Advocates for community solar and other distributed generation (DG) sources say that while smaller, localized energy projects play a pivotal role in meeting rising energy demand, the sector needs supportive regulatory frameworks to operate.

Peter Davidson, CEO for DG-focused investment firm Aligned Climate Capital joined Infralogic’s Crossroads podcast this week to discuss how state lawmakers and regulators are writing the rules of the road for DG deployment.

“There’s no national entity or regulator controlling this. So we’re really seeing the different states implement different programs,” Davidson said.

From the basic measures facilitating the flow of electricity and payments between consumers, community solar operators, and utilities; to regulatory “best practices” for fostering a growing, efficient DG sector, Davidson discussed how states at the forefront of the sector are incorporating DG into their energy mix.

For the economics of community solar to work, Davidson suggested that states pass legislation to allow retail or business customers to buy energy from a community solar project and allocate credits for energy generated by those projects toward their utility bills.

But beyond establishing that basic regulatory framework, Davidson said, states are establishing additional measures to allow DG resources to integrate more seamlessly into the broader energy mix.

Among those measures, consolidated billing, expedited interconnection of DG projects to the grid, and flexibility to grow the size of state DG programs are all measures that states have pursued in recent years, Davidson said.

States like Illinois, New Jersey and Virginia, Davidson noted, have acted to expand the size of their DG programs, accelerating activity in those states.

“You have to have a program that expands, that has enough capacity. Illinois recently went through a major expansion of their program, and that’s been super beneficial to consumers there. It’s brought in a lot of new development dollars into the market,” he said.

To hear the entire podcast, click here.