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Even while wholesale US renewable energy markets are buffeted by macroeconomic and federal policy headwinds, strong opportunities exist for distributed energy generation development on multiple fronts. Growing state-supported community solar programs allow developers to earn attractive returns based on retail electricity rates, often in a context of bipartisan backing and popularity among ratepayers. Meanwhile, New York’s Value of Distributed Energy Resources (VDER) mechanism provides a compensation model for the community solar and storage programs of the future. VDER provides BESS assets an attractive alternative to wholesale energy markets, thanks to higher returns and lower uncertainty provided by VDER's unique tariff structure. Opportunities for distributed resources are also expanding through virtual power plants (VPPs), which are beginning to grow in popularity and provide clear benefits to developers and to the grid.
As part of the 2025 Ascend Analytics Power Markets Workshop, Dr. Shlomy Goffri, VP of Valuation and Portfolio Management, joined Caroline Zechter, Director of Community Solar, to discuss ways that distributed energy generation developers can maximize opportunities as electricity demand soars in energy markets across the US.
The market for community solar is growing as programs gain momentum nationwide, with more than 8 GW of community solar installed to date, and is expected to more than double over the next five years. Many opportunities for growth exist in markets across the US, as shown in Figure 1. State-level support remains strong, which facilitates program expansion and offsets federal policy uncertainty.
Community solar is a form of virtual net metering, allowing for multiple subscribers to receive credits for power generated from a single distributed project. First, an energy project developer builds a community solar project, generally 5 MW or less, on the local utility grid and finds subscribers (who are also utility ratepayers) to sign up for shares of the project’s energy. The generated energy then feeds into the grid, and the utility provides bill credits to each community solar subscriber. Those credits offset a portion of the subscriber’s electricity bill costs. Finally, subscribers pay the developer a subscription fee set as a percentage discount on the bill credit rate, guaranteeing a fixed percentage monthly savings on their utility bills.
For developers, revenues are fundamentally tied to the bill credit’s value, which are usually tied to retail electricity rates, of which the supply charge serves as the key driver of bill credit value since it reflects the cost to a utility of procuring wholesale power. The supply charge follows wholesale pricing trends, but is more predictable since rates change monthly or seasonally rather than hourly. Rising retail rates boost revenue potential, especially in high-demand, capacity-constrained markets.
As community solar markets mature, more investment is taking place, which increases demand for deal support and reliable forecasts, such as those provided by Ascend Analytics. Accurately modeling retail rates requires modeling wholesale price fundamentals such as load growth and policy changes, as well as the way that supply rates respond to wholesale price signals.
New York's VDER mechanism has proven to be a valuable alternative to the New York Independent System Operator (NYISO) wholesale market, due in large part to the higher returns and lower uncertainty provided by a unique 'value stack' structure. This structure compensates distributed resources such as solar or batteries based on when and where they provide electricity to the grid, accounting for time of day and location of resource generation. VDER compensation is meant to reflect the actual benefits that a resource provides to New York’s electric grid, and was developed as an alternative to traditional DER compensation based on retail rates.
VDER offers stable revenue and better capacity value than wholesale markets, and has the potential to serve as a model for distributed resource compensation in other states, especially as an approach to incentivizing storage. As shown in Figure 2, storage can earn greater returns through VDER than in wholesale markets, driven by higher capacity accreditation via the VDER structure, which is not impacted by effective load carrying capability (ELCC) derates, as well as through demand reduction value (DRV), energy arbitrage, and optimized charging.
Hybrid projects can also achieve higher revenues over time than solar-only projects, as projects with storage can take better advantage of time-based components of the VDER stack.
Interest in VPPs is also beginning to increase rapidly. For developers, diversified assets in a VPP can provide transmission and distribution-level value. Helpfully, both state and federal policies are beginning to recognize that value. FERC Order 2222 enables aggregations of distributed resources to participate in wholesale markets, something which is already occurring in CAISO and which other ISOs are in the process of implementing. At the state level, programs are growing across the US, including in New York, Texas, Virginia, California, and Illinois.
Benefits to developers are becoming clear, as well. Through VPPs, developers can get projects to market quickly without the long queue study process, provide onsite resiliency (which is especially valuable in the context of rapid data center growth), and circumvent the growing trend toward marginal accreditations in wholesale capacity markets.
AscendMI™ (Ascend Market Intelligence) delivers proprietary power market retail rate forecasts that support development and transactions around community solar and storage, behind-the-meter projects, virtual power plants, and more. These retail rate forecasts are underpinned by Ascend's long-term wholesale market forecasts.
PowerVAL/BatterySIMM™ reflects the expanded capabilities of BatterySIMM to perform asset valuation across all generation assets and geographies. PowerVAL provides developers, investors, and utilities with bankable and regulatory accepted wholesale and retail price forecasts.
Contact us to learn more.
