New York has undertaken a comprehensive approach to determine the value of distributed energy resources (VDER). A market-based mechanism, VDER will ultimately lead to better understanding of the benefits of DER. More importantly, this holistic approach will encourage the deployment of DER in a manner that maximizes overall value to utility customers.
With VDER, utilities will compensate DER owners for the benefits their resources provide to the energy system based on prices that reflect specific values. Collectively, these values make up what is known as the value stack. Values include:
- Energy (kWh) is the market value for kWh delivered, inclusive of electrical losses
- Capacity (kW) is the market value for capacity delivered
- Environmental impact is value of reduced emissions as a result of using DER
- Demand reduction is the value of avoiding new distribution system capacity by reducing distribution system peak demand
- Locational System Relief is the location-specific value of the DER to a given utility location, for example due to voltage support or avoiding infrastructure upgrades.
The Public Service Commission is defining and delivering VDER in two phases. The new Phase One methodology takes the first step in moving beyond Net Energy Metering (NEM) to a more accurate valuation and compensation for defined categories of DER. The Commission set the Phase One VDER compensation values in the fall of 2017.
Technologies Eligible for VDER Compensation Under Phase One
|Intermittent and non-dispatchable technologies
|Solar photovoltaic (PV) (≤ 2MW)
||Fuel cells (≤ 2MW)
|Wind (≤ 2MW)
||Farm Waste Generators (≤ 2MW)
|Micro hydroelectric (≤ 2MW)
||Micro combined heat and power (≤ 10kW)
||Energy Storage paired with Eligible Generator
The second phase will further refine the values that DER provide to the energy system. Phase Two Stakeholder Working Groups are advancing work around the Value Stack, Rate Design, and Low- and Moderate-Income customers, with materials available at www.dps.ny.gov/VDER/.