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by Jeff St. John
July 24, 2020

A new model for calculating the value of distributed energy resources could lead to big changes in the biggest U.S. state energy market.

This spring the California Public Utilities Commission approved changes to its Avoided Cost Calculator. The ACC creates hourly values representing “marginal costs a utility would avoid in any given hour if a distributed energy resource avoided the provision of energy during that hour" — a key measurement of the value of DERs to the state's electricity grid, calculated over a 30-year time horizon for each utility and climate zone in the state. 

These values apply both to DERs that provide energy, such as solar panels or batteries, and those that reduce or shift energy demand, as with energy efficiency investments, demand response or time-shifting and grid-flexible loads. And the “costs” being displaced by new DERs include not only energy and grid capacity but also greenhouse gas emissions and grid investments.

The ACC was first created to guide how the CPUC and utilities measured the impact of energy efficiency programs. But with the proliferation of behind-the-meter energy resources, "there are some interesting possibilities for using it to value other types of resources," said Tom Beach, principal consultant at Crossborder Energy who worked with the Solar Energy Industries Association on the latest changes to the ACC.