POWER October 2019 - 18

LEGAL & REGULATORY
Whit Johnson Andrew Wasden
What's Driving the
Rise of Behind-theMeter
Distributed
Energy Resources
A
substantial shift in implementation of distributed energy
resources (DERs) is on the horizon with the collision of
new technologies and higher energy demand. Innovation
is spawning an abundance of potential behind-the-meter
DERs, which will change the traditional energy industry view
of DERs as being in front of the meter.
Energy requirements are climbing sharply, driven by population
growth and the technology/information age. Compounding efforts
to meet these requirements, our " sustainable " conscientiousness,
and sometimes legal and regulatory measures, limit options
for adding new energy sources using traditional approaches.
Rising energy demand and corresponding rising energy
costs have forced utilities to consider new ways to structure
generation, transmission, and distribution, including development
of DERs. Initial experiments with net metering (purchasing
power from consumers to supplement the grid, such as
from behind-the-meter photovoltaic solar sources) have created
complicated grid-loading and stability issues, prompting
utilities to shy away from, or entirely prohibit, net metering.
Thus, DERs supporting the grid have historically been in front
of the meter, operated by the utility or its sophisticated commercial
and/or quasi-public agent, in order to limit risks to grid
stability while empowering the utility to meet demand.
Technology Advancements
Meanwhile, technology is accelerating at a breathtaking pace
to enhance living and solve problems. Consistent with Moore's
Law, processing power continues to double every two years.
Relevant to the energy industry, photovoltaics and supporting
technologies are improving and proliferating, as are business
models to deploy behind-the-meter photovoltaics. Storage technology,
and particularly strides in lithium-ion batteries, is improving
and prompting innovations in other technologies, including
mobile devices, the Internet of Things (IoT), electric vehicles
(EVs), and artificial intelligence (AI) for optimizing battery usage.
Two recent trends-the increase in behind-the-meter generation
and the rise of storage-emerge from that backdrop,
and can lead to important and substantial shifts in thinking and
utilization of behind-the-meter DERs.
As energy costs rise and the costs of behind-the-meter solar
and other generation applications drop, increasingly more behindthe-meter
generation will deploy. The out-of-pocket cost to deploy
solar generation need not change, though it likely will continue to
decrease. Innovative financing and deployment business models
incentivize consumers, both commercial and residential, to offset
rising energy costs, such as with solar or wind generation.
Battery storage costs also will drop. AI technologies, such as
by Enel X, are optimizing battery usage and demand response
to capitalize on value streams, creating lucrative incentives to
18
deploy behind-the-meter generation and storage. Blockchain
technology also may help expand behind-the-meter energy
generation by enabling expedited, efficient transactions of
power between consumers. Where economic considerations
fail as incentives, the growing " green " awareness and societal
pressure to be " sustainable " can fill in and propel behind-themeter
generation.
The second trend, bolstering behind-the-meter storage resources,
is helped by EV technology, which is changing the
landscape for automakers and regulators. Automakers and innovators
are advancing infrastructure for EVs; consider the increasing
number of EV charging stations that can be seen even
in rural outposts.
Technologies advancing blockchain and the IoT also can
boost investment in EV infrastructure. For example, a charging
station could be leased to an EV driver by way of an efficient
blockchain-facilitated transaction that is communicated
through IoT devices and mobile communication networks.
EVs Bring Transformative Change
As the number of EVs rises, so does another source of battery
storage potentially available to the grid. A parking garage filled
with EVs could be transformed into a DER. AI and machinelearning
technologies are optimizing charging and discharging
of batteries to enhance battery life and value, raising the willingness
to participate in aggregated EV storage DERs. Potentially,
such aggregated EV storage DERs could initially deploy
in front of the meter, but incentives and technology will continue
to spur solutions that incorporate EV battery storage into
behind-the-meter applications.
As these trends lead to an abundance of behind-the-meter
generation and storage, utilities will begin to consider these
available troves of energy differently. In contrast to a prospect
of heavy capital outlay to build a new power generation facility
in compliance with stringent regulatory and expensive environmental
regulations, accepting readily available power from behind-the-meter
sources becomes alluring. The enticement will
cause utilities to explore innovation to accept power to the grid
from behind-the-meter DERs. As improved technology meets
requirements for safely and reliably accepting behind-the-meter
generation, utilities will increasingly consider and come to
rely on behind-the-meter generation as critical DERs. ■
-R. Whitney " Whit " Johnson is a partner at Stoel Rives LLP,
chair of the firm's Technology and Intellectual Property group,
a member of the firm's Energy and Natural Resources industry
group, and a registered patent attorney.
Andrew Wasden is an associate at Stoel Rives LLP, a member
of the firm's Technology and Intellectual Property group, and a
registered patent attorney.
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POWER | October 2019
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POWER October 2019

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