How can greater uptake and integration of C&I-Owned DERs be promoted? Learnings from international experience

The increasing deployment of distributed energy resources (DERs) marks a significant shift in the way energy is generated, distributed, and consumed. These technologies offer substantial benefits, not only to customers, but also to utilities, distribution networks, and the broader electricity system. However, realising the full potential of DERs within existing energy markets and grid infrastructures requires a comprehensive and coordinated approach. Drawing on international experience from regions such as California, the United Kingdom, and Australia, this presentation focuses on commercial and industrial (C&I) customers and examines strategies to accelerate the adoption, integration, and efficient utilisation of DERs such as solar PV, battery storage, and load flexibility.

Key motivations driving DER adoption in the C&I sector include the potential for cost savings, greater energy resilience, and alignment with national and corporate decarbonisation goals. These drivers have become increasingly important as technology costs have fallen, carbon prices have risen, and persistent challenges like load shedding in South Africa have prompted customers to seek greater energy independence. Regulatory reforms, such as the removal of licensing requirements for generation in South Africa, have further supported private-sector investment in DERs and wheeling arrangements.

Despite this progress, significant barriers remain. Regulatory uncertainty, outdated tariff structures, and limited export frameworks discourage investment and grid participation. Many utilities lack visibility over DERs due to inadequate metering infrastructure, and grid operators often face constraints in integrating new resources into legacy systems. These issues prevent DERs from realising their full value for customers and the broader electricity system.

Lessons from international case studies suggest several promising approaches to improving the integration of these technologies.

  • In California, tariff reform has shifted away from traditional net metering toward net billing structures based on avoided costs. These tariffs, combined with time-of-use pricing and higher fixed charges, have helped ensure that DERs are compensated in a way that reflects their value to the grid, while also promoting equity among customers.
  • In the UK, local flexibility markets have allowed DERs (often via aggregators) to provide grid services to distribution system operators (DSOs). This has helped reduce congestion, defer network upgrades, and improve the integration of renewables. The success of these markets has relied heavily on supportive regulation, standardisation of flexibility products, and investment in smart metering infrastructure.
  • In Australia, virtual power plants (VPPs) have demonstrated the potential of aggregated DERs to act as dispatchable resources, capable of delivering services such as frequency regulation and congestion management. While challenges such as under-delivery and distribution network constraints emerged during initial trials, these were addressed through dynamic operating envelopes and improvements in market participation rules.

These examples show that South Africa can take meaningful steps to unlock the value of DERs by (i) reforming tariffs to reflect grid conditions and costs, (ii) enabling the development of local flexibility markets and aggregation services, (iii) investing in digital infrastructure to improve DER visibility and settlement, and (iv) supporting the evolution of DSOs into proactive system operators. Doing so will not only promote greater uptake and exports from C&I-owned DERs but also strengthen reliability, advance decarbonisation goals, and enhance financial sustainability across the electricity system.

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