How Regulation Creates Markets for Distributed Energy — And Why it Must

Source: Elisa Wood | · LINKEDIN · | January 14, 2024

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Many businesses aren’t fond of government regulations; they see them as restrictive. However, distributed energy providers tend to view it differently because regulatory decisions can create markets for them.

Yes, it's strange and often confuses newcomers. But then, the electric power industry doesn't operate under normal business rules. Distributed energy companies must compete with utilities. And utilities own the playing field as investor-owned monopolies with a guaranteed rate of return, a status that gives them near-invincible market power.

Utilities can (and have) swatted away technologies that threaten to displace their infrastructure, leaving innovators with no path to the market. Aware of this problem, regulators sometimes step in and chisel out a piece of the utility business and open it to competition, or at least demand that the utility consider alternative technologies. To win the contract, the new technologies must prove they are better — cheaper, cleaner, or more reliable.