(If you’d rather listen than read, just click Play above.)Energy nerds love arguing over the value of distributed energy resources (DERs), the rooftop solar panels and customer-owned batteries that are growing more popular by the day. There’s a fight in California right now over the value of energy from rooftop solar, just the latest skirmish in a long war that has ranged over numerous states. The conventional wisdom in wonk circles is that the value provided by DERs is not sufficient to overcome the fact that the energy they produce is, on a per-kWh basis, much more expensive than that produced by utility-scale solar, wind, and batteries (residential solar is roughly 2.5 times as expensive as utility-scale solar, according to NREL).For that reason, many wonks view DERs as a kind of boutique energy and argue that public funds are better spent on utility-scale energy. Turns out: no, that’s wrong. Some groundbreaking new modeling demonstrates that the value of DERs to the overall electricity system is far greater than has typically been appreciated. The work didn’t get the attention it deserved when it came out in late December, so I want to spend some time with it. First, though, let’s get clear on what we’re talking about.The misguided battle between centralized and distributed energyTo understand the difference between centralized and distributed energy, it’s important to understand the distinction between transmission grids, the high-voltage power lines that carry electricity over longer distances, and distribution grids, the nests of low-voltage power lines (strung from the familiar brown poles) that carry electricity to local consumers. If the transmission grid is the interstate highway system of electricity, distribution grids are the local road systems that branch off those main trunks. Centralized energy generally refers to utility-scale power generators (or energy storage) hooked up directly to the transmission grid: coal or natural gas plants, wind farms, solar fields, grid-scale battery stacks, what have you. The big stuff.Distributed energy consists of anything that generates, stores, or manages electricity on distribution grids: rooftop solar panels, ground-mounted “community solar” arrays, consumer batteries, electric vehicles, building energy management software, and the like. (And then there’s truly distributed energy, in the form of off-grid installations that don’t connect to any larger grid. We won’t be getting into that today.)To paint in broad and somewhat crude strokes, advocates for centralized renewable energy tend to view advocates for distributed energy as crunchy pastoral proto-hippies who can’t handle modernity. They note that utility-scale energy is cheaper and capable of powering highly energy-dense modern economies, whereas distributed energy is expensive and diffuse. Advocates for distributed energy tend to view advocates for centralized energy as corporate capitalists in thrall to perpetual growth. They note that distributed energy brings a range of benefits, from resilience and independence to savings on avoided infrastructure, whereas utility-scale energy tends to do greater damage to landscapes and concentrate economic power.Like many disputes in the energy world, this one has hardened into an identity battle, which is annoying and unproductive, since the answer, like with so many other disputes, is both-and.Nonetheless, it’s worth noting that advocates for distributed energy have been at something of a disadvantage to date. It can be devilishly difficult to quantify the benefits of DERs, so a lot of the discussion gets into hand-wavey intangibles.It can be especially difficult to quantify the benefits of DERs to larger grid systems, because energy modeling to date has effectively ignored distribution grids (which represent about a third of US spending on electricity). It has treated them purely as load, as demand to be satisfied, rather than as active, flexible participants in grid management. Until now! Or, until a few months ago anyway. In December, energy modeler Christopher Clack (a familiar name to Volts readers) and his team at Vibrant Clean Energy (VCE) debuted a new way to model the energy system that takes into account DERs and the services they provide. They used it to study the effect of DERs on the electricity system and the results are summarized in “A New Roadmap for the Lowest Cost Grid.” (Full technical report here; slideshow presentation here.)Spoiler: the cheapest possible carbon-free US grid involves vastly more centralized renewable energy, but it also involves vastly more distributed energy. What’s more, far from being alternatives, they are complements: the more DERs you put in place, the more centralized renewables you can put on the system. DERs are a utility-scale renewable accelerant. The practical implication is that going all out on DERs is to everyone’s benefit, up and down the electricity supply chain, from utilities to consumers. It is difficult to exaggerate just what a revolutionary change this represents in energy modeling and how much it turns conventional wisdom on its head. By making distribution grids visible to their model and co-optimizing those grids with the transmission system, the team at VCE uncovered a source of grid flexibility that could save a decarbonizing electricity system some half a trillion dollars through 2050. That’s real money. (If you want to take a deep dive into the material, check out this interview with Clack on Chris Nelder’s Energy Transition Show. It is gleefully nerdy; I cannot recommend it highly enough.)The cheapest energy scenario is clean and distributedAt the heart of VCE’s work is Clack’s state-of-the-art modeling tool: Weather-Informed energy Systems: for design, operations and markets planning (WIS:dom). It allows resolution down to two-mile square areas and makes dispatch decisions every five minutes. It takes into account granular weather data stretching over decades, climate impacts, policy, all forms of generation, storage, transmission, and on and on. VCE boasts that it “leverages 10,000 times more data points than traditional models.”For this study, WIS:dom was augmented to better understand and represent distribution grids, so that it could bring transmission and distribution systems together in one system and co-optimize them. It was given better information about the costs and capabilities of DERs and more options; for example, instead of spinning up a new generator to meet peak demand, it could draw on distributed solar and batteries. No one to Clack’s knowledge has done this before, so there was a lot of experimenting to get it right. “I had to spend a lot of money and time and resources upgrading the model to include this, with a lot of failures along the way,” says Clack. “That's why I'm confident that we did it first, because I spent a lot of time trying to find someone else that had done it, so I didn’t have to do the hard work.”The modeling question was: if a high-resolution optimization tool is given DERs as an option, will it choose to deploy them? If so, how much?The broader social question was: can DERs help lower the overall costs of a clean electricity system? If so, by how much?The paper presents four core scenarios (which were run across a range of geographies):* BAU (business as usual), which includes existing policies and mandates but otherwise lets economics drive dispatch decisions; it deploys WIS:dom in a way that mimics traditional models;* BAU-DER, which does the same but uses the augmented form of WIS:dom, with greater visibility into distribution systems;* CE (clean energy), which models a system that reduces power sector carbon emissions 95 percent from 1990 levels by 2050; WIS:dom mimics traditional models;* CE-DER, which models a 95 percent reduction but uses the augmented form of WIS:dom.To skip straight to the results: if you make DERs an option for the model, it deploys an absolute boatload of them (spending about $10 billion extra over the first 10 years), and by doing so substantially reduces overall system costs. BAU-DER is $301 billion cheaper than BAU (the blue line above), which means we would save money from day one by deploying more DERs even if we didn’t care about climate change. CE-DER is $473 billion cheaper than CE (the green line), which means DERs will make the decarbonization of electricity much less expensive than doing it all with centralized renewables and storage. And here’s the kicker: CE-DER is $88 billion cheaper than BAU (the red line), which means, economically speaking, we’d be better off reducing electricity emissions b...