IEEE Power & Energy Magazine - March/April 2022 - 41

and priorities of electric utilities and stakeholders alike. By
investigating the Illinois example in detail and describing
a consistent theory-driven approach, this analysis
elaborates on key considerations for DER valuation across
the industry.
Using Theory to Guide DER Valuation
From Policy to Practice
The rebate valuations outlined in the 2021 Illinois Clean
Energy Law provide a recent example of how DER incentives
benefit from a careful consideration of the theory
behind efficient utility investment. Under the same legislation,
Illinois utilities are required to compensate distributed
generation and energy storage assets through a statutorily
defined rebate amount.
ComEd has developed a framework that identifies the
marginal value of the real power in kilowatts or reactive
power in kilovolt-ampere reactive (kilovar) capacity provided
by distributed resources. The framework deals with
the avoided cost for delivery capacity and voltage control.
Further, it develops a locational marginal value (LMV) on a
nodal and hourly basis to value a particular DER technology
or configuration. Using this framework, we can express the
locational value of DER real or reactive power injection at
each hour in terms of the injection's marginal impact on all
of the capacity costs for all violations needing corrections
in that hour. As legislative initiatives around DER valuation
evolve, frameworks like this one will play an essential role
in defining the incentives available for DERs that provide
value to the grid.
For instance, if a circuit is projected to be overloaded
in the evening, the value of PVs to reduce that overload is
significantly decreased when compared to a predicted overload
that occurs midafternoon. Suppose the PV is located
upstream of an overload on a radial circuit. Its output cannot
mitigate the flow at the location of the overload and,
accordingly, provides less value than PVs downstream of the
overload. Figure 1 illustrates four principles of DER valuation.
When DERs are installed on a circuit with projected
investment needs, the generation or storage will have value
to the extent that the DERs can operate during the hours of
the year when the condition needs to be mitigated, and the
DER capabilities provide the required real or reactive power.
There are six primary goals for a practical methodology
to evaluate the contributions of DERs:
✔ Identify and quantify the benefits of DERs used to defer
or avoid traditional distribution investments. The
avoided cost includes the addition of delivery capacity
to serve the increased load and needed grid investments
to mitigate voltage violations.
✔ Provide an LMV for the marginal real and reactive
power injected to or absorbed from the grid at each
An upstream DER provides
no value to mitigate
the projected overload.
There is no projected
investment need, so
there is no grid value.
DER
DER
Substation
Substation
(a)
The DER output may mitigate the voltage
and current violations with real
and reactive power injections.
The Circuit Segment Expected
to See an Overload
(b)
The DER must provide real and reactive
power when needed to address
the overload.
DER
T
DER
Substation
The Circuit Segment/Node
Expected to See a Violation
(c)
Substation
The Circuit Segment Expected
to see an Overload
(d)
figure 1. The key principles of DER valuation. (a) Principle 1: the DER value is nonzero only in the presence of system
needs for an upgrade. (b) Principle 2: the DER value is locational. (c) Principle 3: the DER value should be expressed based
on both real and reactive power. (d) Principle 4: the DER value is temporal.
march/april 2022
ieee power & energy magazine
41
T
A downstream DER provides
mitigation of the projected
overload.
DER

IEEE Power & Energy Magazine - March/April 2022

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