Electric utilities face the challenge of maintaining a reliable and affordable grid amid unprecedented (while uncertain) load growth, further compounded by competing pressures, such as an aging coal fleet, a distribution grid strained by climate impacts, and increased fossil fuel price volatility. To meet rising electricity demand, utilities are proposing significant new gas-fired generation that could result in significant costs, especially if the load growth does not materialize as projected. Michigan, North Carolina, and Virginia sit at the forefront of these trends: each state faces significant projected load growth, has a substantial legacy coal fleet in various stages of retirement, and has utility proposals for significant new gas-fired capacity to meet that demand.
Distributed energy resources (DERs) are uniquely positioned to relieve today’s planning challenges. Fast to deploy, cost-effective, modular, and scalable, DERs deliver cost savings, reduce planning risks, and offer customers direct participation in the energy transition. This study evaluates the potential for DERs to meet electricity needs in Michigan, North Carolina, and Virginia through a structured, state-specific analytical process.
Using Current Energy Group’s hourly optimization model, this study identifies the cost-effective DER portfolio in these states for the 2030 and 2035 planning years. The results are substantial, capturing direct utility benefits in avoided energy, generation, transmission, and distribution capacity costs. A multitude of proven benefits, including resilience, ancillary services, fuel price risk reduction, health benefits, and economic development, would further strengthen the already compelling case:
- Michigan: $1.6 billion in annual savings by 2030
- North Carolina: $676 million in annual savings by 2030
- Virginia: $926 million in annual savings by 2030
The resulting portfolios are extensive, and achieving them will require overcoming structural barriers by utilities, regulators, and program administrators. The recommendations in this report offer five strategic priorities that are mutually reinforcing with compounding value when pursued together:
- Price Signals: Adopt a grid services tariff framework that compensates DERs based on the grid services they provide, at the appropriate time and location resolution, calibrated to actual measured performance;
- Cost Allocation: Adopt an export tariff framework that treats exporting customers symmetrically, replacing less predictable upfront interconnection costs with ongoing use-of-system charges;
- Planning Process: Integrate and coordinate planning processes (including distribution, transmission, and resource planning);
- Utility Incentives: Implement performance-based regulation with performance incentive mechanisms and all-source procurement;
- Regulatory Framework: Establish interim targets, condition conventional resource approvals on demonstrated DER progress, require large loads to fund DER programs, and remove participation barriers.
The window to build a lower-cost, lower-risk, more resilient resource base is open, and the choices made today will shape Michigan’s, North Carolina’s, and Virginia’s grids for decades to come. The analysis presented in this report demonstrates that cost-effective deployment of DERs at scale is achievable in these states. The potential savings are substantial, the technologies are proven, and the need is urgent.
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