California’s Distributed Energy Future

by Anna Gretz
April 5, 2017

California already has, arguably, the most distributed energy resources in the country. Distributed energy, also called on-site generation, include sources of energy (often renewable sources) that are smaller, and independent from the power grid’s power plants. The most common examples of this are wind, hydro, and solar installments like wind farm, or rooftop solar. California has all of this in spades. The next step? Pulling it all together, so all of this distributed energy can work together to compose a powerful, sophisticated, distributed energy grid.

With a structural transformation this drastic, it’s hard to know where to start. Many argue that solar is the perfect springboard, which is why many utility companies are already investing in distributed solar resources. This usually means that utility affiliates will seek out and buy commercial solar developers, like Edison did with SoCore. Duke Energy and NextEra did the same, illuminating a growing trend among power companies in the United States to gravitate toward renewable, distributed, sun-powered resources. As the country moves toward renewable energy and energy storage, utility companies don’t want to be left in their own antiquated dust.

The solar springboard into a distributed energy reality has been the result of record-breaking solar installation growth in the past couple of years, almost doubling from 8K MW to 15K MW from 2015 to 2016. Greentech Media’s research leader recently reported that “Solar is not the entirety of distributed energy resources… but I honestly do not think we would be having this conversation if it weren’t for the fact that we’ve had such a boom in distributed solar in the United States. This acted as the tip of the spear for a lot of these conversations about dramatic transformation.”

For many who are still connected to the power grid, some of the distributed, behind-the-grid numbers can be pretty surprising. Right now in the United States, there are 1.3 solar customers that are using rooftop or on-property solar (this is what people mean when they use the term “behind the meter.”) There are also 1,900 energy storage installations, also operating behind the meter. Though this number may strike you as a pretty small one (and it is), the energy storage market has been growing rapidly over the past few years, a promising up-and-comer in the energy market. From every side of things, distributed energy is growing and growing fast, and California is at the forefront of that revolution.

Want proof? Here are California’s latest stats:

California represents…

...49% of all distributed solar installations in the United States.

...49% of all distributed energy storage built in the United States.

...47% of all plug-in electric vehicles on the road in the United States.

Yeah. California is a big deal. This is why it’s so important that California continues to move toward a stronger, more distributed energy grid. Basically, a lot of the country is looking at California to know what to do next, and to see a preview of how it’s all going to work. So far, California has definitely delivered.

So, California… what’s the plan for integrating all of this distributed energy?

California’s Distributed Energy Resource integration plan was actually published last November by the California Public Utilities Commission… but we’ll lay out the basics for you.

Basically, it comes down to three major issues: electricity rates, infrastructure planning, and interconnection.

Electricity Rates: If you put a ton of distributed energy on the grid, how do you change the way you charge customers for their power? Since rates have been pretty flat, across both location and time, California has to figure out how to change rates so that they reflect the cost of service, so more distributed energy sources will pop up where they’re going to be the most valuable.

Net-metering has also been a hot subject within this conversation. Many customers who have their own rooftop solar end up feeding power back into the grid during the day, when their panels are generating plenty of energy, but they don’t necessarily need to use it. Net-metering plans let these customers get compensated for the energy they contribute to the grid by shaving some money off their electricity bill. This compensation has been particularly important for customers without energy storage, or a home battery they can use to store their generated energy for later use. California is going to have to evaluate this system under a whole new structure of integrated, distributed renewables. They’re working on it.

Infrastructure Planning: Historically, the grid as we have known it has been a single system, working together to provide power to the people. The distributed grid is going to change the way this infrastructure works, and California needs to figure out how to fit all of these new components and players under a similarly unified system, to make sure that the grid is providing reliable power at the lowest cost possible. It’s a tall order.

Interconnection: Once rates have been settled, and the infrastructure is unified, it’s time to talk about the interconnection of the energy market, which is made up of a lot of very, very small resources. How can all of these pieces work together, with each other, to form a whole new kind of energy market? This is the third and final issue that California plans to address before they will be satisfied with their finished product: a well-working distributed energy machine.

Needless to say, it’s not going to be easy… but it’s going to be good, resulting in a more effective, economical, stronger energy grid that customers get to participate in, and rely on.

California is showing the rest of the country, and the world, that the decentralization of the energy grid is not only a probability, but a reality. And in California, it’s not going anywhere. The transformation is already underway, and irreversible. The big question isn’t whether or not California’s distributed grid will happen, but when it will happen everywhere else.

Participation Wanted

California’s distributed energy reality started with individual little components of energy distribution. All California had to do was look around and figure out how to tie them all together. If you live in California, your household can join the revolution. It’s as simple as installing solar panels and a home battery in your home, adding you to the numbers that have already joined in the distributed power movement. If you’re not in California, you can be at the forefront of the action, becoming one of the individual components of energy generation that will eventually lead to your state’s own integration plan. Either way, now is the perfect time to join the distributed energy revolution.