Distributed energy resources—solar, batteries, EVs, and smart controls—can attack the real drivers of soaring US power bills while cleaning up the grid.
How Distributed Energy Cuts US Power Bills
US electricity prices have jumped more than 20% on average since 2020, and in some states it’s far worse. Households in places like California and New England are staring at winter bills that look more like car payments. Most companies and utilities respond by talking about more grid investment—which usually translates into even higher bills.
There’s a better way to approach this: distributed energy resources (DERs).
Solar on roofs, batteries in garages, EVs in driveways, and smart devices in buildings can work together like a “virtual power plant.” Done right, this doesn’t just clean up the grid—it directly attacks the drivers of soaring electricity costs. And because this is part of our Green Technology series, we’ll look at how AI and data are quietly making DERs far more useful and profitable than they were even five years ago.
In this post, I’ll break down how DERs lower bills, highlight real US examples (from California to North Carolina), and outline practical steps if you’re a business, community, or utility ready to act.
Why US Power Bills Are Climbing So Fast
Electricity prices in the US are rising for three main reasons: higher fuel costs, aging infrastructure, and extreme weather. DERs directly relieve all three.
The cost problem in plain language
When you pay your power bill, you’re not just paying for electrons. You’re paying for:
- Fuel – natural gas, coal, and sometimes oil
- Wires and infrastructure – transmission lines, substations, transformers
- Capacity – power plants that sit idle most of the year but turn on for a few hundred “peak” hours
- Risk and reliability – redundancy so the lights stay on during heat waves and storms
The expensive part isn’t the average hour. It’s the handful of brutal summer afternoons or freezing winter mornings when everyone cranks the AC or heat at once. In some regions, 20%–40% of system costs are driven by fewer than 100 hours per year.
Here’s the thing about distributed energy resources: DERs are almost tailor-made to kill those expensive peak hours.
- Rooftop solar cuts afternoon peaks
- Batteries and smart thermostats shave evening and winter peaks
- EVs can charge when power is cheap and support the grid when it’s stressed
That’s where the real savings live.
What Counts as a Distributed Energy Resource?
A distributed energy resource is any small-scale, local energy asset that can produce, store, or actively manage electricity close to where it’s used.
Common DERs in the US today include:
- Rooftop and community solar
- Battery energy storage systems (home, commercial, and community-scale)
- Smart thermostats, HVAC controls, and building management systems
- Electric vehicles and bi‑directional chargers
- Backup generators and microgrids (increasingly paired with solar + storage)
On their own, these assets help individual customers. Aggregated and controlled with software, they start behaving like a flexible, responsive power plant. That’s where the big economic story kicks in.
In the Green Technology context, AI sits on top of these DERs: forecasting, optimizing, and coordinating thousands of tiny decisions—when to charge, when to discharge, when to pre‑cool a building—so that the whole fleet delivers value to both customers and the grid.
How DERs Actually Lower Electricity Costs
DERs fight high electricity prices through four main channels: reducing fuel use, avoiding infrastructure upgrades, flattening peaks, and improving reliability.
1. Cutting fuel costs with local clean energy
Every kilowatt-hour generated on a rooftop or community solar site is one less kilowatt-hour a gas plant has to produce.
- Solar and wind have zero fuel cost once built.
- Batteries store cheap or surplus power (like solar at noon) and deploy it when prices spike.
For utilities, that means less exposure to fuel price volatility. For customers, it means lower energy charges and, in many cases, bill credits for exporting excess energy.
2. Avoiding expensive grid upgrades
Transmission and distribution upgrades are staggeringly expensive. A single substation rebuild can cost tens of millions of dollars. Those costs end up in your bill as “T&D charges.”
DERs can be used as “non-wires alternatives”:
- Instead of upgrading a congested feeder, a utility can pay for targeted rooftop solar, batteries, or demand response incentives.
- Local storage can support voltage, capacity, and reliability without laying new wire.
Where regulators cooperate, this is already happening. In several states, utilities now receive performance-based incentives for using non‑wires solutions instead of defaulting to new infrastructure.
3. Shaving peak demand (where the real money is)
Peak demand is where DERs punch above their weight.
During extreme hours, wholesale electricity prices can be 10–50x higher than average. By coordinating thousands of DERs—turning down thermostats a degree or two, briefly pausing EV charging, dispatching batteries—utilities and aggregators can flatten the peak.
The impact is huge:
- Lower capacity costs (less need for new peaker plants)
- Lower wholesale power costs passed through to customers
- Lower demand charges for commercial and industrial (C&I) customers
This is exactly what many virtual power plant (VPP) programs in California and Colorado are doing: aggregating DERs from providers like Sunrun and using them during critical peaks.
4. Improving reliability and resilience
Reliability has a cost. Outages—driven by storms, wildfires, and aging infrastructure—are more frequent and more expensive. When grids fail, businesses lose inventory and productivity, and households often turn to noisy diesel generators.
Microgrids and DERs change the equation:
- Critical facilities (hospitals, data centers, grocery distribution, community shelters) can island from the grid.
- Neighborhood‑scale microgrids can keep essential loads powered during wildfires or hurricanes.
