Dispatches from NARUC and NASEO 

February is not typically considered peak visitor season in Washington, D.C. The city’s iconic cherry blossoms don’t bloom until March at the earliest, and February D.C. weather typically falls somewhere in the “wintry mix” category. However, for energy professionals this year, February was the prime time for D.C. visits, owing to a pair of high-profile regulatory conferences that took place: the NASEO Energy Policy Outlook Conference and the NARUC Winter Policy Summit.

For those that don’t keep regular tabs on regulatory association acronyms, NASEO stands for the National Association of State Energy Officials and NARUC refers to the National Association of Regulatory Utility Commissioners. Although these two organizations convene different types of state officials - NASEO is focused on state energy offices, whereas NARUC is the home for public utility commissions - they both address similar issues in the energy space. And this year, as in past years, distributed energy resources (DERs) were a major topic of conversation.

Below are the key points I overheard during my time at both conferences, and what they mean for the future of DER monetization programs. 

Overheard at NASEO: Tying appliance rebates to DR program participation is a “best-in-class” approach.

This year, NASEO focused its sessions on opportunities provided by the HOMES rebates. This new incentive program, established by the Inflation Reduction Act (IRA), is set to transform the energy landscape in the US by providing incentives for customers across the country to install smart and energy-efficient appliances. The rebates will be managed and disbursed by state energy offices, and many of the attendees at the NASEO conference were there to learn best practices to ensure these rebates provide the most value possible to consumers. 

One of these best practices was to encourage rebate recipients to enroll their devices in demand response (DR) programs. Many of the devices that HOMES rebates can fund - such as smart thermostats and heat pump hot water heaters - are great candidates for DR programs because they allow customers to shift their power demand based on signals from the electric grid. Leveraging the load-shifting potential of smart appliances, in turn, creates significant cost savings for electricity customers.

On one panel, a director from the Maryland Energy Administration affirmed that getting devices funded through rebates to participate in DR programs is “absolutely essential,” while a representative from the Department of Energy - the ultimate source of this rebate funding - noted that it’s “best-in-class” for states to tie these rebates to DR program participation.

On a different panel, a commissioner from the California Energy Commission revealed that the build-out of new transmission & distribution infrastructure threatens to push up the state’s electricity costs. The state’s solution is to tap into the growing pool of DERs in California, which can provide cheaper alternatives not just to peaker plants but also grid upgrades. If the coming wave of devices deployed through HOMES rebates are also put to use in this way, they would create further cost savings, helping to ensure that these programs are ultimately lowering costs for the taxpayers that funded them.

Overheard at NARUC: Allowing distributed batteries to export back to the grid is “absolutely crucial” for program success.

The NARUC conference at the end of February had a broader agenda compared to NASEO, but DERs were no less in the limelight. This included a panel called “TED Talks DERs,” where I heard a particularly eyebrow-raising statistic: a study on ISO-NE revealed that New England could have saved $1 billion in costs if it had operated undispatched DERs from 2014 - 2019. I drew an immediate connection to the statements by the California commissioner at NASEO on the potential for DERs to tamp down electricity cost growth in his state. 

NARUC’s DER discussion culminated in a workshop in which a twelve-person panel of energy practitioners - including regulators, utilities and third-party providers - shared experiences from their work aggregating these devices into virtual power plants (VPPs) to provide services to the grid. One of the biggest takeaways from this panel was a statement by a DER Program Manager at National Grid, who shared that a crucial enabling regulation for his programs to succeed was a regulatory order allowing customers’ batteries to export power back to the grid. Without this order, he said, most of those batteries’ value to the grid would have been “left on the table.”

For those who have been in this industry for a while, it may seem a little crazy that DERs are still such a huge topic of discussion at these conferences. After all, these technologies have been around for over a decade - haven’t regulators figured them out by now? But the regulatory world moves slowly, and these opportunities to share practices are critical to making sure the best ideas spread from the states that first try them out. For example, Leap has been working with regulators across markets to make critical changes like allowing battery exports at scale, which we would love to see expand to California’s wholesale DR programs. Regulatory innovation is happening, and it’s great to see regulators from different markets connecting the dots.