Despite transformer shortages and sometimes inaccurate forecasts based on customer adoption of distributed energy resources (DERs), Patricia Taylor, director of policy and research at the American Public Power Association, said in a January 2023 interview with Utility Dive, that electric utilities expect customers to “deploy and explore DER for electrification in 2023 across many different technologies and end uses.”

Introduction of electric vehicles and smart thermostats, appliances and assorted devices is driving the need for charging infrastructure, as well as customer adoption of solar, batteries and other forms of energy storage.

For example, even in the face of supply chain interruptions, component shortages and reduced compensation from state regulators, growth of residential solar in Q3 2022 was 43% higher than Q3 2021, according to a Q4 2022 Solar Market Insight report from Wood Mackenzie and the Solar Energy Industries Association. 

Residential energy storage set a new record in Q3 2022, per the Q4 2022 Energy Storage Monitor from Wood Mackenzie and the American Clean Power Association. It predicts that annual residential energy storage capacity, estimated at under 1.5 GW for 2022, is likely to reach over 2.2 GW in 2026.

Electric heat pump sales has increased, reports the American Heating and Refrigeration Institute, with numbers projected to 14.3 million in 2023, according to the Energy Information Administration’s March 2022 Annual Energy Outlook. Half of U.S. homes have at least one smart home device and 78% of U.S. homes have smart meters. In 2022, over 56,000 battery electric vehicles were sold in the United States.

This has led to customer demand for energy reliability, resilience and savings. That, in turn, has indicated the need for regulators and policymakers to work together on system integration. Utilities are experimenting with “bring your own device” programs and virtual power plants as grid resources¾sometimes in accordance with state regulation. When utilities have reliability challenges, they’re turning to DER providers for help. As the technology evolves and more customers adopt DERs, integration is expected to surge.

As it does, rules for wholesale market integration will evolve, predicted a January 2022 analysis from the GridLab and Advanced Energy Economy. The focus will be on interconnection procedures, cost assessments and management and coordination of participation in wholesale and retail markets.

Al Weinrub, coordinator for the California Alliance for Community Energy, believes that the “utilities, the distribution system and its rules should serve the needs of the community, not the other way around.” To that end, a national initiative was proposed that would seek input on building a framework for DER integration in an attempt to balance local and central control and interests. 

At the same time, 2022 saw almost 600 policy initiatives affecting distribution system modernization as more than 600 transportation- and electrification-related policies, including financial incentives, regulation, net energy metering and DER rate and billing structures, were considered. Regulatory initiatives could advance performance-based regulation, energy storage rates and competitive utility procurement.