Cheer Up! The World of DERs will be Wonderful!

A couple of months ago, I was in San Francisco for the California Distributed Energy Future Conference and it seems to fair to say that the field of distributed energy resources (or DERs as we energy nerds say) is burgeoning. With an apology to science writers of the 1950s, I want to dispel some of the hype and see what’s really going on.

In this post, I’m going to look at some of the trends that are driving DER growth—and then offer a few cautions. Distributed resources could meet at least half our needs according to new research—but we should also keep in mind the time it takes to deploy new technologies and the potential impacts from a highly distributed power system.

Trends in DER Technology and Regulation

First, I want to underline some positive trends: a new study by the National Renewable Energy Laboratory (NREL) finds that in every state in the lower-48, at least 70% of the buildings are suitable for rooftop solar arrays. And, in California, Florida and Michigan—and across the Northeast—at least 45% of the total power demand could be satisfied by rooftop solar within that state. Other states have less potential, but every state has at least some potential.

Of course rooftop solar is only one kind of DER (I made an infographic listing the major kinds of projects). Other technologies also hold great promise: battery systems will allow us to meet peak demand with less generation; microgrids and combined-heat-and-power systems will improve both the resiliency and the efficiency of the grid; and demand response systems will reduce our need for dirty “peaker” plants and improve the integration of variable renewable resources.

Many of these individual technologies have existed for decades—what’s really new is that advances in computer control are now allowing DERs to be remotely controlled en masse. We are looking at a near-term future where thousands of DERs of different types can be integrated and controlled in real time to create Virtual Power Plants (VPPs). VPPs will allow grid operators to respond to real-time power demand—and to the variable output of large-scale renewable projects—with flexible, local power resources.

The growth in distributed resources is also being driven not just by technology, but also by state mandates. For instance, in 2015 California passed a law requiring utilities to bring 12 GW of renewable DG onto the grid by 2020. Other states, including South Carolina and New York have either created requirements for DERs or are considering them. States are mandating or supporting these projects because distributed resources can reduce power system pollution and reduce the need for costly and complicated power line construction projects.

Another reason why states are interested is the potential for DERs to improve grid resiliency. After hurricane Sandy knocked out power to millions of people in the tristate area, policy makers began paying a lot more attention to the potential for microgrids and DERs to keep the lights on when the larger power system goes down. So is the “soft path” for energy that Amory Lovins advocated back in 1976 finally coming to fruition? Will the future for DERs be wonderful?

A Few Notes of Caution

Yes, but—let’s not lapse into techno-utopianism. With the positive trends outlined, I want to inject a few notes of caution based on the research I’ve done on technology diffusion and public opposition to energy infrastructure. What we know from the research on these two subjects is that: 1) the estimated technical potential of an energy resource is very rarely, if ever, realized and 2) all energy technologies—even “green” ones—have impacts that may arouse local opposition.

We can use an analysis of past energy diffusion patterns to inform our understanding of today. Although technology diffusion paths can vary widely and change quickly, at the macro level, the most classic diffusion curve follows a logistic model and creates an S-type shape. Viewed from this perspective, technologies have three rough phases:

  1. A phase of “gradual diffusion” as the technology is introduced to the market and improved with the lessons learned from deployment
  2. A phase of “rapid, exponential growth” as the cost of the technology falls and performance improves
  3. And then a final phase where growth slows as the market becomes saturated (p. 82, Wilson, 2012).

One benefit of DERs that has sped deployment is that DERs are modular in nature. In other words, DERs are usually based on components that are produced in large quantities in a factory environment. And, as Wilson (2012) shows, modular technologies (Wilson uses the example of compact fluorescent bulbs) are inherently easier to deploy as compared to large, industrial scale facilities—like a gas-fired power plant, which must be custom designed. DERs, properly placed, can also return monetizable benefits to grid operators in terms of balancing and power control services—and they can help utilities avoid costly and difficult transmission upgrades.

With that said, it’s also important to remember that all (existing) power technologies have impacts on someone to some extent. For example, a rooftop solar array produces no pollution during operation, and is far less disruptive to habitats as compared to a greenfield solar project built in the desert. But rooftop solar can create impacts nonetheless (and I am ignoring for the moment the impacts created by production and disposal) such as creating glare, blocking sunlight, and harming aesthetic views. Although these may seem like minor impacts, a person who used to look out onto a familiar cityscape or a fallow field, but now looks out on endless rows of panels, may feel otherwise.

Other problems could crop up from moving large amounts of generation from distant sources into urban settings. For instance, a microturbine or a combined-heat-and-power unit may be more efficient per se, but it also creates local air pollution that might not exist if the owner depended solely on grid-resources. A battery installation doesn’t create air pollution, but it does create electric and magnetic fields (EMFs). Fears of EMFs are often overblown—but there is also evidence that exposure to high levels of EMFs can be a threat to human health.

Too often with new technology, the media inflates the potential for benefits and underplays the possibilities of harm. So it’s important to be realistic about the impacts of more distributed resources—and to realize that some people may react very negatively to projects. Instead of decrying this, we should anticipate it and let criticism inform both technological development and policy. This excellent research paper on DG by Pepermans and coauthors at the University of Leuven has a balanced discussion of the benefits and possible costs from DG. And this blog post by Timothy Brennan of RFF describes some of the economic reasons why utilities may prefer centralized generation. A full discussion of the costs and benefits of DERs as compared to centralized resources is beyond the scope of this post—but it’s clear that we need to continue to study this topic so that we can value the benefits from DERs properly.


In the “soft path” energy future envisioned by Amory Lovins, centralized generation resources would fade away and be replaced by smaller and more renewable resources. Although technology is making DERs ever more desirable, it will take time for these distributed resources to be deployed—and so, in the coming decades at least, it appears that a hybrid system will emerge. DERs will surely grow. And, appropriately planned, they hold great potential to reduce pollution and reduce the need for new grid infrastructure while simultaneously increasing resilience to extreme weather. But it’s important to realize that power projects take time to build and alway cause impacts—to someone, someplace. And so, as we move to reshape our grid, we should keep in mind that people who oppose projects should be treated with respect, and their concerns should be taken seriously.


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