%0 Journal Article
%A Juan Pablo Carvallo
%A Nan Zhang
%A Sean Murphy
%A Benjamin Leibowicz
%A Peter H Larsen
%B Applied Energy
%D 2020
%G eng
%R https://doi.org/10.1016/j.apenergy.2020.115071
%T The economic value of a centralized approach to distributed resource investment and operation
%U https://www.sciencedirect.com/science/article/abs/pii/S0306261920305833
%V 269
%8 07/2020
%X <p><span>Distributed energy resources have been almost exclusively deployed and operated under a decentralized decision-making process. In this paper, we assess the evolution of a power system with centrally planned utility-scale generation, transmission, distribution, and distributed resources. We adapt a capacity expansion model to represent both centralized and decentralized decision-making paradigms under various electricity rate structures. This paper shows that a centralized planning approach could save 7% to 37% of total system costs over a 15-year time horizon using a Western United States utility as a case study. We show that centralized decision-making deploys substantially more utility-scale solar and distributed storage compared to a decentralized decision-making paradigm. We demonstrate how a utility could largely overcome the complications of decentralized distributed resource decision-making by incentivizing regulators to develop electricity rates that more closely reflect time- and location-specific, long-run marginal costs. The results from this analysis yield insights that are useful for long-term utility planning and electric utility rate design.</span></p>