What Is It Worth? The State of the Art in Valuing Distributed Energy Resources

The traditional cost recovery rate framework is as old as the regulated monopoly business model itself. This century old compact is showing its age as evidenced by recent high profile fights over rate design in Nevada, Arizona and elsewhere. Central to many of these conflagrations is the proliferation of distributed energy resources (DER). While DERs are not new to the electric grid, recent innovations in generation, storage and information technologies have allowed customers and new market entrants to deploy them in ways that threaten the traditional regulated monopoly model. This report, commissioned by the Department of Energy and included in the latest installment of the Quadrennial Energy Review, offers regulators a guide to valuing these distributed resources.