provide to the grid can
accelerate the adoption process. Compensating DER
owners for their contributions to the grid provides an
additional value stream that can make deployment
more economical. This support for the deployment of
DERs extends public policy goals and increases opportunities
for DERs to provide additional value to the
grid in the future.
For example, increased DER penetration sited closer to
the load can reduce energy losses on the system and enable
a modular grid design, provided that the generation output
coincides with demand. As clusters of DER aggregate close
to load centers, new grid designs become increasingly feasible,
including the formation of microgrids that could provide
higher levels of resiliency. Also, the investments necessary
to integrate this higher penetration of DERs can provide
incremental benefits to utility service, including potentially
enhanced reliability.
In a larger sense, the increased penetration of DERs with
appropriate capabilities at certain locations can alter how the
grid is planned and operated. Instead of power going from
centrally located generation through the transmission system,
to the distribution system, and then to customers, more
power is moving directly from local generation to the distribution
system and end customers.
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ieee power & energy magazine
Managing the Increased
Adoption of DERs
This changing paradigm poses both challenges and opportunities.
Electric utilities must integrate DERs into a grid that is
becoming more complex, but this integration also unlocks new
opportunities. For example, the same energy storage system
interconnected to the distribution system to meet sustainability
or resiliency goals may, under certain circumstances, be used to
defer traditional capacity upgrades or regulate voltage.
Using DERs for grid purposes encourages value spillovers
that benefit customers through more affordable energy, provided
that a methodology of DER valuation accurately establishes
DER benefits to the distribution system. If the value is
overestimated, it might increase customers' cost burden. If it is
underestimated, it might disincentivize DER developers from
deploying DERs. Electric utilities play a crucial role in navigating
between these shoals. It is also important to consider
how the valuation is done so that the customer, developer, and
electric utility all benefit from utilizing DERs instead of more
traditional solutions for capacity upgrades.
Supporting Broader Societal Goals
When DER deployments are effectively incentivized to serve
grid purposes, electric utilities can further support broader
societal goals. Enhanced DER incentives support an environmentally
sustainable electric grid and enable technologies
to enhance grid resiliency. Greater economic investment
also brings growth opportunities for the regions that utilities
serve. Incentives for DER adoption can encourage beneficial
electrification by strengthening environmental and public
health benefits. As the grid energy supply grows cleaner
and more resilient, the carbon reduction benefits of electrification
also increase. Furthermore, implementing advanced
grid-edge technologies also sustains regional competitiveness
through improved service and workforce development.
In many parts of the United States, societal goals have
been driven by specific policies that promote DER development.
In Illinois, for example, the General Assembly included
DER incentives in both the 2016 Future Energy Jobs Act and
2021 Illinois Clean Energy Law (PA 102-0662). The 2021
law establishes base rebate values for distributed generation
and storage. It also requires the Illinois Commerce Commission
to initiate an investigation into DER value by June 2023.
This is just one example of how regulators are seeking
methodologies to value DERs, thereby directing the evolution
of the electric grid. The policy push requires a broad
and deep industry discussion of methods that meet the goals
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IEEE Power & Energy Magazine - March/April 2022

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