Dive Brief:

• California utility regulators last week issued a draft distributed energy resources (DER) action plan, intended to create a roadmap to roll out "forward-thinking" policy amid expected increases in DER deployments across the state.
• The plan is split into four tracks, which include creating more effective retail rate and demand response structures; ensuring that utility infrastructure planning can maximize the value of DERs that are connected to the grid; integrating DERs into wholesale markets; and creating a framework to help customer programs deepen their greenhouse gas emission reductions.
• The effort from the California Public Utilities Commission (CPUC) comes against the backdrop of steep forecasted increases in DER deployments. According to regulatory analysis, behind-the-meter solar generation, behind-the-meter storage capacity, and electric vehicle demand in the state will increase by 260%, 770% and 370% respectively from 2019 to 2030. 

Dive Insight:

California has rolled out multiple policies that are expected to contribute to DER growth. Lawmakers in 2018 passed legislation setting the state on the path to 100% clean electricity sales by 2045, and a September executive order from Gov. Gavin Newsom, D, calls for all new cars and passenger trucks sold in California to be zero-emission by 2035. These factors, coupled with the push for electrifying buildings and incentive programs for distributed resources, mean "the time is ripe to prepare a new DER Action Plan," according to the CPUC. 

The CPUC endorsed a first version of the DER action plan in 2016, which provided a roadmap for DER policy through 2020. This new plan will help coordinate DER policies across regulatory proceedings that tackle affordability, grid planning, load flexibility, and similar issues for the next few years. The agency plans to conduct a workshop on Aug. 26 to discuss the draft plan, and finalize it after receiving stakeholder feedback. 

The draft plan is divided into four tracks, the first focusing on load flexibility and rates. As part of this, the CPUC envisions creating a host of rate options that customers can choose from, and has listed various action items to achieve that goal, including having investor-owned utilities conduct focus group research by 2023 to see how different customer segments will react to dynamic and real-time pricing. By 2024, the draft plan recommends that all utility customers be able to opt in to these rate structures.

The second track, focused on grid infrastructure, looks at ensuring utility planning and operations are transparent and can easily integrate DERs, as well as improving interconnection processes. The CPUC's draft plan recommends that utilities this year begin implementing systems to export distribution system planning data to regulators on a semi-annual basis. The following year, the agency is considering taking a closer look at interconnection fees and cost allocation for distribution system upgrades, and potentially issuing a decision on the matter at the end of 2022. 

The draft plan's market integration track looks at integrating DERs into the wholesale markets, to help enable renewables, reduce greenhouse gas emissions and bolster system reliability, as well as ensuring that DERs are fairly compensated for value stacking. 

The fourth track, which is centered on customer programs, is also expected to take a look at the impact of DER programs on low-income and middle-income ratepayers and disadvantaged communities, as well as end-of-life management programs. As part of this, the plan recommends the CPUC consider whether to adopt measures to ensure that solar panels, as well as electric vehicle and energy storage batteries, are effectively recycled once they are no longer in operation. 

The draft plan touches on many of the priorities storage advocates have pushed for, according to Jin Noh, policy director at the California Energy Storage Alliance. Given the significant build-out of renewables required to meet the state's clean energy goals, "we need an all-the-above approach. Leveraging the built environment where you can actually site storage closer to urban, dense areas, I think will play a critical role to support reliability," he added.

Behind-the-meter storage is significantly under-utilized, according to Noh, but "if we have a mechanism that allows for export, and mechanizes and buys those exports, that might completely change the way behind-the-meter storage systems are sized and configured, so we may even size it to grid needs — not just customer needs."