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This report is the third in a series of three reports on DER integration. See also the first report, DER Integration into Wholesale Markets and Operations, and the second report, Lessons Learned for the U.S. Context: An Assessment of UK and Australian Open Networks Initiatives.

Distributed energy resources (DERs) have the potential to provide significant benefits to the U.S. electricity system and its customers, including demand flexibility, lower emissions of greenhouse gases and criteria pollutants, consumer choice, competition, rapid innovation, cybersecurity, and enhanced reliability and resilience. Important efforts to further DER integration are underway, highlighting key challenges that must be solved to facilitate Federal Energy Regulatory Commission (FERC) Order 2222 in the short term (enabling DERs to participate on a level playing field with other resources through DER aggregations) and to expand opportunities for integrating DERs into power systems over the longer term. All current efforts call for broader venues that facilitate knowledge sharing across states and other jurisdictions. A comprehensive, national initiative is needed to develop greater consistency and consensus around DER integration in the United States.

ESIG’s report, The Transition to a High-DER Electricity System: Creating a National Initiative on DER Integration for the United States, proposes a U.S. national initiative around DER integration that would create common concepts and vocabulary, more standardized solutions to nearer-term DER integration challenges, and more alignment across the industry on how to resolve longer-term challenges.

The goals of a U.S. national initiative would include:

    • Consistency in terminology, concepts, and vision. Greater consistency and coherence across the United States with regard to terminology, concepts, and future vision for different elements of DER integration: distribution planning, DER interconnection, data access and communication, distribution system operations, utility regulation and tariffs, and markets.
    • Nearer-term, least-regrets strategies. More visibility and consensus on nearer-term, least-regrets strategies for expanding functionality and operational capabilities on the distribution system, both to support the FERC Order 2222 implementation and, more broadly, to cost-effectively support DER deployment.
    • Dialogue on longer-term issues. Advancing structured dialogue on priority longer-term issues around DER integration, such as distribution system operator functions and regulation, overlapping federal-state jurisdiction, independent system operators’ market design, and utility regulation, which would enable alignment across the industry on key issues and potential solutions.

The initiative proposed in this report includes three tracks.

Track 1: Technical Foundations

Regulators, utilities, and other stakeholders need a common foundation for thinking about the potential models and functions for future distribution system operations. Track 1 would examine different functions performed by transmission system operators and distribution system operators (DSOs) and produce several potential models of distribution system and market operations. A subset of these would provide a bottom-up technical foundation and common reference point for discussions on nearer-term priorities (Track 2) and solutions to longer-term challenges (Track 3).

Track 2: Least-Regrets Strategies

Common understandings of shorter-term, least-regrets strategies for DER integration are needed that are consistent across distribution utilities. These include strategies for enhancing distribution and transmission planning, data sharing and communication, distribution operations, and DER interconnection and aggregation review. Coordination is needed within distribution utilities and between distribution and transmission systems concerning load and DER forecasts, DER operating assumptions, and the need to ensure that DER schedules and dispatch in the wholesale market are feasible.

Track 3: Dialogue on Longer-Term Issues

A structured dialogue is needed on longer-term DER integration issues, including the design of distribution system operations, markets, and regulation; federal-state jurisdictional overlap; design of independent system operators’ markets; and incentive frameworks for regulated utilities.

A national initiative will need to engage a multi-disciplinary set of stakeholders representing different kinds of organizations to provide distinct and necessary perspectives and expertise. Participant engagement will need to include transparency (with deliverables approved by a steering committee being made public), incorporate multiple opportunities for substantive feedback, be proactive, and have dedicated resources for these efforts.