The California Public Utilities Commission has recognized that utilities are hesitant to pursue third-party energy sources because they are riskier and are negatively impacted by doing so. In December 2016, the CPUC approved a pilot program to incentivize utilities to incorporate cost-effective distributed resources. Utilities must each identify at least one project and up to three more additional projects to receive a four percent financial incentive that will be applied to the annual payment of the resource..
To prevent power disruptions, the pilot program requires utilities to develop contingency plans to ensure the uninterrupted flow of quality electricity. This report by the Lexington Institute shows that utilities in California will increasingly adopt available tools to identify optimal locations for third-party energy sources, including management systems, data and information.