Distributed Energy Resources

Distributed Energy Resources

Clean-energy, including on-site renewables, energy storage and energy-efficient technologies, such as electric vehicles, separately and together are increasingly being adopted to support energy efficiency and decarbonization goals.  As these technologies become more prevalent on the customer side of the meter, the energy distribution system must evolve to account for them in the supply and demand equation. Integration of these technologies into the electrical grid is critical to ensure that utilities can continue to operate the grid in a safe, reliable and cost-effective manner. View the topics below, and visit the model policy and resource page for more information.

Getting Started

Distributed Energy Resources (DER) complement regional power plant and fossil fuel distribution systems by providing local points where electricity is generated, waste heat is recaptured and/or excess energy is stored for later use. DER or virtual power plants can interact productively with the regional electrical grid by reducing overall loads and shifting loads from peak to off-peak hours. This allows regional generating systems to reduce fossil fuel consumption and carbon emissions, especially when compared to carbon-intensive, highly-polluting peaker plants.

Standby diesel generators, microturbines and other electric generation technologies with lower efficiency and higher emissions than central station power plants can be classified as DER. For the purposes of this document, however, and in the interest of reducing carbon emissions, the focus is placed on DER derived from renewable sources. DER can contribute to the resiliency and reliability of the grid by providing local generation and storage that could be deployed and utilized during failures in portions of the distribution line. Communities with lower system stability and reliability can particularly benefit from the deployment of robust DER systems in key priority locations.

During a two-month period in 2020, communities in Louisiana experienced three hurricanes resulting in a loss of power for over one million people and 73 inoperable sewage stations. Restoring power took weeks. Even short-term power outages can have serious health implications for medically vulnerable persons who rely on electric medical equipment. Recommendations to improve the reliability of the grid included investment in virtual power plants, incentivizing solar+storage in community facilities that function as shelters, and providing equity to environmental justice communities.

DER technology is relatively new and rapidly evolving. Policies aiming to encourage the use of DER technology should be flexible enough to account for innovation. Policies should also be performance-driven, emphasizing goals for carbon reduction and energy efficiency over prescriptive language or strict adherence to specific technologies.

Demand-responsiveness typically requires an agreement between a building owner and the local utility but can also be set up independently by a building owner as a means of reducing power usage, and thus high electrical rates, during peak hours.

A modernized grid that is resilient, reliable and flexible is based on two key elements: front-of-the-meter and behind-the-meter components. The front-of-the-meter component involves the integration of DER into the utility power grid. The behind-the-meter component requires building-to-grid integration in the form of an information loop between buildings and the grid that, at a minimum, tracks patterns of energy production (if any) and consumption.  Buildings account for 75 percent of electricity consumption in the US;[ii] a policy that does not include building performance or building-grid interaction has limited potential to reach energy-efficiency goals.

Multiple fundamental decisions must be made as building-to-grid integration policies are developed. Before consideration of renewable energy or other demand response strategies, a foundational step should be a careful analysis to determine whether all available passive design strategies  and energy efficiency measures have been optimized. Some considerations are listed below as a starting point for DER policy development.

DER policies might be documented in or integrated with codes such as:

  • Building Codes
  • Electrical Codes
  • Fire Codes
  • Energy Conservation Codes
  • Land Use Codes

The policies might be applicable to:

  • New construction projects
  • Major alterations
  • Existing buildings

Within each of those project categories, policies may be applied to building types:

  • Single-family
  • Multifamily
  • Commercial
  • Industrial

Policies may also be implemented for building of a given size:

  • All buildings
  • Buildings over 2,500 square feet
  • Buildings over 20,000 square feet

The minimum required capacity of on-site or off-site zero-carbon energy systems could be based on:

  • Typical energy use intensity for the building type (schools and office buildings may require less, while hospitals may require more. Utility bill records could provide use data.)
  • Available roof area
  • Building floor area

Decisions must be made regarding whether DER policies will include sector-specific targets such as DER deployment in the transportation, industrial, commercial and residential sectors. Where investments and incentives are being proposed for the use of DER technologies, policies may also set targets for a portion of the sources being directed to those specific sectors and/or to disadvantaged communities, consistent with the municipality’s environmental justice goals. Decisions must also be made regarding whether “EV ready,” “renewable ready” (wind, solar, geothermal, biomass, etc.) or “demand response readiness” should be required for new construction, to facilitate future installation or expansion of such systems.

Scalable DER Power Technologies

Scalable technologies include both on-site generation resources and off-site renewable alternatives.

Solar photovoltaic (PV) arrays are the most common form of distributed renewable energy. Costs for PV systems have fallen drastically over the years, and continue to fall, while their efficiency at converting incoming solar rays to electricity improves. PV installation is most feasible and cost-effective when coordinated with new construction. When installation during construction is not an option, the next best choice is solar readiness (Appendices CB and RB of the 2021 IECC). Given the right solar orientation, systems are commonly installed on existing roofs or on-ground where land is available.