That resilience doesn’t just protect lives; it reduces the economic cost of outages, which regulators and utilities increasingly factor into system planning and rates.
Real-World Examples: California, Colorado, and the Carolinas
Let’s ground this in what’s actually happening across the US.
California: high prices, high DER potential
California’s combination of high retail rates, solar adoption, and wildfire risk has pushed DERs to the mainstream.
- Solar + storage providers aggregate thousands of home batteries into VPPs.
- Community Choice Aggregators (CCAs) use DER portfolios to reduce procurement costs and hedge against extreme wholesale prices.
- During heat waves, VPPs support the grid and help prevent rolling blackouts.
Here, green technology isn’t just about sustainability. It’s a financial survival strategy for both utilities and customers.
Colorado: policy-driven virtual power plants
Colorado regulators have been relatively proactive in opening the door for DER aggregation:
- Utilities are starting to run programs that pay customers for battery, solar, and smart device participation.
- VPP pilots are testing how aggregated DERs can replace or defer traditional capacity investments.
The lesson: clear policy frameworks accelerate DER adoption and give utilities the confidence to plan around distributed resources.
North Carolina and Duke Energy’s evolution
Historically, big investor-owned utilities (IOUs) like Duke Energy leaned toward centralized assets because that’s where their traditional rate structure made money.
That’s changing:
- Duke has proposed programs that integrate customer‑sited solar and storage into grid planning.
- Behind‑the‑meter DERs are being evaluated as legitimate reliability and capacity resources, not just a nuisance.
The direction of travel is clear: whether utilities like it or not, DERs are becoming part of the core grid toolkit.
The Role of AI and Smart Software in DER Value
Distributed energy resources are only as valuable as the intelligence coordinating them. This is where AI, forecasting, and control platforms show up as the quiet backbone of modern green technology.
Forecasting and optimization
AI models predict:
- Solar generation at the panel or feeder level
- Building demand down to 15‑minute intervals
- Wholesale price spikes and system peaks
With those predictions, software can automatically:
- Charge batteries when prices are low or renewable output is high
- Discharge during peak price hours or local constraints
- Pre‑cool or pre‑heat buildings so occupants don’t notice short demand reductions
The reality? The economics of DERs are now heavily software‑driven. The underlying hardware (panels, batteries, EVs) is increasingly commoditized; differentiation and savings come from intelligence.
Turning thousands of small assets into one reliable resource
Grid operators care about one thing: reliability. They need to know that if a VPP commits 50 MW of capacity, 50 MW will show up.
AI-driven aggregation platforms:
- Continuously monitor performance of every device in the fleet
- Automatically replace or “overbook” capacity to cover underperformers
- Learn the behavior of devices and owners over time, improving dispatch strategies
This turns a messy, human‑scale collection of assets into something that looks reliable from a system operator’s perspective.
Practical Steps: How Different Players Can Act Now
Here’s how to approach DERs depending on who you are.
If you’re a commercial or industrial energy user
You have the most immediate upside from DERs because of demand charges and time‑of‑use pricing.
Focus on:
-
Load flexibility first
Smart controls for HVAC, refrigeration, and process loads often have a faster payback than hardware. -
Onsite solar + storage
- Use solar to cut daytime energy costs.
- Use batteries to reduce peaks and participate in demand response or capacity programs.
-
Data and analytics
Work with a provider that offers granular interval data, scenario modeling, and clear ROI projections—not just equipment quotes.
If you’re a utility or community choice aggregator
Treat DERs as grid assets, not side projects.
- Build or partner for a DER management platform that can forecast, control, and settle DER operations.
- Redesign tariffs and pilots that pay for performance (kW reduced or kWh delivered), not just device enrollment.
- Identify specific feeders or substations where DERs can defer investments and design targeted programs.
Regulators are increasingly open to this story if you can show clear comparisons between “build wire” vs “use DERs” costs.
If you’re a policymaker or regulator
You control many of the structural incentives.
- Enable third‑party aggregation of DERs in wholesale and capacity markets.
- Allow utilities to earn returns for using non‑wires alternatives.
- Standardize data access so customers and aggregators can see and respond to price and grid signals.
Where policy has moved in this direction, DER adoption and cost savings have followed.
Where DERs Fit in the Broader Green Technology Story
Within green technology, DERs sit at the crossroads of clean hardware and intelligent software. Solar panels, batteries, EVs, and smart building controls are the visible side. AI, forecasting engines, and VPP platforms are the invisible side that turns goodwill and gadgets into real system savings.
This matters because the US can’t afford a clean energy transition that also explodes power bills. Distributed energy resources—properly planned and digitally orchestrated—offer a path to:
- Stabilize or reduce long‑term electricity costs
- Improve reliability in the face of climate‑driven extremes
- Cut emissions without forcing customers to choose between sustainability and affordability
If you’re responsible for energy strategy—at a business, a utility, or a city—the next logical step is simple: treat DERs as core infrastructure, not a pilot experiment. Run the numbers, test a program, and give your assets intelligent control.
The grid is getting more local, more digital, and more flexible. Those who plan for that reality now will pay less for electricity later.