Generac Grid Services Blog

Last year, when we put together our predictions for 2020, we missed one very important, game-changing element: COVID-19. And today, while still in the midst of the pandemic that has turned the world on end, we once again engage our collective brainpower to foretell what the coming months will bring.

A few days ago, we were contacted by an interested professional in Norway who had read our newest white paper, which I co-wrote with Guidehouse Insights to dispel the many myths surround distributed energy resource management systems (DERMS). He posited that Norway may be the world’s largest distributed energy resource (DER) system, noting that 90+ percent of the country’s electricity comes from numerous local, but interconnected, hydro stations. He pointed out that when rainfall is high, electricity is relatively inexpensive and that when it’s low, coal-fired power needs to be imported — a dynamic that’s changing with Norway’s ongoing construction of wind power. Noting that the country’s grid has operated for many years without 21^st century grid management, he pondered what could be done with modern DERMS technology to minimize waste and improve the performance of the grid.

Guest blogger Peter Asmus of Guidehouse Insights writes about the changing DERMS market

The concept of integrated distributed energy resources (iDER) is a broad umbrella. Under this umbrella are platforms designed to maximize shared value across the energy ecosystem landscape. A recent Guidehouse white paper referencing virtual power plants (VPPs) and distributed energy resource management systems (DERMS) spells out why iDER strategies are necessary platforms to keep the grid in balance. Two recent acquisitions reinforce the message that these platforms are mature and are moving into the mainstream.

As part of last week's 2020 New York Climate Week, Credit Suisse and Dynamo Energy Hub co-hosted an informative online panel in collaboration with IBM. The panel, titled Cleantech, Collaboration and Climate Action: Driving the Clean Energy Transition Through COVID-19, brought together industry leaders to discuss their experiences and insights on trends over the previous — very disruptive — six months.

Two years ago, Enbala posted a blog that posed a proverbial 64 dollar question. Noting that “DERs are becoming so entrenched in the daily operations of the grid that it’s tempting to ponder just where their limitations lay,” we then asked, “Can DERs play in utility wholesale markets?”

Everything you always wanted to know about power systems but were too afraid to ask

Part 1 of Malcolm Metcalfe's Power System Primer

There are two distinctly different methods used to balance supply and demand. These are:

1. Balancing supply/demand in an isolated system (one that is not interconnected with the larger grid. Examples are local systems to power a remote location).
2. Balancing supply/demand in an interconnected system, where a utility is a part of a major interconnection of many utilities.

Like countless industry associations, the Smart Electric Power Organization—better known as SEPA—had planned to hold its annual Grid Evolution Summit this year in Washington, DC. But rather than kicking off as planned, the yearly event “clicked on” in mid-July, with a virtual format that included several live sessions, followed in August by pre-recorded “bonus sessions” focused on topics with a high degree of interest and relevance to today’s utility industry.

One of the topics covered Trends in Behind-the-Meter Distributed Energy Resources (DERs), and Enbala CEO Bud Vos was one of the featured speakers, providing insights on how grid operators and utilities can manage DERs at the microgrid, virtual power plant (VPP) and distributed energy resource management system (DERMS) levels. Speakers also explored how DER management trends impact value streams, market opportunities and grid services across various use cases.

I think it’s safe to say that, with the possible exception of a psychic or two who claim to have predicted the global pandemic that we’re all hoping would stop plaguing us, none of us had any idea that 2020 would be turned on its ear by a virus we’d never heard of a few short months ago. We’re all wondering what the short- and long-term impacts will be on all aspects of our lives, and at Enbala, we’ve been studying, pondering and prognosticating what the impact will be on the world’s evolution to distributed energy resources — and a greener, more sustainable energy future.

• Will business and residential customers continue to demand clean energy alternatives, and how will the answer to this question impact the market for renewables?
• How long will overall reductions in electricity demand persist, and how will the ramifications impact short- and long-term energy costs and the impact of these costs as drivers for cleaner energy alternatives?
• Can an increased focus on distributed energy resources help speed recovery from the pandemic?
• How will on-again, off-again stay-at-home orders and summer high-demand expectations impact grid reliability/stability, and how can distributed energy resources help?

In 1994, California restructured its electricity market, introducing competition as a theoretical means to bring down the price of power. The end-goal was to help revive an economy that was struggling due to a blend of issues, including high energy costs that were driving major manufacturing companies to leave the state, taking jobs and expendable income with them.

But despite good intentions, the restructured system lacked normal power market stabilizers. This, coupled with sharp, adverse changes in supply and demand, led to opportunistic (and occasionally illegal) behavior from out-of-state energy traders that caused power shortages, extreme price spikes and rolling blackouts during the infamous California Electricity Crisis of 2000-01.

A decade later, as California’s two major utilities teetered on bankruptcy and immense uncertainty, the California Public Utilities Commission (CPUC) established a policy framework in 2004 to prevent this from happening again. The resulting Resource Adequacy (RA) program created the rules for how load-serving entities (LSEs) contract for electricity capacity to ensure demand is met in case of an unexpected event.

The US Energy Information Administration (EIA) suggests that the multi-year historical average for transmission and distribution losses in the US power grid are approximately 5% annually (average of annual losses in 2014 through 2018).

More recent data for 2018 suggests that the loss has increased to 6.6%, which, by any account,is significant. Put in perspective, the actual loss in 2018 amounted to 275 TWh. The average retail price of electricity in 2018 was $105.30/MWh, meaning that this loss was valued at $29 billion. The increase in loss from about 5% to more than 6.6% has resulted in increased costs of loss by almost $7 billion.

What is causing the increased loss, and what, if anything, can be done to manage it?