Solar thermal arrays for generating hot water are another possibility for on-site renewables. Once the on-site storage tanks are sufficiently heated, however, there is generally no further productive use for the excess solar energy, as opposed to PV arrays which can either store on-site or export excess electricity out to the grid. While the technology of the systems is relatively simple and time-tested, the system’s pumps, exterior piping and controls require ongoing maintenance. The cost of long-term maintenance needs to be considered in the pay-back analysis.

Building-mounted wind turbine generators are available in several varieties. Their suitability for a particular site and a payback that includes maintenance need to be carefully evaluated.

Ground source heat pumps transfer heat from one area to another and capitalize on the relatively constant temperatures a few feet below the earth’s surface to capture heat during the winter and to dissipate heat during the summer. Air source heat pumps perform a similar function and are less expensive, but their efficiency is 25 to 50 percent lower than that of ground source heat pumps. One alternative to achieve higher efficiency and lower cost is a dual-source heat pump.

On-site energy generation goals can also be coupled with a jurisdiction’s environmental justice goals. The Energy Trust of Oregon was one of the recipients of the 2020 State Leadership in Clean Energy Awards for their Inclusive Innovation Project. The project makes solar energy generation affordable and accessible to low income, rural, and traditionally under-served communities.

Where a building and its site lack sufficient wind, solar exposure or space for the installation of on-site renewables, as is the case with some slender buildings or buildings with heavy process loads, some off-site source of renewable energy might be desired or required by local policies or regulations. The ownership and billing credit for off-site generation requires the cooperation of a local utility. The purchase of renewable energy certificates (RECs) is another alternative, but it can be challenging as it is often unclear whether such purchases result directly in the construction of new renewable energy resources, and how far into the future that renewable energy benefit might extend. Community solar programs provide an attractive option in those areas where such programs are available. At the utility level, offshore wind generation is an alternative for coastal states. Large scale offshore wind projects have been implemented in New York State as part of the state’s clean energy and public health goals.

EV Infrastructure 

EVs have an important role to play in strategies for decarbonization and reduction of harmful emissions. One of the barriers to successfully reaching EV goals is range anxiety, or the fear that an EV will have insufficient charge to reach a charging station. At the larger scale, infrastructure investment and incentives can be implemented to provide charging stations at existing service stations, parking lots and along public ways. At the building scale, EV charging at buildings and building sites can be required as part of decarbonization and energy-efficient policies; cities such as New York City already do so. Since the 2016 version, the California Green Building Standard (CALGreen), has required EV readiness for residential and commercial buildings as part of the state’s Zero-emission Vehicles Action Plan. Vehicle batteries provide one convenient option for storage and use of excess renewable energy generation, either directly to plugged-in vehicles or indirectly into dedicated energy storage. This avoids the losses that occur with DC to AC power conversion.

Energy Storage 

By large, the most accessible forms of renewable energy are intermittent by nature because solar energy is only available during daylight hours and wind speed is variable. Those hours don’t always coincide with the hours of peak energy demand. A school or office building might be empty on a sunny weekend afternoon but bustling early on a winter morning with little or no sun. Excess energy could be fed into the grid where the utility offers net-metering options. This would reduce the overall cost of energy for the property owner or operator; however, it does not contribute to the reduction of peak demand, nor does it improve resiliency or reliability during an outage. As an alternative, the excess energy could be stored in an Energy Storage System (ESS) for later use or converted to thermal energy. The logical synergies between solar energy generation and energy storage, often referred to as Solar+Storage, also extend to the reduction of peak demand loads.

A heat pump water heater can efficiently convert solar energy to hot water for use that same evening or the following morning, and excess solar energy can be used to freeze ice storage for the following day’s cooling. Useful heat can also be recaptured from drain water or exhaust air, either to be used immediately or stored for later use. The use of such systems takes stress off the grid during peak events, reduces demand charges, and reduces overall energy use and carbon emissions.

Multiple energy storage technologies have been developed and are currently available; other emerging technologies are in different stages of development. The most common type of ESS consists of lithium-ion batteries arranged on a rack. This is the same battery technology used in small electronics and in electric vehicles. Due to the popularity of electric vehicles, the cost of lithium-ion batteries is in decline.

One example of efficient use of energy generated from on-site resources, such as PV panels, produces energy during the hours of peak production, stores it in an ESS, then transfers that energy onto the battery of an EV for use the following day. ESS has also been used successfully in remote areas where access to the grid is impractical. One such location is the Energy Conservation Management Division in Cimarron, New Mexico, a fire command center for the state’s northwestern region.


Visit the International Code Council energy resources page for more information.