CPUC Updates Distributed Resources Plan to Capitalize on Broad Benefits

By Published On: August 3, 2021

California’s groundbreaking 2016 Distributed Energy Resources Action Plan will be updated to better align rising levels of clean local renewables with ratepayer and society interests, particularly air quality, climate resiliency, and economic  opportunities in disadvantaged communities, the California Public Utilities Commission announced July 23.

It is “mission critical” to bring clean distributed energy resources to “all customers, including disadvantaged customers,” Mathew Tisdale, executive director of think tank Gridworks, said. The hope is that the new Action Plan drives “real investment of time and energy.”

Significant growth is expected from California’s rooftop solar and other distributed generation, storage, electric vehicles (EVs), time-varying rates, load management, demand response, and energy efficiency. The state leads the nation in rooftop photovoltaics and other behind-the-meter clean energy.

The key goal of the DER Action Plan 2.0 plan is to coordinate electric sector policy, grid planning, affordability, load flexibility, market integration, and customer initiatives, the CPUC said. That will include coordination with the California Air Resources Board, the California Energy Commission, and the California Independent System Operator.

The plan update’s goal received many kudos.

Southern California Edison “could not be more aligned” with the commission’s vision and goals, SCE Managing Director for State Regulatory Operations Shinjini Menon said. Utility-scale renewable are more economic, but developing the needed transmission will take time, “which means DER have to be part of the equation” to achieve the state’s policies.

“California’s challenges in this space are immense and we need all the best minds and resources pulling together,” Tisdale added. “It’s good to see the commission stepping up and providing this leadership again.”

Earlier, accelerating DER activity was not coordinated through an overarching framework. The Action Plan 1.0 “connected the commission’s interdependent proceedings and initiatives, but this is a timely update for the expanding capabilities of DER,” Tisdale added.

Plan 1.0 out of sync with technology adoption

DER technology adoption was moving faster than regulatory and market constructs, like accepted practices for valuation, East Bay Community Energy CEO Nick Chaset said of the initial plan. “We were concerned that might not lead to spending that would serve grid planning or energy markets.”

California cannot transition to a net zero emissions power system by 2045 “without addressing affordability, equity and access head-on,” SCE’s Menon agreed.

The 2016 DER Plan was “a roadmap for where we want to go with DER, the ways we can get there, and what we have to do to achieve the vision that we’ve laid out,” then CPUC President Michael Picker told this reporter at the first plan’s release.

New goals

California’s behind-the-meter solar in 2020 was over five times more than the next closest state. It has continually been between 45% and 50% of new U.S. EV sales, and it had over 13% of U.S. smart meters in 2019. The state has a responsibility to point the way on DER policy, Gridworks’ Tisdale stressed.

The CEC 2020 Integrated Energy Policy Report forecast behind-the-meter solar growth of 260%, behind-the-meter storage growth of 770%, and EV demand growth of 370% by 2030. To prepare for it, the CPUC Action Plan 2.0 will address the 2021-2026 time period.

Its new plan also will address issues and challenges not in 1.0, including transportation and building electrification, the need for microgrids for resiliency, and the need to grow load flexibility, it added.

The 1.0 plan focused on the three targets of rates and tariffs, DER on the distribution system, and in wholesale markets. The 2.0 plan expands to four tracks that follow related commission proceedings: Load Flexibility and Rates, Grid Infrastructure, Market Integration, and DER Customer Programs


The Load Flexibility and Rates track focuses on managing DER through demand side programs and time-varying retail rate designs that can make the power system more flexible, the draft reported.

But new work on rates could become too prescriptive, EBCE’s Chaset cautioned. California is already implementing mandatory time-of-use rates, and  real-time pricing introduces complexity for customers,” he said. “The price signals we have now will allow load serving entities and the private sector to innovate solutions.”

Drivers other than new rate designs will be needed for “mass adoption of flexible loads,” Gridworks’ Tisdale added. But work on rate designs to better manage flexible load will be valuable, he added.

The Grid Infrastructure track, intended to guide utility infrastructure planning and operations for DER, will address questions key to many regulatory decisions, EBCE’s Chaset said. If distributed resources are deployed where and when they are needed, it will result a higher net energy metering compensation and lead to greater utility investment in the buildout of microgrids for reliability, he said.

SCE’s Menon agreed. The next step is to go beyond traditional solutions and integrate DER solutions into distribution planning, she said. “We need to make the DER option part of planning from the beginning,” she said. That is something that could be accomplished in the 2.0 process.

Market integration is key

The Market Integration track is focused on integrating DER into wholesale markets and capturing more DER value streams, the CPUC said. But there is little action defined in the 2.0 draft on wholesale markets, Gridworks’ Tisdale warned.

The just-approved federal Order 2222 “calls for a national opening of DER participation in wholesale markets, but California, the fastest-growing U.S. distributed resources market, does not appear ready to address it,” he added.

Market integration is the most important track in the 2.0 draft because California regulators need to prepare to use DER in wholesale markets for grid services, EBCE’s Chaset said.

The Customer Programs track is intended to enable equitable customer access and compensation and efficient power provider management of DER, the CPUC said. That would align DER capabilities, customer interests, and system needs.

But “over-engineered programs” can lead to inadequate market outcomes, Chaset warned. It may be better to leave program design to load serving entities who know their own customers, he said.

SCE is always working on customer programs and with DER vendors to innovate, Menon pointed out. But the Action Plan is valuable because it coordinates the inter-related proceedings involving those programs, she said.

The commission’s Draft Distributed Energy Resources Action Plan 2.0 provides a framework for the proceedings scheduled to begin with a public workshop August 26, 2021.

Herman K. Trabish

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