State Strategies for Valuing Distributed Energy Resources in Cost-Effective Locations

The deployment of Distributed Energy Resources (DERs), small-scale electricity generation sources or controllable loads connected to the distribution system or a facility served by the distribution system, can have wide-ranging and positive impacts for the electricity grid. Interconnecting a DER in a high-value location on the grid can unlock benefits beyond those that accrue to the off-taker or asset owner. When DERs are deployed optimally, not only can the individual consumer benefit, but the local utility, the electricity system, and other ratepayers can benefit as well. By engaging in locational DER planning, states can help protect their communities and ratepayers and can help ensure the reliability and resilience of the electricity system. This report explores states' role in better integrating locational value into DER siting and development. It first outlines some of the benefits that can be achieved through the deployment of DERs in high-value locations. It then looks at state policy and regulatory roles and the tools states can use to influence the location of DER development. The report next examines the challenges of locational DER planning, with a particular focus on the challenges that states face in influencing the location of DER development. It highlights three case studies from states that engaged in locational DER planning through the Multistate Initiative to Develop Solar in Locations that Provide Benefits to the Grid and then presents several lessons learned from these efforts. The final section of this report summarizes some recent publications related to locational value of DERs in the form of an abbreviated literature review.