Improving Grid Reliability with Distributed Generation Policy Reforms

Good News Thursday! Michigan is trying to fix its grid in new, distributed ways. The Michigan Senate Energy and Environment Committee just advanced SB 731 and SB 732, two bills that would create a statewide virtual power plant (VPP) program. Right now, Michigan doesn’t really have one. There are small pilot programs, but no clear rules, no consistent payments, and no requirement for utilities to use them, making it hard for the private sector to get involved. These bills aim to change that. Here’s what each one does: 1. SB 731 This bill sets the legal groundwork. It defines how virtual power plants work under Michigan law and allows distributed energy resources (like rooftop solar, home batteries, EV chargers, and smart devices) to be treated as a real grid asset. Without this, everything stays in scattered pilot programs, each working in isolation, with no common rules and no way for those systems to talk to one another. 2. SB 732 This bill moves it into action. It requires the Michigan Public Service Commission to: • create a statewide VPP program • require utilities to include VPPs in their grid planning for distribution and transmission • set compensation for households and aggregators who provide grid services In simple terms, it turns distributed resources into something utilities are actually required to use. The state has faced growing reliability concerns in recent years. Storm-related outages have left hundreds of thousands of customers without power at times. At the same time, demand is rising, and the grid is aging. The traditional solution is to build more infrastructure. But that takes time and costs money. VPPs offer another option. California, Texas, and New York have all expanded VPP programs: • California has used solar + battery VPPs during heat waves to cut peak load, reduce stress on the grid, and avoid emergency measures. • Texas has scaled residential battery VPPs that pay battery owners to respond to price signals and support grid-constrained areas during summer peaks. • New York is expanding utility-run programs that pay households with batteries to provide grid support during high-demand periods. The result in many cases has been: • lower peak demand • fewer last-minute emergency measures • better use of existing transmission and distribution infrastructure Instead of relying only on large power plants, the grid starts using what people already have installed that can reduce pressure during peak demand, lower system costs over time, and improve reliability during extreme weather. Both bills now move forward in the legislative process. If passed, Michigan would move from scattered pilots to a structured, statewide VPP program that actually integrates distributed resources into how the grid is planned and run.

Two Recent Policy Actions in CA and MD Suggest an Evolving Future for DERs. 1) On March 21, 2024, the California PUC issued ruling permitting distributed renewables to be interconnected to the grid through an energy export schedule (called a Limited Generation Profile). The ruling requires utilities to furnish hourly hosting capacity information for each circuit, allowing asset developers to design projects that stay within pre-defined limits - export levels can vary 24 times per year - instead of paying for upgrades such as new transformers. This provides a more realistic and cost-effective approach to integrating renewable exports into the grid. 2) On April 4, 2024, the Maryland legislature passed the Distributed Renewable Integration and Vehicle Electrification Act, or DRIVE (it now goes to the governor for signature). DRIVE requires utilities to compensate customers for providing grid services through virtual power plants (VPPs), while specifically calling for utilities to accelerate vehicle to grid (V2G) bidirectional charging systems. Utilities must submit V2G plans by next April and VPP plans 3 months later. These actions matter. Today’s grid runs at around a 41% average annual capacity factor and it’s getting peakier. However, if we could cut demand by just 1%, we could reduce capital costs by roughly 8%. If we could cut peak demand by 10%, we’d reduce total expenditures by roughly a quarter. With a growing population of rooftop solar, home batteries, and EVs, we may soon have the tools to address this opportunity. California’s first-of-its-kind approach helps avoid unnecessary grid upgrades, while Maryland’s future virtual power plants and bi-directional EVs will add flexibility while increasing capacity utilization factors – reducing costs per kilowatthour delivered.  Charging EVs at the right times, combined with solar assets, rooftop batteries, and optimized bi-directional flows could deliver more clean power to the right locations, when we need it and help flatten those costly demand curves. If the two models were combined, then we’d really have something. Utilities elsewhere should be paying attention. Links: https://lnkd.in/enqATa_R https://lnkd.in/ekyaEnHA #VPPs #virtualpowerplants #DERs #distributedenergyresources #vehicletogrid #V2G #vehicletoeverything

