With COP26 concluded, many sovereign governments are furthering plans to cut their carbon emissions to net zero by 2030. Pledges include a phase-out of coal, and incentivizing the development and building of renewable generation.

But to successfully battle climate change, the world must also address another aspect of the issue: barriers that currently prevent smaller power generation and storage technologies from competing effectively against conventional hydrocarbon sources.

The technologies, known as distributed energy resources, enhance or provide alternatives to traditional electric power systems.

They lower consumer costs, improve grid flexibility and resilience and, most importantly, add innovation in a country’s electricity sector.

Distributed energy resources generate or store less than 10,000 kilowatts (kWs), a relatively small amount by industry standards. They are located on electric utility distribution systems and subsystems, and on large electricity customer systems (on customer meters). Intermittent and distributed generation, demand response programs, energy efficiency projects—even electric vehicles—are forms of distributed energy resources.

Often, energy efficiency projects are included in the national electricity plans of developing countries and emerging markets. However, at times, their small size leaves them short of satisfying minimum financial threshold criteria needed to make them viable.

Because many current energy policies and regulations were designed for traditional resources, the contribution of new, cleaner technologies in the fight against climate change has been limited.

Policies and regulations that aggregate these resources can solve this issue, allowing distributed energy resources to meet the litmus tests of finance institutions.

Indeed, to increase climate mitigation impacts, distributed energy resources should be aggregated and assessed using a comprehensive, integrated approach. Sovereign energy policies and regulations are necessary to fully aggregate distributed energy resources alongside traditional power sector master planning and in established wholesale power markets.

New national energy policies and regulations should enable power sector tariffs, which aim to establish distributed energy resource aggregators as licensed participants in the electricity market. Tariffs should allow these aggregators to register as electricity suppliers, while accommodating physical and operational characteristics of each aggregator’s dedicated resources.

For instance, a vertically integrated distributed energy resources aggregator would include single, homogeneous types such as battery storage, while a horizontally integrated aggregator would include a diverse set of distributed energy resources that might combine energy efficiency and battery storage resources in one group.

Coordination among aggregators, grid companies, and regulators is a pre-requisite to success. Metering and data gathering technology also must play a role. (SCADA, a computer-based system used by the energy sector to gather and analyze data from machines and equipment in real time, illustrates how monitoring and evaluation can identify constructive changes in approach.)

Because many current energy policies and regulations were designed for traditional resources, the contribution of new, cleaner technologies in the fight against climate change has been limited. New approaches are needed to break down barriers, and for developing countries to meet COP26 emission reduction targets by 2030.

With appropriate, innovative policy advice on distributed energy resources, developing countries can take giant strides in their journey to carbon neutrality.