Even while wholesale US renewable energy markets are buffeted by macroeconomic and federal policy headwinds, strong opportunities exist for distributed energy generation development on multiple fronts. Growing state-supported community solar programs allow developers to earn attractive returns based on retail electricity rates, often in a context of bipartisan backing and popularity among ratepayers. Meanwhile, New York’s Value of Distributed Energy Resources (VDER) mechanism provides a compensation model for the community solar and storage programs of the future. VDER provides BESS assets an attractive alternative to wholesale energy markets, thanks to higher returns and lower uncertainty provided by VDER's unique tariff structure. Opportunities for distributed resources are also expanding through virtual power plants (VPPs), which are beginning to grow in popularity and provide clear benefits to developers and to the grid.
As part of the 2025 Ascend Analytics Power Markets Workshop, Dr. Shlomy Goffri, VP of Valuation and Portfolio Management, joined Caroline Zechter, Director of Community Solar, to discuss ways that distributed energy generation developers can maximize opportunities as electricity demand soars in energy markets across the US.
The market for community solar is growing as programs gain momentum nationwide, with more than 8 GW of community solar installed to date, and is expected to more than double over the next five years. Many opportunities for growth exist in markets across the US, as shown in Figure 1. State-level support remains strong, which facilitates program expansion and offsets federal policy uncertainty.
Community solar is a form of virtual net metering, allowing for multiple subscribers to receive credits for power generated from a single distributed project. First, an energy project developer builds a community solar project, generally 5 MW or less, on the local utility grid and finds subscribers (who are also utility ratepayers) to sign up for shares of the project’s energy. The generated energy then feeds into the grid, and the utility provides bill credits to each community solar subscriber. Those credits offset a portion of the subscriber’s electricity bill costs. Finally, subscribers pay the developer a subscription fee set as a percentage discount on the bill credit rate, guaranteeing a fixed percentage monthly savings on their utility bills.
For developers, revenues are fundamentally tied to the bill credit’s value, which are usually tied to retail electricity rates, of which the supply charge serves as the key driver of bill credit value since it reflects the cost to a utility of procuring wholesale power. The supply charge follows wholesale pricing trends, but is more predictable since rates change monthly or seasonally rather than hourly. Rising retail rates boost revenue potential, especially in high-demand, capacity-constrained markets.
As community solar markets mature, more investment is taking place, which increases demand for deal support and reliable forecasts, such as those provided by Ascend Analytics. Accurately modeling retail rates requires modeling wholesale price fundamentals such as load growth and policy changes, as well as the way that supply rates respond to wholesale price signals.
New York's VDER mechanism has proven to be a valuable alternative to the New York Independent System Operator (NYISO) wholesale market, due in large part to the higher returns and lower uncertainty provided by a unique 'value stack' structure. This structure compensates distributed resources such as solar or batteries based on when and where they provide electricity to the grid, accounting for time of day and location of resource generation. VDER compensation is meant to reflect the actual benefits that a resource provides to New York’s electric grid, and was developed as an alternative to traditional DER compensation based on retail rates.
VDER offers stable revenue and better capacity value than wholesale markets, and has the potential to serve as a model for distributed resource compensation in other states, especially as an approach to incentivizing storage. As shown in Figure 2, storage can earn greater returns through VDER than in wholesale markets, driven by higher capacity accreditation via the VDER structure, which is not impacted by effective load carrying capability (ELCC) derates, as well as through demand reduction value (DRV), energy arbitrage, and optimized charging.
Hybrid projects can also achieve higher revenues over time than solar-only projects, as projects with storage can take better advantage of time-based components of the VDER stack.
Interest in VPPs is also beginning to increase rapidly. For developers, diversified assets in a VPP can provide transmission and distribution-level value. Helpfully, both state and federal policies are beginning to recognize that value. FERC Order 2222 enables aggregations of distributed resources to participate in wholesale markets, something which is already occurring in CAISO and which other ISOs are in the process of implementing. At the state level, programs are growing across the US, including in New York, Texas, Virginia, California, and Illinois.
Benefits to developers are becoming clear, as well. Through VPPs, developers can get projects to market quickly without the long queue study process, provide onsite resiliency (which is especially valuable in the context of rapid data center growth), and circumvent the growing trend toward marginal accreditations in wholesale capacity markets.
AscendMI™ (Ascend Market Intelligence) delivers proprietary power market retail rate forecasts that support development and transactions around community solar and storage, behind-the-meter projects, virtual power plants, and more. These retail rate forecasts are underpinned by Ascend's long-term wholesale market forecasts.
PowerVAL/BatterySIMM™ reflects the expanded capabilities of BatterySIMM to perform asset valuation across all generation assets and geographies. PowerVAL provides developers, investors, and utilities with bankable and regulatory accepted wholesale and retail price forecasts.
Contact us to learn more.
Ascend Analytics is the leading provider of market intelligence and analytics solutions for the power industry. The company’s offerings enable decision makers in power development and supply procurement to maximize the value of planning, operating, and managing risk for renewable, storage, and other assets. From real-time to 30-year horizons, their forecasts and insights are at the foundation of over $50 billion in project financing assessments. Ascend provides energy market stakeholders with the clarity and confidence to successfully navigate the rapidly shifting energy landscape.
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