Generac Grid Services Blog

Our blog post this week was authored by our friends and fellow Coloradans at the Rocky Mountain Institute (RMI). We think it's one of the best posts we've read in a while, and RMI kindly gave us permission to share it. 

In April, U.S. Secretary of Energy Rick Perry announced a 60-day study on electricity market design and grid reliability, meant to assess to what extent current market designs fail to adequately compensate “baseload” (i.e., coal- and nuclear-fired) power plants.

The memo commissioning the study presents as “fact” a curious claim: “baseload power is necessary to a well-functioning electric grid.” This notion has been thoroughly disproven by a diverse community of utilities, system operators, economists, and other experts that moved on from this topic years ago. To these practitioners, this premise seems as backward as if President Eisenhower, instead of launching the interstate highway system, had called for restudy of the virtues of horse-drawn carriages.

Today, the grid needs flexibility from diverse resources, not baseload power plants. Leveraging market forces to help us decide between options offers the best chance of avoiding the multitrillion-dollar mistake—and gigatons of carbon emissions—of blindly reinvesting in the past century’s technologies.

REDEFINING SUCCESS FOR A DISTRIBUTED ENERGY GRID: THE THREE TENETS

When it comes to effectively leveraging distributed energy resources (DERs), there are three critical success factors that any DER management system or Virtual Power Plant (VPP) must embody. This is especially true as the number of distributed energy assets continues to grow and as the ways in which distributed energy can be used to keep the grid in balance grows along with them. They are: 

• Speed
• Scalability
• Accuracy

In this blog, we tackle the topic of speed and exactly why this such an important success criteria.  

This week, we feature guest blogger Peter Asmus of Navigant Research, who talks about virtual power plants (VPPs) and their changing role in the utility industry.

The primary goal of a virtual power plant (VPP) is to achieve the greatest possible profit for asset owners—such as a resident with rooftop solar PV coupled with batteries—while maintaining the proper balance of the electricity grid at the lowest possible economic and environmental cost. The purpose is clear, but getting to this nirvana is not easy. Nevertheless, there are clear signs that the VPP market is maturing. New partnerships are pointing the way for control software platforms that can manage distributed energy resources (DER) in creative ways.

IN CASE YOU MISSED IT:

Virtual power plants or VPPs are one of the hottest topics in the energy industry today. In fact, investments in VPPs are expected to total over $68.6 billion by 2025 -- this according to Navigant Research, who has published a new white paper on the topic. 

Software advancements are enabling greatly expanded capabilities in the distributed energy resources (DERs) that can be aggregated into VPPs, which are now capable of responding to the needs of the power grid at the sub-second speeds required for instantaneous grid balancing. 

Titled Stacking Values with Virtual Power Plants in Today's Digital Power Grid: Moving Distributed Networked Energy Into the Mainstream, the paper was authored by Navigant's Peter Asmus and covers:

• The expansion and convergence of VPP market segments
• New distributed energy resource architectures
• Physical VPP grid and market interaction values
• ROIs on VPPs

Opening the Distributed Energy Doors is a Win-Win

In November of last year, FERC issued a Notice of Proposed Rulemaking (NOPR) around electric storage resources. The goal was to better allow these distributed energy resources (DERs) to compete in the various wholesale markets.  Per their November press release, FERC’s NOPR would require that RTOs/ISOs:

• Establish a participation model consisting of market rules that, recognizing the physical and operational characteristics of electric storage resources, accommodate their participation in the organized wholesale electric markets
• Define distributed energy resource aggregators as a type of market participant that can participate in the organized wholesale electric markets under the participation model that best accommodates the physical and operational characteristics of its distributed energy resource aggregation

A few days ago, I listened to a group of environmentalists on the evening news protesting a plan to build a new bridge that would solve traffic congestion and make it easier for people get in and out of a local large city. The protestors wanted the money spent instead on public transit, claiming that this options had not even been examined, and arguing that their solution would solve the transportation problem without requiring construction of new infrastructure.

I looked more closely at both alternatives. The government and the consultants retained to propose solutions to the problem had advanced several standard options, all of which revolved around either a bridge or a tunnel, while the environmentalists had extended the options by one – adding public transit as a means to achieve a similar result.

This seemed logical until I started thinking about the need to add one other criteria to the equation: the need to reduce carbon emissions. 

STRENGTHENING YOUR DEFENSES

It seems like almost everyone has had some sort of personal experience with hacking, cyberattacks or malware these days, either at work or at home – and, for many, both.  But did you know that Symantec, the cybersecurity software giant, discovered more than 430 million new unique pieces of malware in 2015 alone?  That was up 36 percent from the previous year, and the numbers keep growing.   

Anyone in the utility industry is also aware that utilities are a target for cyberattacks, but did you realize that hackers target utilities more than any other part of the U.S. critical infrastructure or that there are more reported cyber incidents in the energy industry than in healthcare, finance, transportation, water and communications combined?  

There are many drivers for investing in distributed energy resources, but it’s always interesting to take the pulse of the industry to assess current thinking. Last month Enbala took advantage of the large number of utilities attending DistribuTECH 2017 in San Diego and asked attendees to weigh in on which utilities are investing in distributed energy resources (DERs), what types of DERs are in the mix and key factors underpinning successful integration of DERs. More than 100 attendees took the survey, whose results uncovered some very interesting facts about where the industry is today and where it might be heading.

This week's blog is authored by Rick Nicholson, Global Product Management and Marketing, Enterprise Software, for ABB. We asked Rick to provide his insights on ABB's newly announced investment in Enbala. 

ABB recently announced an investment in Enbala, made through ABB’s venture capital unit, ABB Technology Ventures.  The announcement also mentioned that ABB and Enbala are joining forces to develop a new distributed energy resource management system (DERMS). The joint solution will combine the benefits of Advanced Distribution Management Systems (ADMS) and DERMS to enable utilities, energy service companies and grid operators to efficiently manage the entire lifecycle of distributed energy resources, like solar, batteries and wind, while ensuring the safe, secure and efficient operation of the electric distribution network. It will also enable more active participation from energy consumers.

A stronger, smarter, greener grid

Why did ABB make this investment and choose to partner with Enbala to develop a DERMS solution? The answer to this question is based on the current state and expected evolution of distributed energy resource management. 

Today's blog was written by our friends at the Smart Electric Power Alliance (SEPA), Advanced Energy Economy (AEE) and Rocky Mountain Institute (RMI). We thank them for their insights, their hard work in compiling this compendium and for letting us share these valuable resources with our readers. 

Keeping up with the influx of new information on distributed energy resources (DERs) can be daunting. DERs are physical and virtual assets that are deployed across the distribution grid, typically close to load, and usually behind the meter, which can be used individually or in aggregate to provide value to the grid, individual customers, or both. A particular industry interest seems to be centered on DERs — such as solar, storage, energy efficiency, and demand management — that can be aggregated to provide services to the electric grid.

The energy industry’s focus on DERs is a function of how important it’s become to understand the potential capabilities they have to offer. In 2015, U.S. electric utilities spent $103 billion in capital expenditures to maintain and upgrade the grid — and they now expect average annual spending of around $100 billion through 2018, even as growth in electricity demand slows.

These two trends combined could raise retail rates significantly for electricity customers, as much as 15% to 30% through 2030, according to one study. To modernize the grid for two-way energy flows and incorporate new, connected technologies, while maintaining minimal rate impacts, all available resources, including DERs, need to be put to best use.

To reach this goal, we need to start with a common base of foundational knowledge on DERs -- key articles and resources that are easily available to all stakeholders -- which is the purpose behind this piece.