Brattle Experts Assess Ontario’s DER Compensation Mechanisms and Recommendations in New Report
Prepared for the Ontario Energy Board (OEB) and the Independent Electricity System Operator (IESO)
In a new report prepared for the Ontario Energy Board (OEB) and the Independent Electricity System Operator (IESO), experts from The Brattle Group reviewed Ontario’s distributed energy resource (DER) compensation mechanisms. Specifically, they examined whether and to what extent existing and potential compensation mechanisms work individually and collectively to drive the efficient and cost-effective adoption and participation of DERs in Ontario’s electricity system.
Results of the Brattle team’s review, along with lessons learned from other jurisdictions, informed the development of a principle-based DER assessment framework. The framework was used to assess Ontario’s DER compensation mechanisms and identify potential ways to enhance them, with the goal of maximizing the economically efficient adoption and operation of DERs.
Key findings from the report included:
- Rate design presents the biggest opportunity to promote the efficient level of DER adoption and participation, especially more dynamic rates for mass-market customers.
- There are opportunities to allocate Global Adjustment costs to all customer types more efficiently, which would result in more appropriate price signals for DER adoption and dispatch.
- Continued integration of DERs into existing wholesale/procurement mechanisms would improve economic efficiency by creating additional competition among energy service providers.
- Programmatic mechanisms can be used to bridge the gaps and incentivize DERs more efficiently when rates alone fall short of conveying underlying costs, or where existing mechanisms have gaps due to unrecognized value streams or lack of available participation pathways.
- Continued incorporation of non-wires solutions into distribution system planning and in regional transmission planning will reduce the magnitude of wires needs and/or defer the wires investment.
Brattle presented the results of this work to Ontario stakeholders. The insights derived from the study will help inform DER-related programs and policies under development by the OEB and the IESO.
The full report, “Assessment of Ontario’s DER Compensation Mechanisms and Recommendations,” and a summary presentation are available below.
