DERs and Transmission Needs

As clean energy booms across the country, the importance of transmission has grown along with it. Utility-scale solar and wind resources require large transmission upgrades to connect to the grid and serve consumers. Even without the renewable boom, transmission was already straining to meet the increasing demand for capacity in new population centers, for new technologies like AI data centers, and to reduce congestion during extreme weather events.

Despite the feverish call for new transmission, and we do need more of it, distributed energy resources (DERs) such as community and rooftop solar with local generation decrease strain on the grid, while the industry tries to overcome obstacles to new transmission build out. DERs can fill this immediate shortfall, illustrating the benefits of smaller spread-out generation for energy security, resiliency, and ultimately costs. By filling the gaps arising from the logistical challenges presented by utility scale renewables and transmission build out, DERs take pressure off the grid, ultimately lowering costs to consumers.

With so much at stake, New Columbia Solar is rising to the challenge. We allow local CRE to become clean energy champions, paying them to host DERs that provide their local communities with cleaner, cheaper power.

Transmission Needs

Last October, the Department of Energy (DOE) released the National Transmission Needs Study, detailing the current and future transmission needs through 2040. Overall, the study finds a “pressing need for additional transmission infrastructure” to meet 21^st century power demand.

This is especially true as the U.S. has staked decarbonization on utility-scale solar and wind. This plan only works with a simultaneous grid infrastructure build out of mammoth proportions. Studies modeling high clean energy growth scenarios predict the median need is 47,000 gigawatt-miles of high voltage lines by 2035. Overall this represents a whopping 57% growth in transmission!

Even now, just increasing consumer demand for electricity alone has outpaced what the grid can handle. This has resulted in persistently high wholesale energy prices over the past three to five years due to transmission congestion. The Mid-Atlantic and North East regions have particularly struggled recently. This congestion reflects how transmission constraints are preventing lower-priced energy from reaching high-demand, high-priced areas during peak periods. The effects are apparent in PJM’s recent announcement of skyrocketing capacity prices that are set to raise energy bills by as much as 24% in 2025.

PJM and their customer’s woes boil down to tight supply-demand conditions. New generation is not able to be put on fast enough to meet ballooning energy demand. Clearly a problem exists, and a utility-scale build out coupled with a “big transmission fix” seems to be the most popular solution.

Transmission Reality

This is easier said than done. After a boom in the beginning of the 2010s, transmission buildout has significantly decreased in the last 10 years even as investment has grown, reflecting the larger price tag. Not only have costs risen due to supply chain and production constraints, but large transmissionprojects have seen a string of failures as stakeholders across multiple states disagree over who should shoulder these costs.

Transmission development faces barriers due to complex state processes, permitting challenges, and cost allocation. Transmission lines are required to cross multiple states at once, exacerbating these problems. The utility incentives also delay transmission development. Many utilities opt to maintain control of transmission by building shorter lines serving narrower needs within their own territories.

And then there is local opposition. Any large transmission buildout will have to cross natural spaces, such as wetlands, and inevitably reduce tree canopy. Lines will run through rural and historically disadvantaged communities mostly to benefit consumers in large population centers. And there are a lot of local battles over transmission siting. We can’t assume that obstacle can be overcome.

Role of DERs in Transmission

This is where DERs can play a role in easing the burden on transmission. Ultimately, they lower energy costs for consumers and buy time for transmission to catch up to need.

Distributed generation (DG) refers to the production of electricity at or near the point of use. Examples of DG include solar panels and wind turbines. Distributed generation helps reduce the short-term burden on transmission buildout in a few ways:

1. Reduced Transmission Losses: DG reduces the amount of energy lost in transmitting electricity because the electricity is generated very near where it is used, perhaps even in the same building. This efficiency reduces the size and number of power lines that must be built.
2. Deferred Investments: Using distributed energy storage to supply electricity during peak demand hours can reduce the strain on the grid. This may allow utilities to defer costly transmission and distribution (T&D) grid investments.
3. Impact on Inter-Zonal Transmission Flows: Distributed generation can significantly reduce more local transmission flows. At moderate levels, distributed generation and distributed storage adoption could allow certain inter-zonal transmission investments to be delayed or avoided.

Companies like New Columbia Solar are innovating in the DER space. We offer an alternative to reliance on utility-scale generation, both renewable and otherwise. The importance of decentralized power is core in the DER space and speaks to the benefits of smaller spread-out generation for energy security, resiliency, and ultimately costs. By taking advantage of existing infrastructure and serving the needs of local communities, NCS’s solar projects do take pressure off the grid.

DG helps to reduce bulk-scale transmission investment, however, it does not totally eliminate the need for such investment. The DOE study suggests benefits of simultaneously planning for transmission, distributed generation resources, and utility-scale resources in order to optimize power planning outcomes. The trade-offs illustrated in the study indicate that there is no single solution in the pursuit of achieving long-term system needs and clean energy policy goals.