Lawrence Berkeley National Laboratory

Accelerating load growth from domestic manufacturing and data center development is increasing pressure on distribution systems across the United States. Traditional infrastructure upgrades face long lead times and rising costs. Demand flexibility (DF) from aggregated distributed technologies can help defer costly infrastructure upgrades and address localized constraints to the energy system. This aggregated DF, operated by utilities or other organizations, can shift or reduce loads to provide reliability and alleviate costs at the distribution and bulk system levels, supporting affordability for customers. Despite recent growth in deployment of such demand flexible measures, they remain underutilized as a distribution system resource. This paper examines how aggregators can address distribution-level grid constraints and identifies the institutional and economic barriers limiting scale. Drawing on literature review and interviews with over 15 aggregators and other market participants, the authors characterize aggregator roles, business models and revenue structures relevant to distribution grid services. Findings indicate that scaling distribution-oriented DF is constrained by access to localized grid data, procurement models that were not designed with targeting DF to areas of highest grid need, and more. Recommendations for overcoming these challenges are included, as scaling products and services will ultimately lower costs for consumers while providing valuable grid services, including for improved reliability to utilities.