Finally, the right time for Distributed Energy Resources
Source: Andy Lubershane | · STEEL FOR FUEL · | September 10, 2025
Any utility today can have a VPP program
“Being right too early is indistinguishable from being wrong.”
- Christopher Ailman, Chief Investment Officer of the California State Teachers’ Retirement Fund
The birth of “DERs”
The term “Distributed Energy Resource” — or “DER”, for those in the know — is not very well defined. It refers to a motley crew of devices which can be deployed out at the “edge” of the power grid, most often sitting on customer premises, with the potential to serve as tools for grid operators.
Here’s a more precise definition (my own) which adds some technical specificity, at the cost of some additional wonkery:
“Any loads, generators, or storage devices interconnected to the electric distribution system or behind customer meters, which can be influenced or managed to help balance supply and demand for electricity on the grid.”
“DER” first entered the energy industry lexicon a little over a decade ago. I’m not sure where the term originated, but I recall it began to be promoted in wonky clean tech circles in the early 2010s. The rooftop solar industry was just beginning to pick up steam, as were two other nascent product categories which could theoretically be harnessed for the benefit of the system: 1) “Smart” thermostats — e.g. Nest and Ecobee; and 2) Lithium-ion battery packs — e.g. Tesla and Sonnen.
The industry needed a catch-all term for these new products, and the companies pitching them were eager to be perceived as “resources” for grid operators — in particular distributed solar, which was beginning to be perceived as a nuisance (rightly so, in many cases). Hence, the industry was keen to promote a friendly umbrella term.
And so, a new category of energy assets was born.
It’s important to note that “DER” is intentionally a big tent, but there is a critical distinction to be made among its constituents: only a subset of DERs can be dispatched in real-time, on-demand. Others — notably energy efficiency and rooftop solar — cannot. Grid planners can certainly offer customers incentives to adopt these resources. (For example, your utility might offer you a few dollars per bulb to swap out your old incandescent lights for LEDs.) With the right programs in place, utilities can certainly count on these resources as contributors to their long-term plans.