WHO SHOULD OWN AND OPERATE DISTRIBUTED ENERGY RESOURCES?

The paper examines how different DER ownership models can be used to integrate cost-effective technologies into outdated regulatory frameworks. It argues that no single model is universal, but each can work if the value proposition aligns with the public interest and utilizes an adaptive approach prioritizing fair compensation and transparency. Utility-owned models are effective for early adoption and public goals but risk cost overruns and market power issues. Third-party and customer-owned models excel when they have transparent access to the full value of DERs through dynamic rate design or competitive markets.

• Utility-owned DER programs are most effective when narrowly tailored to public goals and used for the early adoption and demonstration of emerging technologies, though they must be managed to avoid cost overruns and market power concerns.
• Third-party and customer-owned DERs are most effective when they can transparently access the full value of the resources, often through dynamic rate designs or competitive markets for distribution-level and bulk-system services.
• In California, utility-owned solar PV programs (1-20MW) were largely cancelled because purchasing power from third parties via reverse auctions proved materially cheaper than utility ownership and operation.
• The Borrego Springs microgrid project demonstrated that utility investment in DERs can significantly improve reliability and service for marginalized remote communities while spreading costs across the customer base.
• Opening wholesale capacity and energy markets to third-party demand response (DR) and energy efficiency (EE) in PJM Interconnection has significantly lowered prices; without these DERs, the 2017-2018 capacity auction clearing price would have increased by 137%.
• The mPowered program in NV Energy's territory shows that third-party managed DERs can provide significant peak reduction (over 100MW) and reduce average customer energy bills by 10-15%.
• Automation technology significantly increases customer responsiveness to dynamic pricing; a SMUD study found that automation nearly doubled the customer response to time-varying rates compared to non-automated groups.

APA

O’BOYLE, M. (2015). WHO SHOULD OWN AND OPERATE DISTRIBUTED ENERGY RESOURCES? Energy Innovation. https://energyinnovation.org/wp-content/uploads/20150824_APPSEPA_utility-ownershipDERs.pdf

Chicago

O’BOYLE, MICHAEL. WHO SHOULD OWN AND OPERATE DISTRIBUTED ENERGY RESOURCES? Energy Innovation, 2015. https://energyinnovation.org/wp-content/uploads/20150824_APPSEPA_utility-ownershipDERs.pdf.

Wikipedia

{{cite report |last1=O’BOYLE |first1=MICHAEL |title=WHO SHOULD OWN AND OPERATE DISTRIBUTED ENERGY RESOURCES? |publisher=Energy Innovation |date=August 2015 |url=https://energyinnovation.org/wp-content/uploads/20150824_APPSEPA_utility-ownershipDERs.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{oboyle2015who, author = {O’BOYLE, MICHAEL}, title = {{WHO SHOULD OWN AND OPERATE DISTRIBUTED ENERGY RESOURCES?}}, institution = {Energy Innovation}, year = {2015}, month = aug, url = {https://energyinnovation.org/wp-content/uploads/20150824_APPSEPA_utility-ownershipDERs.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }