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This report, produced by the Rocky Mountain Institute (RMI) for PG&E, examines the impact of distributed energy resources (DERs) and Zero Net Energy (ZNE) buildings on California's electricity system. It identifies misalignments between current utility business models and the shift toward decentralized generation, proposing a transition toward new pricing structures and regulatory frameworks to ensure grid stability and cost equity.

This research paper by the Rocky Mountain Institute (RMI) and PG&E examines the challenges and opportunities presented by the rise of zero net energy (ZNE) buildings and distributed energy resources (DERs). It argues that traditional utility business models and volumetric rate structures are poorly adapted to a bidirectional power system, potentially leading to economic inefficiencies and equity issues. The authors propose a framework for solutions based on rigorous impact measurement, the use of price signals to align incentives, and the evolution of utility business models toward either incentive-based regulation or a network utility model.