
By rewarding utilities for achieving well-defined performance outcomes such as grid utilization and cost savings (as opposed to simply incentivizing capital investments) utilities are motivated to pursue technology solutions that are more cost-effective, efficient, modern, intelligent, and distributed.
Performance-based incentives can motivate utilities to procure advanced technologies that make them more operationally efficient, speed up interconnection processes for both large-scale and distributed energy resources in support of improved grid reliability and consumer costs, and explore innovative solutions to modern-day energy system challenges. Advanced rate design can help distributed technologies better support ratepayers and the grid. These reforms can also be designed to match public policy objectives, such as state clean energy goals.
In addition to direct-to-consumer benefits, distributed energy resources can help utilities forgo or defer expensive, large-scale grid investments. Many offer additional financial value not yet appropriately recognized in state utility regulation. Utility regulators can ensure customers are more accurately compensated for DERs based on the value provided to the grid, leading to greater adoption and more benefits for all involved.