What are DERs? Definition & Types

Distributed Energy Resources (DERs) are rapidly transforming the U.S. electric grid paradigm. Small-scale solar, storage, and other DER technologies are proliferating at an exponential rate, driven by declining costs and policy incentives.

What Qualifies as a DER?

Distributed Energy Resources generally refer to small, modular energy resources located at or near the point of use that can generate, store, or manage electricity. FERC Order 2222 broadly defines a DER as “any resource located on the distribution system, any subsystem thereof or behind a customer meter”.

In practice, DERs encompass a diverse array of technologies providing electric capacity or services locally rather than from centralized power plants. They can be supply-side (distributed generation), demand-side (controllable loads), or storage resources.

Categories of DER

Key categories include solar photovoltaics (PV), small wind turbines, battery energy storage systems, electric vehicles (EVs) with vehicle-to-grid (V2G) capability, demand response assets, combined heat and power (CHP) units, fuel cells, and microgrids, among others:

  • Solar PV: Rooftop and community solar installations converting sunlight to electricity at homes, businesses, and shared arrays. Over 4.7 million PV systems are now distributed on U.S. rooftops, often backed by net metering. Sizes range from a few kW on residences to multi-MW community solar farms.
  • Distributed Wind: Small and mid-sized wind turbines installed on-site (e.g., on farms) to generate local power. Projects are generally under 5 MW.
  • Battery Storage: Behind-the-meter batteries (residential or commercial) and small front-of-meter batteries provide energy storage to shift energy use, supply backup power, or provide grid services like peak shaving and ancillary services. Aggregated home batteries are now bidding into wholesale markets.
  • Electric Vehicles (EVs): EVs are mobile batteries. With smart charging (and eventually V2G discharge), EVs act as DER by modulating their draw or feeding power back to the grid. EV fleets (buses, delivery trucks) are emerging as grid-responsive assets.
  • Demand Response (DR): Flexible demand-side resources – devices and loads that can be curtailed or shifted (e.g., smart thermostats, water heaters, HVAC, industrial processes). DR offers capacity (“negawatts”) and grid flexibility akin to generation. IoT controls have greatly expanded DR potential.
  • Combined Heat and Power (CHP): CHP systems (cogeneration) produce electricity and useful heat from a single fuel source (often natural gas) at commercial, industrial, or institutional facilities. They improve efficiency and supply on-site power, often with islanding capability.
  • Fuel Cells: Stationary fuel cells (using natural gas, biogas, or hydrogen) generate highly reliable, low-emission electricity through electrochemical reactions, often for critical facilities like data centers. Some models also cogenerate heat.
  • Microgrids: Localized clusters of DER (generation, loads, storage) that can disconnect (island) from the main grid and operate autonomously. They enhance resilience and can offer grid services when connected. Often integrate multiple DER types (e.g., solar + storage + generator).

Location and Scale

DERs can be either behind-the-meter (BTM - on the customer’s side, primarily serving on-site loads) or front-of-meter (FOM - connected to the distribution network but not tied to a particular customer). In all cases, they reside on distribution grids (typically interconnected at < 69 kV) and are relatively small-scale (from a few kW up to a few MW).

The definition is broad enough to include enabling demand-side technologies: “Demand response, energy efficiency technologies such as controllable thermostats, and EVs can also be considered DERs” even though they do not inject power, because they modulate demand. In summary, any resource that can either generate electricity or adjust consumption at the distribution level qualifies as a DER, as long as it can contribute to balancing supply and demand.

Defining Features

DERs are typically small, modular resources deployed at end-user sites, providing power where needed and often leveraging consumer choice. They contrast with central station power plants by virtue of:

  • Size: Usually kW-scale or low MW, versus hundreds or thousands of MW centrally.
  • Location: Embedded in distribution networks or on customer premises.

Because of their distributed nature, DERs collectively form a decentralized layer of the grid that complements traditional generation. They introduce bidirectional power flows on local lines and empower end-users (now “prosumers”) to actively participate in energy production and management.