Addressing the Locational Valuation Challenge For Distributed Energy Resources

The Smart Electric Power Alliance (SEPA), in partnership with Nexant, has released a report entitled:  “Addressing the Locational Valuation Challenge for Distributed Energy Resources.”  It is the second report in SEPA’s Beyond the Meter series, focusing on program strategy and planning for distributed energy resources (DERs). This paper addresses the growing need to define a common metric or approach for assessing the distribution capacity deferral value provided by various DERs so their individual values can be stacked and combined. This document explains a methodology for evaluating capacity deferral potential by using real world utility investments as a foundation for proposing a methodology to calculate locational capacity value.

Extensive electric industry research and thought leadership has identified a whole host of system, community, and locational benefits that could be achieved through careful, targeted deployment of DERs, particularly the locational value of deferring traditional distribution investments through management of local loads. This paper lays out the substantial economic and engineering analysis being devoted to these efforts, including real world demonstrations, with the goal of enabling any utility to adopt this approach for assessing locational capacity value.