Using Distributed Energy Resources to Address Grid Deficiency in the U.S

The U.S. power grid is facing unprecedented challenges as electricity demand surges due to the rise of data centers, AI, EVs, and renewable energy. Much of the country's transmission and distribution infrastructure is more than 25 years old, and traditional upgrades are often costly and slow. Distributed energy resources (DER), including solar photovoltaics, battery energy storage systems, and smart appliances, offer a flexible, localized solution. By generating and managing electricity closer to where it is consumed, DER can reduce strain on the bulk power system, improve reliability, and support decarbonization goals. As extreme weather events and aging infrastructure continue to threaten grid stability, DER technologies present a viable path for modernizing the grid and enhancing resilience.

This Guidehouse Research Strategy Insight analyzes 14 DER technologies, forecasts growth trends, and evaluates regional deployment across seven major grid operators. It highlights policy frameworks such as FERC Order 2222, which aims to integrate DER into wholesale markets, and examines barriers including regulatory fragmentation, supply chain constraints, and workforce shortages. Through detailed comparisons of ISO/RTO regions, the report identifies best practices and lessons learned from early DER adopters. It also outlines the DER value chain, from physical assets to software platforms, and emphasizes the importance of coordination among utilities, regulators, and technology providers.

Guidehouse Research recommends updating market rules to fully enable DER participation, investing in grid modernization infrastructure, and aligning utility incentives with customer benefits. Strategic deployment of DER can defer costly upgrades, improve reliability, and unlock new revenue streams. As lithium prices fall and battery efficiency improves, DER adoption is expected to accelerate, especially in EV charging and energy storage, which are forecast to grow most rapidly through 2034.