Gabriela Elizondo

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The role of distributed energy resources (DERs) in future power systems is becoming increasingly important due to the ongoing transformation of the electricity sector towards carbon neutrality and higher decentralization. As changes in the demand side continue, such as the adoption of electric vehicles (EVs) and heat pumps, and the connection of DERs to the grid by prosumers and aggregators, coordination between supply- and demand-side resources becomes more critical.

Both developed and developing countries have a strong incentive to deploy DERs. In developed countries, there is a growing demand for cleaner and more sustainable energy sources, as well as a desire to reduce dependence on centralized power grids. As renewable energy sources like solar and wind power continue to gain a larger share of the energy supply, there is a growing need for an optimized and flexible power system that can effectively manage the variability of these sources.

In developing countries, the deployment of DERs has the potential not only to reduce greenhouse gas emissions but also to improve energy access, promote energy security, and mitigate the risks associated with importing fossil fuels. This is why these economies have started to deploy growing DER volumes, particularly distributed solar, battery energy storage, and EV charging load.

Central to this paper is our exploration into the dynamics, opportunities, and challenges of implementing DERs in various energy contexts, particularly underscoring the disparities and commonalities between developed and developing regions. The principal research objective is to unearth the strategic, regulatory, and technological underpinnings that have facilitated the proliferation of DERs in pioneering regions such as Australia, the UK, Germany, and California, and subsequently, to extract actionable insights and tailored recommendations for accelerating the integration of DERs in developing countries. By analyzing the distinct pathways, policy landscapes, and outcomes realized by these frontrunner regions, we aim to distill lessons and strategies that can pragmatically be adapted and applied to the nuanced energy ecosystems prevalent in developing countries. These recommendations cover a range of areas, including end-user tariffs, network access pricing, addressing fixed system costs in the presence of decentralized resources, DER aggregation, enabling DER participation in multiple markets to maximize revenue, reforming electricity distribution utilities, and establishing coordination mechanisms between transmission and distribution system operators (DSOs). The lessons learned can inform developing countries’ efforts to integrate DERs and transition to a more sustainable energy future.

[post_title] => Harnessing the Power of Distributed Energy Resources in Developing Countries: What Can Be Learned from the Experiences of Global Leaders? [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => harnessing-the-power-of-distributed-energy-resources-in-developing-countries-what-can-be-learned-from-the-experiences-of-global-leaders [to_ping] => [pinged] => [post_modified] => 2024-03-25 11:06:07 [post_modified_gmt] => 2024-03-25 11:06:07 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=46670 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [1] => WP_Post Object ( [ID] => 44329 [post_author] => 111 [post_date] => 2021-11-18 13:01:09 [post_date_gmt] => 2021-11-18 13:01:09 [post_content] =>

As the world’s third-biggest emitter of greenhouse gases, India has pledged to achieve net-zero carbon emissions by 2070. The electricity sector is at the forefront of decarbonisation initiatives and distributed energy resources (DERs) are expected to play a key role in enabling the country to eventually transition away from fossil fuel power generation (especially coal). DERs are physical or virtual assets that are located close to demand across the distribution grid, and can provide value to the power system, individual customers, or both. As the share of traditional flexible fossil fuel generation declines in the power mix, distributed generation, energy storage, and demand response will become important sources of system flexibility. Specifically, the rise of EVs (electric vehicles) and of electricity demand for cooling services provide significant opportunities for decentralized flexibility. However, the Indian power sector requires a range of reforms to bring it into line with the rise of the decentralization paradigm. These include in the areas of market architecture, coordination between transmission and distribution network operators, reforming the distribution sector and rationalisation of retail tariffs.

In terms of market architecture, the country needs to move towards a two-sided market in which both supply-side and demand-side resources can participate. This requires removing barriers to the entry of aggregators, investment in ICT infrastructure and distribution grid modernization, and the establishment of liquid short-term electricity markets, local flexibility markets, and ancillary service markets. Also, a more effective coordination mechanism between transmission and distribution network operators is needed to improve visibility and control over DERs and enable a better utilization of these resources for both local grid congestion management as well as national grid balancing. The more complex issues, however, lie in the distribution sector. The current scope of distribution licensees’ operation includes both network and retailing, which means that the state distribution companies (Discoms) will not benefit from customer-owned DERs; they thus have an incentive to resist their uptake. The State Discoms are also in poor financial health due to a range of factors such as poor management, non-cost reflective retail tariffs, and a high level of AT&C (aggregated technical and commercial) energy losses. This prevents them from investing in grid modernization and digitalization. Finally, retail tariffs in India are lower than the actual costs of supply for residential consumers; this makes investment in DERs uneconomic for this class of customers, whereas a higher rate incentivizes grid defection among C&I (commercial and industrial) customers, with consequences for the revenues of distribution utilities.

[post_title] => The Rise of Distributed Energy Resources: A Case Study of India’s Power Market [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => the-rise-of-distributed-energy-resources-a-case-study-of-indias-power-market [to_ping] => [pinged] => [post_modified] => 2021-11-18 13:01:09 [post_modified_gmt] => 2021-11-18 13:01:09 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=44329 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) ) [post_count] => 2 [current_post] => -1 [before_loop] => 1 [in_the_loop] => [post] => WP_Post Object ( [ID] => 46670 [post_author] => 974 [post_date] => 2023-10-26 11:05:28 [post_date_gmt] => 2023-10-26 10:05:28 [post_content] =>

The role of distributed energy resources (DERs) in future power systems is becoming increasingly important due to the ongoing transformation of the electricity sector towards carbon neutrality and higher decentralization. As changes in the demand side continue, such as the adoption of electric vehicles (EVs) and heat pumps, and the connection of DERs to the grid by prosumers and aggregators, coordination between supply- and demand-side resources becomes more critical.

Both developed and developing countries have a strong incentive to deploy DERs. In developed countries, there is a growing demand for cleaner and more sustainable energy sources, as well as a desire to reduce dependence on centralized power grids. As renewable energy sources like solar and wind power continue to gain a larger share of the energy supply, there is a growing need for an optimized and flexible power system that can effectively manage the variability of these sources.

In developing countries, the deployment of DERs has the potential not only to reduce greenhouse gas emissions but also to improve energy access, promote energy security, and mitigate the risks associated with importing fossil fuels. This is why these economies have started to deploy growing DER volumes, particularly distributed solar, battery energy storage, and EV charging load.

Central to this paper is our exploration into the dynamics, opportunities, and challenges of implementing DERs in various energy contexts, particularly underscoring the disparities and commonalities between developed and developing regions. The principal research objective is to unearth the strategic, regulatory, and technological underpinnings that have facilitated the proliferation of DERs in pioneering regions such as Australia, the UK, Germany, and California, and subsequently, to extract actionable insights and tailored recommendations for accelerating the integration of DERs in developing countries. By analyzing the distinct pathways, policy landscapes, and outcomes realized by these frontrunner regions, we aim to distill lessons and strategies that can pragmatically be adapted and applied to the nuanced energy ecosystems prevalent in developing countries. These recommendations cover a range of areas, including end-user tariffs, network access pricing, addressing fixed system costs in the presence of decentralized resources, DER aggregation, enabling DER participation in multiple markets to maximize revenue, reforming electricity distribution utilities, and establishing coordination mechanisms between transmission and distribution system operators (DSOs). The lessons learned can inform developing countries’ efforts to integrate DERs and transition to a more sustainable energy future.

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