Podcast Summary: "Is now the time for DERs to scale?"

Catalyst with Shayle Kann | Latitude Media
Date: September 18, 2025
Host: Shayle Kann
Guest: Andy Lubershain, Head of Research & Partner, Energy Impact Partners (EIP)

Overview

In this episode, host Shayle Kann and his EIP colleague Andy Lubershain explore a pressing question in the world of climate tech: Is now truly the moment for distributed energy resources (DERs) to scale after a decade of false starts and unmet hype? They revisit past predictions about DERs, analyze why earlier expectations fell short, and interrogate whether changing grid needs and falling technology costs signal a transformative inflection point for DER deployment.

Key Discussion Points & Insights

1. Defining and Categorizing DERs

[04:16]

• Andy outlines two fundamental categories:
  • Non-dispatchable DERs:
    • Energy efficiency and distributed solar.
    • Valuable to grid planners, but don't provide "real-time, on/off control" for grid operators.
    • "They don't give you enough real time control, which is the real challenge here." – Andy [05:10]
  • Dispatchable capacity DERs:
    • Distributed generation (e.g., natural gas gensets)
    • Flexible loads (demand response)
    • Energy storage (batteries)
    • Each offers varying degrees of controllability and operational limits.
    • "There's mostly no such thing as a perfect energy resource here... the closest thing to a perfect resource from the perspective of a grid operator is a flexible distributed gen set of some sort that can turn on and off really quickly." – Andy [06:19]

2. What Went Wrong the Last Time?

[10:10]

• Power System Just Didn’t Need DERs (Then):
  • In the 2010s, grid load growth was minimal; upgrading traditional infrastructure sufficed.
  • Non-wires alternatives were more theoretical than practical.
  • "I got this extremely disappointing answer, which was, basically, we're not finding them..." – Andy recalls utility feedback [12:00]
  • Shayle likens early DERs to "vitamins, not painkillers"—nice to have, but not necessary. [14:47]
• Cost Barriers:
  • Hardware costs (batteries, solar, IoT devices) dropped, but soft costs (customer acquisition, installation) didn’t.
  • Even as battery prices plummeted, fully-installed system costs were stubborn—recent changes are only just starting to show promise.

3. Has the Inflection Point Arrived?

[22:10]

• Changed Market Fundamentals:
  • Today’s grid faces acute stress—"every part of the system has major bottlenecks now." – Andy [22:57]
  • Load growth, electrification, and supply-side constraints create "desperation" that makes DERs more attractive.
• Cost Landscape:
  • DERs may still be pricey, but their relative cost is more competitive—other capacity costs (like gas turbines, retail rates) are also rising.
  • "Whether or not the costs come down significantly from here, it's all about comparative cost and the cost of the comparison is going up." – Shayle [25:20]

4. Virtual Power Plants (VPPs) as a Growth Vector

[24:30, 32:43]

• VPPs—aggregations of DERs managed to act as grid resources—are scaling up, with actual dispatch into the hundreds of megawatts, though this is "still little compared to the scale of the problem." – Shayle [25:00]
• Demand response, historically underused, is starting to be called on more often, indicating both need and operational comfort among utilities.
  • "In the last two years [demand response dispatches] have been kind of escalating off the charts. I mean, it seems to be going exponential in 2025." – Andy [28:16]
• Scaling to gigawatt-level VPPs across more utilities is seen as plausible with proper programmatic momentum.

5. Barriers: Structural & Regulatory Hurdles

[27:31]

• Electricity market change is slow, especially in regulated markets (outside ERCOT).
• Even when programs start, utility/regulator pace, restrictive rules, and risk aversion can limit scale.
• Utilities prefer "100% solutions"—resources that can always be counted on—DERs require a new planning mindset since they often offer partial or variable capacity.
  • "Nobody gets fired for putting in place a 100% solution..." – Andy [39:04]

6. Scenarios for DERs in the Next Five Years

[35:26]

Bull Case (DERs Succeed & Scale)

• Utilities start substantial DER capacity programs, embed DERs in core planning, and scale up quickly due to DERs’ inherent install speed.
• "If you start doing that today, I can imagine a world where within two to three years, there's a bunch of those programs standing up..." – Andy [37:08]

Bear Case (DERs Falter Again)

• Supply chain or price headwinds, notably for batteries.
• Regulatory inertia/conflict with the "100% solution" mindset.
• Slow programmatic progress, continued underestimation or cautious integration of DERs.
  • "If you're going to put in a solution that's not 100%, ...that's tough... and they're not historically have not been incentivized to do it." – Andy [39:56]

Notable Quotes & Memorable Moments

• "The power grid didn't need DERs that much in 2015. Now it desperately does, and every part of the system has major bottlenecks now." – Andy [22:57]
• "Early days of distributed energy resources, they were a vitamin. It wasn't a painkiller at that time." – Shayle [14:47]
• "I tend to assume people make rational decisions... my optimism today is more of a bet that the need is so great that the economic fundamentals will in this case finally win out and be able to overcome those frictions." – Andy [27:56]
• "There is some tipping point that one can imagine we hit." – Shayle [31:33]
• "It can scale up to hundreds of megawatts very quickly, particularly compared to the bottlenecks in large scale resources we're seeing today." – Andy [36:08]

Timestamps for Key Segments

• [04:16] – DERs: Key categories and what makes a resource dispatchable.
• [10:10] – Why the DER sector didn't take off in the 2010s: lack of need and cost barriers.
• [22:10] – What’s different now: market needs, cost relativity, and new optimism.
• [24:30, 32:43] – VPPs explained and the growing impact/potential of demand response.
• [35:26] – Bull vs Bear scenarios: What it would take for DERs to truly scale.
• [39:00] – Utility culture, risk aversion, and the challenge of integrating “less than 100%” resources.

Tone and Takeaways

Shayle and Andy approach the discussion as honest, slightly skeptical longtime DER enthusiasts, careful not to overstate the promise but clearly believing the sector is finally poised for meaningful growth. They stress that actual grid needs—not just technology or cost curves—are the critical driver, and that for all the optimism, regulatory and cultural inertia remain formidable obstacles.

The close: There's real potential for DERs and VPPs to make a "meaningful dent" in grid needs within the next 5 years—if utilities and regulators move proactively and learn to plan around resources that are fast, but sometimes imperfect.