WHO SHOULD OWN AND OPERATE DISTRIBUTED ENERGY RESOURCES?

This research paper examines different ownership and operation models for distributed energy resources (DERs), evaluating utility-centric, third-party-centric, and customer-centric approaches. Through various case studies, the author argues that any of these models can optimize the electricity system if they prioritize fair compensation, transparency, and adaptability to new technologies.

• Utility-owned DER programs are most effective when they are narrowly focused on achieving specific public goals, such as early technology adoption or market development, but they risk cost overruns and market power issues if not properly managed.
• Third-party and customer-owned DERs are most successful when they have transparent access to the full value of the resources they provide, often facilitated by dynamic rate designs or competitive markets for distribution and bulk-system services.
• In California, utility-owned solar PV programs were terminated by Southern California Edison (SCE) and Pacific Gas and Electric Company (PG&E) because competitive procurement from third parties via reverse auctions proved more cost-effective for ratepayers.
• The Borrego Springs microgrid project demonstrated that utility investment in DERs can significantly improve reliability for remote or marginalized communities where transmission bottlenecks exist.
• Opening wholesale capacity and energy markets to third-party demand response (DR) and energy efficiency (EE) aggregators in PJM Interconnection has led to significant cost savings by displacing more expensive conventional generators.
• The mPowered program in NV Energy's territory shows that third-party managed automation (using programmable communicating thermostats) can effectively reduce peak demand for utilities while lowering customer bills by 10-15%.
• Automation technology significantly increases the effectiveness of customer-centric DERs; a SMUD study and a Brattle Group meta-study indicate that automation and in-home displays can nearly double or increase price response by an average of 90%.

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} }