Resources > Report: Value of DERs in Virginia

Report: Value of DERs in Virginia

• Report

January 14, 2026

New report shows that DERs can reliably meet our growing energy needs while lowering costs and strengthening the grid in Virginia.

Distributed Energy Resources (DERs) are easy-to-deploy, cost effective energy solutions—like rooftop and community solar, customer-sited storage, or energy efficiency—that can satisfy Virginia’s skyrocketing energy needs, keep the Commonwealth on track to meet its decarbonization goals, and reduce energy costs for all customers. 

SUN’s latest report with Current Energy Group finds that by 2028, a 590 MW DER portfolio that is well within reach can provide the same reliable support and power to the grid as a 950 MW natural gas plant while costing $288 million less per year—this would put an average of at least $90 dollars per year back in the pockets of each residential customer in Virginia.

DER portfolio costs and benefits

The utility benefits outweigh the costs and generate $38 million per year in ratepayer savings. These savings balloon to $288 million when participant and societal benefits are considered.

What are DERs?

What are DERs?

Distributed Energy Resources (DERs) are small to medium-scale energy technologies that produce or store electricity close to where consumers use it. Common types of DERs include community solar systems, rooftop solar panels, battery energy storage systems, electric vehicles, and chargers. Energy efficiency upgrades (that reduce total energy use) and demand response technologies (that manage or reduce energy use during peak times) are also forms of DERs.

When geographically dispersed DERs are centrally managed and called upon by utility companies, they are referred to as Virtual or Distributed Power Plants (DPPs). Through DPPs, grid operators can deploy distributed resources as if they were a single power plant that supplies energy, reduces demand, and stabilizes the grid.

Virginia’s urgent need for energy solutions

Virginia’s urgent need for energy solutions 

Virginia is facing an energy affordability and demand crisis, primarily due to an unbridled surge in power hungry data centers. A recent report by Virginia’s Joint Legislative Audit and Review Commission (JLARC) found that data centers could almost double the state’s energy use in the next decade and cause Dominion’s residential bills to increase by over $400 a year by 2040. These bills are already set to go up by nearly $135 in 2026 following the utility’s latest rate hike. In its 2025 Integrated Resource Plan, Dominion Energy alone projected a 2.6 GW shortfall by 2031 without new capacity resources—that’s roughly enough capacity to power 2.6 million homes. 

Throughout the South, utilities are scrambling to delay coal plant retirements and fast track the buildout of gas power plants to serve data center demand. But in doing so they’re deliberately underestimating the role that rooftop solar, behind the meter storage, and other DERs can play in filling large portions of projected shortfalls. Notably, DERs generate key benefits for ratepayers and reduce risks to public health, support decarbonization efforts, and increase grid reliability when compared to fossil fuel resources. 

Benefits of DERs

Benefits of DERs

While traditional supply-side resources (e.g. gas plants) are facing rising costs and mounting delays, advances in DER technology, business models, and regulation are allowing DERs to compete at an unprecedented scale. Virginia has already recognized the value of DERs through the 2020 Virginia Clean Economy Act (VCEA) and the 2025 Community Energy Act. These resources can rapidly meet energy demand in a way that decarbonizes the power sector, spurs local economic development, protects households from utility rate hikes, and boosts grid resilience and reliability.

DERs offer [not exhaustive] 

• Reduced risks due to quicker deployment timelines and greater resource diversity
• Resilience to power outages
• Greater comfort 
• Less impacts on public land and natural habitats 
• Improved public health by reducing greenhouse gas and air pollution emissions 
• More local jobs and economic development opportunities 
• Democratized access to data and control over energy 
• Less reliance on expensive, large energy infrastructure 

DERs, when compared to traditional utility scale resources, can also more easily improve energy equity by localizing and concentrating the above benefits in the communities that need them the most— like low income and overburdened communities with high energy burdens, less access to modern energy infrastructure, and disproportionate exposure to pollution.

Main findings

Main findings

The report’s cost benefit analysis compares a portfolio of DERs (see table 1 below) with a more traditional fossil fuel alternative to meet new peak energy demand and found that DERs generate $288 million per year in net benefits. These DER targets are achievable in the near-term based on existing statutory requirements under the Virginia Clean Economy Act (VCEA) and the DPP Pilot program envisioned by the 2025 Community Energy Act.

Table 1: DER portfolio 2028

The methodology used for the cost benefit analysis most closely aligns with Virginia’s jurisdiction specific test, a cost effectiveness framework that utilities will adopt starting in 2029. However, the report found that the DER portfolio still generates almost $38 million in net savings when analyzed with a more conservative cost benefit methodology, the Utility Cost Test, that only considers a narrow range of impacts to the utility system. This approach disregards benefits to participating customers and broader societal and environmental benefits, like avoided air pollution. 

DERs are clearly a net positive and must be fully supported to unlock an affordable, democratic, and resilient energy future for Virginia.

Policy recommendations

Policy recommendations 

Virginia’s legislators and regulators can lower energy costs, democratize our energy system, and strengthen the grid by adopting the report’s policy recommendations. Some examples are below:

1. Strengthen and expand the Virtual Power Plant (VPP) Pilot
   1. Increase the size of the aggregator component in the VPP Pilot program to pave the way for a robust permanent program with ambitious procurement targets 
   2. Establish clear pathways for expansion to additional service territories, such as a 50 MW VPP Pilot for Appalachian Power.  
   3. Strengthen the VPP program by prioritizing automated offerings that dispatch virtually, building upon the success of manual demand response programs like Peak Time Rebates.
2. Uphold the spirit and letter of the VCEA and Community Energy Act by not allowing backsliding on targets and enforcing penalties for underperformance.
   1. To ensure progress prior to 2035, add interim requirements for small-scale solar and BTM battery storage to align with the utility-scale interim targets. 
   2. Remove or increase the distributed generation (DG) caps. 
3. Allow large loads, like hyperscale data centers, to directly fund DER programs and share more of the cost for distribution system upgrades that allow for greater DER integration and customer participation 
4. Establish minimum DER deployment levels, interim targets, and incentives for disturbed lands (parking lots, brownfields, landfills) to accelerate Virginia’s brownfield priorities. 
5. Develop a set of targeted performance-incentive mechanisms (PIMs) to incentivize utilities to meet DER targets and address utility biases that impede DER deployment.