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For DERs, a focus on equity will fuel the adoption rate we need.

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Christopher Neely's picture
Independent Local News Organization

Journalist for nearly a decade with keen interest in local energy policies for cities and national efforts to facilitate a renewable revolution. 

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  • Jun 29, 2022

This item is part of the DER and Management Systems - June 2022 SPECIAL ISSUE, click here for more

In February earlier this year, the California Energy Commission approved a policy report that outlined a goal of installing 6 million electric heat pumps by 2030. The sleek and shiny goal of mass adoption of this distributed energy resource would go far into decarbonizing California homes and businesses but it also means a massive scale of installation and adoption for this technology, the likes of which we have never seen. 

Just how much of an increase in scale would this require? Well, California would need to install more than 60,000 heat pumps per month, every month through the end of the decade. In a presentation to the California Energy Commission, the main energy policy setting body in the most advanced state in the clean energy sector, Holmes Hummel, founder of Clean Energy Works, cited some deflating statistics that show just how far we are from figuring out how to push clean energy upgrades like heat pumps and other DERs. 

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A ten year study out of Lawrence Berkeley National Lab showed the actual adoption rates of debt-financed, clean energy upgrades with state-backed loans that helped customers cover the upfront cost of the technology. In no state studied, which included New York and California, were more than 1% of customers served, total, over the course of a decade. Hummel translated this into sobering terms: we’re at a rate to serve 10% of customers over the course of the next century. 

This is a scale and rate of adoption that is unworkable if states and countries are going to reach their clean energy goals, in which DERs such as heat pumps, microgrids and rooftop solar will play a major role. There are two reasons that this rate may be stagnant as it is. One is an economics problem: that customers are not willing to take on the debt obligation of a DER even if government-backed loans subsidize some of the upfront cost. The other is an equity problem: Studies show that many homes in disadvantaged communities are too old or too small to adopt the increased load of DER technology. 

The first problem—unwillingness to take on the debt obligations—could be a public relations problem as much as an economic one. It’s not that all eligible customers who decline the government-backed dollars to invest in a DER are poor. In many cases they have made the calculation that their money is better spent somewhere else. There is growing support in the energy community for massive public information campaigns—similar to those we see around cigarettes—to help convince people of the importance of making the investment if they can, and what it will do to help them and their community. 

For the economic aspect of this problem, utilities can play a larger role in offering upfront subsidies to qualifying customers. In Detroit, Detroit Edison has proposed site specific investments and cost recovery tariffs as part of an effort to ramp up adoption of EVs, which will require investments in at-home and business charging stations. The utility is not going to receive the benefit of the EV wave unless bidirectional charging technology is installed, and the way to ensure that happens is to help finance the technology’s adoption in the market. 

Then there is the inequity problem helping to slow the rate of DER adoption. In a study published last year in Nature Energy Journal, led by Anna Brockway, Jennifer Conde and Duncan Callaway, they found that more than half of customers in PG&E and Southern Con Edison’s service areas didn’t have access to renewable energy offsets due to limitations posed by the grid. 

“The grid may hinder efforts to increase equity in DER adoption,” the authors wrote. The most telling statistics were in the study’s conclusion, which found that 39% of households in these service areas lacked access to even the lowest power intensive DER loads, such as heat pumps and level 1 EV charging; 64% of households lacked access to level 2 EV charging. The study found this lack of access, often in smaller and older homes, was most widespread in minority and disadvantaged communities. 

DER adoption is a critical aspect of these clean energy goals countries, states, cities, and companies are setting for themselves. It is going to take a full ecosystem effort to accomplish the scale and rate of adoption necessary for these goals. It’s a utility problem as much as a state problem, an economic issue as much as a public information issue. No matter where you are in that ecosystem, it’s urgent that the work begins now.

Rao Konidena's picture
Rao Konidena on Jul 7, 2022

Thanks for raising this equity issue in terms of DER adoption. For mass adoption of DER loads such as heat pumps and EV charging - access is important. I wonder to enable this access if the state PUC should work with community choice aggregators (since you mentioned California) and form a Public Private Partnership (P3) investment business model to accelerate the deployment of these DER loads.

Christopher Neely's picture
Thank Christopher for the Post!
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