Illinois’ Climate and Equitable Jobs Act (CEJA), passed in 2021, sets an ambitious path for the state to phase out carbon emissions from the energy sector by 2045. As specified by the Act, a key part of the path to decarbonization involves leveraging distributed energy resources (DERs) for the value they can provide to the grid. However, Illinois lacks both a framework to quantify this value and a compensation mechanism to promote DER adoption and dispatch that helps realize this value. In recognition of this, CEJA directed the Illinois Commerce Commission (ICC) to initiate an investigation into the value of, and compensation for, DERs, and ICC selected E3 and our subcontractor Viridis Consulting to carry out a study in service of the CEJA mandate. After a yearlong effort, the resulting report has been published, and is available for download here.
Download the report >
While much of the value of a DER mirrors the value of a bulk grid resource, their position dispersed throughout the distribution system, and often behind-the-meter, affords DERs a unique ability to provide distribution grid relief. For example, if load growth is expected downstream of distribution equipment that has no remaining headroom, DERs that are also downstream of that equipment may be able to accommodate the additional load growth without equipment upgrades or replacement. With electrification expected to push electric load to unprecedented levels in the coming years, this particular value of DERs to the distribution grid will be increasingly important.
Our new report includes a robust calculation of distribution grid value that reflects both the hourly variation of the value within a single year and the evolution of the value across many years. The results of this valuation motivate an approach to DER compensation that prioritizes ratepayer protection and benefit realization.
The report recommends no additional compensation for DER solar, but that a performance-based incentive be made available for DER energy storage. It also provides a brief roadmap for how Illinois can evolve distribution system data and planning to eventually feed into a compensation mechanism that is more targeted and more valuable to the grid. The Illinois Commission is expected to open a docket on this topic at the end of Q1 2025, with the report’s recommendations serving as a starting point for a future rulemaking.
The report was prepared by E3’s Andrew DeBenedictis, Fangxing Liu, Andrew Solfest, Stephanie Kinser, Jun Zhang, Melissa Rodas, Hugh Somerset, Eric Cutter, Genevieve McQuillan, and Viridis Consulting’s Mabell Garcia Paine and Kristine Jiao.
