Household energy use is transforming, placing utilities at the center of two important trends—decarbonization and customer affordability. Individual purchases of smart home appliances, solar and storage systems, and electric vehicles (EV) are exponentially increasing the number of distributed energy resources (DER), which can generate, store, or flexibly draw energy from the grid. This partial decentralization of production and storage is changing the historical unidirectional power flow from utility power plants to customers as bidirectional DER networks multiply at the distribution grid edge, or “DERstribution.” Commercial, industrial, and other customers are part of this DERstribution, but households form the most distributed and versatile customer segment, with the greatest capacity and equity potential.

Using DER, households can now pursue their own financial, operational, and environmental priorities, while utilities still have an obligation to serve them. However, if unmanaged, these resources could complicate utilities’ efforts to balance decarbonization with affordability. But if utilities successfully engage customers, they could harness DER to help meet peak demand with clean energy and provide essential grid services, while equitably sharing revenue and resilience benefits with households and placing downward pressure on rates. This is the case utilities should make to regulators to secure backing for DER integration plans.

The potential role of quickly deployable DER is likely to become even more important as permitting and interconnection queues for utility-scale resources lengthen, compounding cost and resource pressures that have intensified over the past year due to …