Dive Brief:

• Persuading households that solar panels and energy storage batteries are worth the expense is the first challenge to integrating excess electricity from renewables into the U.S. power grids, industry participants were told Friday at a panel convened by the United States Energy Association.
• The energy industry also has few standards for distributed energy resources, or DERs and virtual power plants, known as VPPs, which must change before they are widely adopted, panelists said.
• Several utilities and energy companies have found ways to encourage customers to install solar panels and wind turbines and those ideas can serve as a model for regulators and energy providers, they said.

Dive Insight:

Panelists included Jon Wellinghoff, the chief regulatory officer for Voltus and a former Federal Energy Regulatory Commission chairman; Rudy Garza, president of CPS Energy in San Antonio; Duane Highley, CEO of the Tri-State Generation and Transmission Association in Denver; John Reynolds, president of the Agile Fractal Grid; and Ahmed Mousa, who manages the Utility of the Future program for New Jersey’s Public Service Electric and Gas Company.

Wellinghoff said the industry must first persuade consumers of the value of renewables and storage.

“We have to figure out how people can pay for these resources, and to pay for them we have to value them correctly,” he said.

The move to solar panels and wind power requires a common set of standards and regulations and a mature market for wind turbines and solar panels, he said.

“We need a standard set of market rules so a Walmart in California can operate under the same rules as a Walmart in New England,” Wellinghoff said.

Customers ultimately bear the costs when utilities build wind and solar arrays, he added, and means requiring power companies to be transparent about the price and benefits.

“As long as you’re making the case, I think customers understand there is a benefit,” he said.

Rooftop solar panels and wind turbines can send power back to the grid when demand is low, and battery storage can preserve excess energy for times of peak demand, making the power grid more efficient and reducing costs, Garza said.

“The cheapest form of power is the kilowatt you don’t use,” he said. “It costs half as much to run energy efficiency and demand response programs than it does to buy and produce” electricity.

Highley cited Red Feather Lakes, an isolated town in the mountains of Colorado, as an example of the benefits of distributed energy resources. The community, which had one transmission line, was prone to power outages during natural disasters, he said.

A microgrid with solar panels, a storage battery and a backup generator now operate in Red Feather Lakes, Highley said. 

“We didn’t have to build a second line over the mountain which saved us tens of millions of dollars,” he said.

However, some utilities, particularly investor-owned utilities, are resistant to wind and solar projects, Wellinghoff said. Utility companies have a monopoly in some parts of the country and owners don’t want competitors encroaching on their territory and eating into their profit, he said.

“Investors have to make money,” he said. “And we need to work through those conflicts.”

The FERC Order 2222, a 2020 decision intended to remove some barriers to DERs, is a good first step, panelists said. The order lets multiple sources of electricity aggregate to satisfy minimum size and performance requirements that they couldn’t meet individually.

The regulatory agency submitted a compliance filing in 2022 and market participation begins in 2026.

“Order 2222 is the one basket that will solve all of the issues we have right now,” Mousa said. “Once we start implementing it, we will see a lot of progress.”