@ThePewCharitableTrusts released the Distributed Energy Resources (DER) policy playbook to help state policymakers and regulators scale distributed energy across the United States. As a Co-chair of Pew’s DER Advisory Council, I was pleased to contribute to the goals and recommendations in the DER policy playbook which seek to unlock the full potential of distributed energy. Here’s the reality: energy affordability, reliability and resiliency challenges are affecting every corner of the United States. DERs are readily available today to lower electricity bills, strengthen grid reliability, and help utilities defer costly investments in new power plants. In the DER policy playbook, lawmakers and regulators will find guidance to pursue solutions that accomplish three goals:  -Integrate DERs into utility planning and procurement -Reduce barriers to DERs permitting and grid access -Strengthen community resilience with DER solutions For each goal are specific, actionable recommendations as well as examples of policy successes already making a difference domestically and abroad, including in Texas 😀, Virginia, Puerto Rico 😁, New York, the United Kingdom, and Australia.     As states are increasingly looking to insulate themselves from market fluctuations and extreme weather, DERs and virtual power plants present a real solution. The DER policy playbook and Pew's recently launched DER State Policy Explorer, (pew.org/ders_explorer) are key resources designed to support lawmakers and regulators as they look to advance DER policies and reforms. The bottom line: there is a lot to be learned from other states and countries on how to do this successfully. I encourage you to read the playbook, leave me a comment with your thoughts on our approach and share this resource with your colleagues and networks: https://lnkd.in/gVpZZAuh #DERs #EnergyPolicy

🚀 Reforming Australia’s energy markets: A $19 billion DER opportunity 💰 My submission to the National Electricity Market (#NEM) Wholesale Market Review, prepared for Solar Citizens, outlines how outdated rules and market design are stifling $19 billion in net benefits from distributed energy resources (#DER) by 2040. As pv magazine Australia highlights, this isn’t just about rooftop solar—it’s about redesigning markets to prioritise DER as critical infrastructure for affordability, reliability, and decarbonisation. DER—including solar, batteries, EVs, and flexible demand—could deliver: $11 billion in avoided network costs (poles, wires, substations), and $8 billion in reduced large-scale generation/storage needs. 20% of contingency FCAS raise is already provided by aggregated DER today. Yet current market rules and network revenue regulation: * Impose 1MW bid minimums, reducing competition * Lock households and SMEs out of the wholesale demand response mechanism * Let networks prioritise costly infrastructure over DER solutions * Include no minimum demand equivalent of the RERT (emergency peak supply), and * Are not designed for a majority renewable electricity system. See my submission for the details of this series of principles to support the participation of aggregated DER in markets: * Market design should be prepared from first principles * Value resilience to extreme weather events in reliability * Consider how greater deployment of SAPS and microgrids could be facilitated * Ensure fair and non-discriminatory access for all forms of aggregation to all markets and regulatory procurement * Ensure equitable, fair compensation * Facilitate robust competition, especially through the lowest reasonable minimum bid sizes *Establish the best way to manage minimum demand * Enable value stacking to maximise benefits Ensuring fair and inclusive consumer participation: * Voluntary consumer participation * Tiered participation options * Ensure appropriate consumer protections, including transparency about benefit splits Technical and regulatory enablers of #ADER: * Create open data and open communication protocols, use open-source software, make detailed network data available and allow third party access to real-time smart meter data with consumers’ permission * Implement Dynamic Operating Envelopes * Upgrade Market Systems #EnergyPolicy #RooftopSolar #NEMReform #aggregatedDER Integrate To Zero, IEEFA Australia, The Superpower Institute, UTS Institute for Sustainable Futures, NSW Decarbonisation Innovation Hub, Blunomy, Tim Nelson, Paula Conboy, NACD.DC GAICD

Colorado is showing how to scale distributed solar and storage in ways that meet both customer and grid needs at the same time. As Latitude Media reports, the state’s new dispatchable distributed generation (DDG) framework combines solar — including community solar — with storage to deliver clean, flexible, and reliable power. It’s a model that succeeds when programs are built around data transparency, fast interconnection, and scalable processes—getting projects online quickly and demonstrating measurable value for both the grid and consumers. If we design these programs right, we can build a more efficient energy system, avoiding billions in new transmission and distribution investments by putting clean power closer to where it’s needed. Pairing competitive community solar with DDG not only expands customer access and strengthens grid reliability—it also opens new ways for utilities to deliver greater system efficiency through better utilization of existing assets. That’s the path to aligning incentives, lowering costs, and creating the kind of grid customers actually want: clean, affordable, and built for the future. https://lnkd.in/gVVXtJQv