DERMS Policy Ecosystem

Industry Groupings
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VPP & DER Aggregation
DERMS Tech Providers
Grid Operators / Utilities
Equity & Programs
Market & Standards
Equity and Programs
Market and standard
Grid Operator
VPP & Aggregator
DERMS Tech

Policy Timeline

1978
PURPA
1982
Rule 21 Adoption
2001
SGIP Launch
2005
FERC Order 2006
2009
ARRA & Smart Grid
2013
AB 327 (CA)
2015
Rule 21 Smart Inverter Requirements
2018
FERC Order 841
2020
FERC 2222
2022
Inflation Reduction Act
2023
CAISO DER Aggregation Enhancements
2025
CPUC Flexible Resource Mandates

Policy Landscape Analysis

This section provides a detailed overview of the policies, programs, and regulatory frameworks shaping the deployment and equity of Distributed Energy Resources (DERs) across local, state, and federal levels.

Market Access Frameworks

FrameworkWhat It DoesLocal/State Implications
Rule 21 CaliforniaSets statewide interconnection standards for DERs. Sets technical standards to connect DERs safely.Applies to SCE/LADWP; key bottleneck area.
FERC 2222 FederalOpens wholesale markets to DER aggregations.CAISO working through compliance.
Net Metering (NEM) CaliforniaAllows DERs to export to grid, get credited.NEM 3.0 reduces compensation.
AB 327 DRP CaliforniaRequires utilities to plan for DER integration.More transparent data, targeting equity.
EPIC-LA, Permitting LocalStreamlines online permitting in LA County.Model for other local jurisdictions.
IRA/Justice40 Federal- but sunsettingProvides federal incentives and equity focus for DERs.Funds local pilots, prioritizes equity.

Summary Table: Local Policy Levers & Touchpoints for DERMS in LA County

Policy AreaAuthorityLocal Details/Barriers
Permitting & InspectionLA County, CitiesOnline permitting (EPIC-LA), variable timelines.
Zoning, SitingLA County, CitiesDictates allowable uses, can limit DER siting.
Utility InterconnectionLADWP, SCERule 21 applies, but each utility has own process.
Hosting Capacity/PlanningUtilities, CPUCAB 327 DRPs, grid maps guide efficient siting.
Equity ProgramsLADWP, CBOsCommunity solar pilots, DEEP-HARBOR, LA100 Equity.
Incentives & RatesUtilities, CityNet metering, TOU rates, local utility incentives.

Key Takeaways

  • LA County and Southern California have made strong progress in aligning local, state, and utility-level policies for DER deployment, with stand-out efforts in community-driven equity initiatives.
  • Barriers persist in local permitting, siting, and interconnection variability, as well as in ensuring all communities participate in DER benefits.
  • Opportunities for innovation include standardizing processes, scaling equity-focused pilots, leveraging hosting capacity transparency, and integrating DER considerations into all aspects of local planning.
What could happen next? Lots of UNCERTAINTY

One Big Beautiful Bill (2025):

  • Accelerated Phaseout of Tax Credits: Eligibility ends for projects placed in service after 2027; projects must begin construction by July 4, 2026, to qualify at all
  • Direct Hit to Wind & Solar
  • Reduced Residential Clean Energy Credit: The 30% tax credit is eliminated after December 31, 2025
  • Tariffs & Foreign Entity Restrictions
  • Market and Cost Impacts: Loss of tax credits expected to reduce new renewable (wind, solar) capacity by over 70GW by 2030, risk half a trillion in clean energy investment, and drive up average household energy bills by $165/year
  • Fossil Fuel Favoritism
  • Some Tech Still Supported: Geothermal, nuclear, biogas, and cogeneration remain eligible for credits—focus shifts to "always-on" (baseload) energy rather than intermittent wind/solar
  • Local Revenue Sharing: 50% of rent, royalty, and capacity payments from wind/solar on public lands now go to host communities, potentially creating local financial incentives for clean energy
Concrete Ideas for how the industry should respond

Bottom Line: The "Big Beautiful Bill" sharply restricts clean energy tax incentives and support for wind and solar. It will slow clean energy investment, increase costs, and shift the U.S. energy transition further toward fossil fuels.

  • Accelerate project timelines: Expedite permitting, construction, and financing to ensure wind/solar projects begin construction before July 4, 2026, to qualify for remaining federal tax credits
  • Conduct urgent supply chain reviews: Audit suppliers to ensure compliance with strict "foreign entity of concern" (FEOC) restrictions; pivot to domestic or allied country procurement where feasible
  • Shift focus to supported technologies: Reallocate R&D and investment toward geothermal, nuclear, biogas, fuel cells, and technologies that retain tax credit eligibility under the new regime
  • Intensify state-level advocacy: Lobby for expanded and stable state incentives, streamlined permitting, and fair compensation structures to offset lost federal support
  • Diversify financing and M&A strategies: Explore joint ventures, tax equity restructuring, asset mergers, and other models to adapt to reduced federal incentives and increased market uncertainty
  • Engage proactively in Treasury/IRS guidance: Monitor and participate in federal rulemaking to protect early projects' eligibility and clarify compliance
  • Strengthen local alliances: Partner with host communities to leverage new local revenue-sharing provisions and build regional political support
  • Communicate policy volatility: Transparently share legislative risks with investors, customers, and partners to manage expectations and encourage advocacy

Citations

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