FERC commissioner David Rosner thinks the post-election mandate of delivering on energy affordability will largely come down to how markets accommodate both new demand and flexible resources.
Regulators and grid operators need resources that can reduce the risks of meeting electricity demand, and distributed technologies could be among the fastest options available, Rosner said onstage at the DERVOS conference in New York this afternoon.
“We’re in a moment in this country where we really need electrons, like in a bad way,” he told the distributed energy companies in the room. “And we’ll take yours.”
Figuring out how much demand will actually materialize, how to maintain reliability, and how to connect resources without years of administrative delay are all key to reducing uncertainty, Rosner said. DER companies need to show where their technologies are already reducing resource adequacy and reliability risks, he added.
Speaking alongside Rosner was former Department of Energy Loan Programs Office head Jigar Shah, who had a different take on how the industry should be thinking about risk — and how those in the audience can capitalize on Tuesday’s blue wave.
His advice was straightforward: Stop acting like value investors seeking 10-year fixed-price contracts, and start embracing the uncertainty that helped fuel the fracking boom. In other words, the industry can’t expect every source of revenue to be nailed down before it makes its move.
“We have to take a risk posture that looks like you’re long-term greedy — that your solutions are so amazing that you know you’re going to get paid for it on the back-end, but on the front-end you aren’t quite sure how you’re going to get paid for it,” Shah said. “That risk posture is equity, and right now everybody’s risk posture is debt.”
It’s a message that Sparkfund CEO and co-founder Pier LaFarge also emphasized at Latitude Media’s Flex Summit last month, when he said that the industry needs to start pitching distributed energy as a premium product, especially when it comes to dealing with premium buyers like hyperscalers, who are willing to pay for electrons that are available fast.
Making flexibility worth buying
For Rosner, the outcome of Tuesday’s energy-focused elections is a strong indication that it’s time for utilities to change how they study and accommodate new demand. Utilities are “kind of like banks; they don’t change very fast,” he said. “But this is a moment where we need them to change, and we’re pushing them to change.”
In June, FERC issued show-cause orders directing all six regional grid operators to justify or revise their rules for serving large loads. The orders address cost recovery, study processes, and accommodations for flexible loads, though the commission stopped short of requiring that flexible customers get faster grid access.
Assigning new infrastructure costs to data centers could give them an incentive to procure their own alternatives, Rosner said, and create an opening for batteries and other distributed resources that can meet their needs faster and at lower cost.
One key test is playing out in PJM. The region’s revised reliability backstop proposal would reduce the procurement target to account for capacity secured through bilateral contracts, including demand response and DERs.
But incentives there remain unsettled. FERC rejected PJM’s separate proposal requiring new data centers to either secure new supply or face curtailment during emergencies. That leaves a key mechanism for pushing large loads to bring their own capacity unresolved; in fact, it’s likely in the hands of states to figure out rules on curtailment and cost allocation. And the balance of power at the state level just shifted dramatically, bringing new lawmakers and governors with new priorities into positions of power over these processes.
Capitalizing on the openings in PJM and elsewhere will require making sure policymakers really understand what distributed resources can deliver, Shah said. “Make sure you spend the time educating people about what you do, what your solutions do, how fast they can scale, and how important they are for energy affordability,” he advised the audience.
