As homeowners and businesses continue to install energy generating equipment like batteries and solar PV behind their meters, forward-looking utilities such as San Diego Gas and Electric (SDG&E) are piloting projects that will help them figure out not just how to use them to strengthen the grid but also how to compensate those DER owners for the use of their equipment.

New regulation will take effect in September in California that will require all inverters connected to the utility grid be “smart inverters,” with technology installed that will give utilities the ability to communicate with them, should they wish.  With communications protocols embedded in four-quadrant inverters, solar + battery systems could theoretically provide volt/var support and serve as both energy sinks and energy generators depending on what the grid needs moment by moment. 

It’s a situation in which technology is outpacing regulation and rates, according to Chris Chen, Strategy Development Manager for SDG&E.

“Technology is definitely moving faster [than regulations], he said in an interview with Renewable Energy World.

The question that utilities are wrestling with right now is how they will compensate those homeowners and businesses that might wish to participate in helping to balance the grid.

“I think rates are going to play a big role certainly down the line,” said Chen.

One scenario might be similar to the way that ratepayers can opt into a slightly lower rate if they agree to turn off their air conditioners from time to time in order to lessen their energy demand on the grid.

“If it is a rate then we are agnostic as to how that function is being performed: whether it is solar, or a battery or somebody turning off their stove or their microwave,” said Chen. He added: “We just care about the impacts to the grid so we can manage the grid effectively.”

Chen sees a future in which all ratepayers have a greater awareness of the grid itself and each person with a grid connection — be it a homeowner or a business — has a real stake in keeping the grid healthy.

“I’d like to call it the customer grid. Because that’s what I think we are doing, we’re engaging customers in their role and helping them recognize that everything they do – they turn a light on, they turn a light off, they put a battery in — everything they do impacts the grid,” said Chen.

“I think in the future, we want them to understand that — to engage in their heart in managing the grid for the benefit of everyone,” he said.

Chen is a presenter at the upcoming SAP for Utilities conference and said he will lead a discussion around the topic of new technologies and how they are impacting utility business models.