eLab Accelerator 2017

Scalable DER Pricing Mechanisms

Project Objective

Develop a scalable framework to integrate and compensate all forms of DERs that provide benefits to the grid or other customers.

Team Members

  • Abby Hopper, President and CEO, Solar Energy Industries Association

  • Anne Hoskins, Chief Policy Officer, SunRun

  • Briana Kobor, Program Director for DG Regulatory Policy, VoteSolar

  • Marc Kolb, Director of Energy Policy, Tesla

  • Thomas Plagemann, Chief Commercial Officer, Vivint Solar

  • Tom Starrs, VP for Market Strategy and Policy, SunPower

  • James Tong, CEO, Advanced Grid Consulting

Project Description

This project will develop a realistic pathway for resolving disputes over net metering and distributed resource pricing, by addressing the larger issue of an outdated utility regulatory model that was not designed for distributed generation and prosumers. The project will develop recommendations for how to reform market structures to determine utility cost-recovery as well as compensation for customers who supply products and services to the grid.

Through a comprehensive, market-based approach, the team will improve on current pricing approaches, which have been piecemeal and unable to provide a stable, long-term pathway. Following Accelerator, the project team will disseminate our recommendations and work with industry stakeholders, including the larger solar industry, utilities, and regulators to promote improved pricing structures in key markets.

Progress Made to Date (pre-Accelerator)

Members of this team have recognized the need for NEM reforms, accompanied by utility business model reforms, and have agreed to work collaboratively to investigate alternative pricing structures. Team members and their companies have also participated in a number of state-level proceedings and settlement agreements for NEM successor tariffs and DER valuation methods, including New York’s recent “Value of D” decision, which serve as test cases or reference points for this discussion.

Post-Accelerator Outcomes

At Accelerator, the team stepped back from day-to-day activities to consider how solar and DER pricing mechanisms need to evolve over the next decade. The team identified key attributes of future electricity market designs, including open access for DERs, investor confidence in pricing structures, and an expanded marketplace for distributed technologies and services.

The team also reviewed strawman options for advanced rate designs that can support a sustainable pathway to new solar and DER compensation mechanisms, and outlined a set of publications to write in support of this work. Team members agreed to key milestones and next steps to carry this work forward for the next 12 months and beyond.