Issue date
AER reference
AC 146/20

Today the Australian Energy Regulator (AER) released the Value of Distributed Energy Resources report (VaDER) produced by the CSIRO and CutlerMerz.

The report recommends a methodology to determine the value of distributed energy resources (DER) that can be used by networks in investment proposals to integrate DER into the grid.

The VaDER report makes several recommendations including publishing guidance, hosting capacity assessments and key input assumptions for business cases such as adoption rates.

Greater levels of DER uptake means network businesses require guidance on how the AER will assess their proposals to facilitate this transition in future reset processes.

The recommendations aim for consistency in approach across different networks in demonstrating and justifying prudent and efficient investments.

The AER will consider these recommendations during a consultation process in early 2021. This process will inform the development of a draft DER integration expenditure guideline (mid-2021) that will be completed before the end of 2021.


On 19 November 2019, the AER released a consultation paper on DER integration expenditure. This initiated a process to provide stakeholders with guidance on how the AER will assess distributors’ expenditure proposals for DER integration programs. Through stakeholder submissions and feedback, we determined that there was merit in expanding the scope of guidance by establishing a methodology that distributors can use to calculate the value of DER (VaDER).

The Australian Renewable Energy Agency (ARENA) approached the AER to co-sponsor the VaDER methodology study. The AER and ARENA commissioned the CSIRO and Cutler Merz to conduct the VaDER study in May 2020. The purpose of the study is to deliver a simple and transparent methodology for assessing the value of DER unlocked by proposed network expenditures to increase DER hosting capacity.

CSIRO and Cutler Merz submitted the final VaDER study report to the AER and ARENA in November 2020. Throughout the VaDER consultation, CSIRO and Cutler Merz received submissions from a range of stakeholders, including included distributors, consumer group representatives, industry organisations and consultants. Stakeholders were broadly supportive of the proposed methodology and recommendations.