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A Deloitte report shows how distributed energy resources (DER) can help the U.S. meet its climate goals while improving grid functionality.
As households increasingly electrify their appliances and heating and cooling systems, and shift toward driving electric vehicles, utilities face new challenges in meeting demand while achieving decarbonization and maintaining affordability for customers.
A Deloitte report explains how distributed energy resources (DERs) can address these multiple challenges, filling a gap that centralized, utility-scale power cannot achieve as efficiently. DERs are household electrical resources such as solar, batteries, electric vehicles, thermostats, and smart appliances. When intelligently coordinated, DERs can reduce pressure on the grid, decreasing peak electricity demand.
“If utilities are successful in engaging customers, they could leverage DERs to help meet peak demand with clean energy and provide essential services to the grid, while equitably sharing revenue and resilience benefits with households and putting downward pressure on rates,” Deloitte said.
According to Deloitte, household energy capacity from DER could exceed total peak demand by 2035 in a decarbonized grid scenario. According to Deloitte, US households could have more than 1,500 GW of generation, storage and flexible demand capacity.
This could prove important, as grid planners who had assumed flat demand for decades have raised projections in early 2023, ending the year by doubling their five-year load forecast to 4.7%. As utilities reassess demand from domestic manufacturers, AI data centers, cryptocurrency miners and green hydrogen producers, as well as electrification of transportation and buildings, demand estimates continue to be revised upward. Achieving the Biden administration’s goal of a fully decarbonized grid by 2035 with renewables could double peak demand to 1.4 terawatts in 2035, the report said.
Utility-scale renewables development is meeting most of this demand growth and replacing retired fossil fuel capacity. But grid interconnection delays are growing, delaying projects or causing them to be cancelled.
According to Deloitte, “the electricity system is constrained by the retirement of fossil fuel plants and the long lead times for projects to connect new plants to the limited transmission infrastructure, which now extend to five years.” “In 2023, the pipeline of projects, mostly utility-scale renewables and storage, pending grid interconnection grew to 2.6 terawatts, more than double the current installed capacity.”
Particularly for meeting peak demand needs, DERs can offer a more cost-effective solution than current methods. Peak electricity demand typically occurs in the summer evenings and nights when people return home from work and turn on their air conditioning and appliances. Peak demand is typically met by fossil-fuel thermal power plants that are idle most of the time, but are built to ensure that utilities have enough capacity to quickly come online when electricity demand spikes. For grid-scale renewables to meet peak demand, much larger generation and storage are needed because only a fraction of intermittent capacity counts toward resource adequacy requirements, and solar generation does not match the load profile of winter peaking systems. |
