Generac Grid Services Blog

This blog post is authored by special guest Peter Asmus of Guidehouse Insights

Utilities, governments and major corporations alike are committing to 100% clean energy goals in the coming decades. Utilities will need to lean on smart software platforms, such as a distributed energy resources management systems (DERMS), to keep grids that are increasingly dependent upon variable renewables, such as wind and solar, in balance. 

These highly sophisticated platforms enable greater control and interoperability across heterogeneous grid elements. The value of DER assets can only be fully realized if they are integrated at customer sites and brought into a grid network to create shared value. At Guidehouse Insights, we use the term Energy Cloud to describe this transition. 

I describe myself as a technological optimist—well, within reason. I don’t think that Moore’s Law, the notion that our computing capabilities double every couple of years, permits humans to continue reckless consumption and assume that we’ll be able to innovate our way out of any self-created calamity. I also fear technology’s risk of generating moral hazards; just because we are learning how to capture, sequester, and use some carbon dioxide does not mean we can otherwise continue to emit it recklessly. Joining the Enbala team, however, I do recognize we have the tools at our disposal to reduce the economic and environmental costs to power our society.

Enbala’s Concerto™ software platform, combined with distributed energy resources (DER), creates a balanced, sustainable energy future. I joined this company because I believe that such a future isn’t far away, and if we put our hearts and minds into transforming the energy system, we can green it today.

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.

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?”

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.

I’m wondering how everyone out there is doing today. As I sit down to write this blog, many thoughts and ideas swim through my head about what to write. Should I ruminate on how the virus that has turned all our lives upside down will impact the utility industry? Should I speculate on what the future will bring, offering theories on how long this will last and the different scenarios that might play out when summer peak loads arrive? Or perhaps offer beacons of hope and optimism? 

The French author Andre Gide coined an oft-copied phrase, “Everything that needs to be said has already been said,” and in this case, there is a lot of truth in that.  The virus is all anyone has been talking and thinking about for days, weeks or months now—depending on where you happen to live. Many of us, including me, are experiencing serious information overload; I feel like I’ve been drinking from a fire hose.

Energy systems are changing. As variable renewable energy generation replaces retiring fossil fuel-run power plants, we see a shift from our century-old mindset of centralized supply following demand, to a more distributed grid with distributed energy resources (DERs) playing an essential role in a sustainable energy future. In order for renewable energy resources and DERs to replace conventional power plants, they need to be able to act like power plants – virtually at least.

At technology and innovation’s finest hour, we are able to aggregate disparate, geographically dispersed DERs and orchestrate them in such a way that they are able to respond to the grid’s needs at the same speed and accuracy as a traditional power plant. That’s where the Virtual Power Plant (or VPP for short) comes in. Navigant Research defines a VPP as:

“… a system that relies upon software and a smart grid to remotely and automatically dispatch retail DER services to a distribution or wholesale market via an aggregation and optimization platform”

VPPs are critical for the transition to more sustainable energy systems – so where is the technology at? Where can we find VPPs? And what can we expect in the future?