The Economics of Integrating Distributed Energy Resources into the Electricity System

This chapter provides a broad overview of current economic issues related to integrating distributed energy resources (DERs)—primarily solar photovoltaics (PV) and battery electric storage (BES)—into the electricity system, and the implications this has for electricity markets. Topics covered include (but are not limited to) generation intermittency, merit-order effects, the ‘duck curve’ problem, resource adequacy and the ‘missing-money’ problem, efficient investment in flexible generation and storage, implications for the electricity transmission and retail distribution systems, incentivizing adoption of DERs, and the solar rebound effect. The chapter’s general aim is to provide a non-economics audience with a broad sense of the current state of economic research on these topics.