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.
A definition of terms
Guidehouse Insights’ Brett Feldman set the stage by predicting that this year’s 200 GW of forecasted global DER capacity will grow to 500 GW by 2030, putting the significance of this prophecy into perspective by noting that the U.S. peak load is currently 700 GW and pointing out that 500 GW of DER capacity would mean that 70% of the total U.S. load could be met with DERs alone. He emphasized that while this is positive news, grid operators nevertheless face growing challenges to their business models as the volume of DERs increases.
Brett explained that when it comes to DERs and their control, there are many different terms and overlapping definitions around microgrids, VPPs and DERMS. He described a microgrid as “a distribution network that incorporates a variety of DERs that can be optimized and aggregated into a single system which can balance loads and generation and is capable of islanding, whether or not it is connected to a grid.”
VPPs are a step up on the DER control ladder, he said, using software and smart grid technology to remotely and automatically dispatch DER services to a distribution or wholesale market via an aggregation and optimization platform.
Brett characterized DERMS as being at the highest level — “looking at the grid as a whole as a software-based solution to monitor, forecast and optimize both behind-the-meter and grid-tied distributed energy resources across customer, market and grid applications in real-time.” The DERs can be customer-, utility- or third-party owned and can be directly or indirectly controlled by the utility.
Eversource and AGL: Comparing and contrasting business models
Bud expanded on Brett’s characterization of the DER market, adding that the value propositions derived from the three microgrid-VPP-DERMS levels vary. “There is value for the customer under the microgrid scenario, value to the utility or energy supplier under the VPP scenario and then there is value to the distribution operator under the DERMS scenario,” he said. “There is a need for all of these layers to come together in order to leverage DERs to add value across the energy ecosystem.” Bud cited the work Enbala is doing with Eversource as one example of how this is being done.
“For Eversource, we are doing just that – we have a massive fleet of both commercial & industrial as well as residential assets that are producing value for the end customer. The assets are also frequently aggregated and brought together in different groups of resources that are used for DR events as well as other energy balancing scenarios under New England ISO programs,” he continued. “Lastly, there are times when Eversource will dispatch and manipulate these resources to benefit the distribution grid. We are seeing a number of these things happening on an ongoing basis every single day.”
In contrast to the North American Eversource example Bud talked about the work Enbala is doing in Australia with AGL as part of one of the world’s largest solar+storage VPP projects. “There the business model is different,” he explained. “Eversource has a traditional regulated utility business model, under which they are leveraging DERs under normal demand response rates.” But in Australia, he said, “There is a full retail business model, so rather than a business model based on regulation-based rate of return, we see a strong retail approach, mixing solar and storage together and using those DERs in every single wholesale market imaginable, whether its energy shifting, capacity trading or regulation services (or frequency regulation as we call it here).”
The business models are different, he stressed, but the outcomes are similar — capturing value from DERs and using it for the good of the power system and the customer.
Market Opportunities
A new report from Guidehouse Insights puts the DER management technology market at $826.4 million in 2020 and forecasts that it will grow to nearly $5.9 billion in 2029, at a compound annual growth rate (CAGR) of 24.3%.
Bud pointed out that this growth is explained by an increase in DERs and DER control that encompasses everything from EVs all the way through to traditional DR, framing a wholesale market that is changing rapidly. “As we see everything from the energy imbalance markets of the west emerge to additional ancillary services markets, and as capacity markets begin to expand and become both year-round and encompass both long-term and short-term markets, this is where the value for DERs ultimately lies — in being able to take these assets into all these markets.”
“Whether you are a utility that’s operating in these markets or an unregulated retail entity that wants to aggregate and play into them, you need the ability to leverage a wide range of diverse distributed energy resources, and you need the technology that can slice and dice them to create actual products for these markets,” he said.
Bud emphasized that at Enbala, we believe that you need to be able to:
- Perform in real time
- Operate in sub two-second cycles
- Create dynamic groups and to control these resources with very high fidelity
- Optimize these groups for every type of power and energy characteristic that needs to be achieved
A bit more food for though
Bud made a few more concluding points about the future of distributed energy resources.
- The integration challenge – Bud noted that integration is still a challenge not only for software providers but also for the manufacturers whose DER devices need to be integrated. “There is no utility on the planet that wants to deal with 14 different knobs that need to be turned for every car manufacturer and level-two charger out there,” he said. The industry at large needs to do a lot more work on the protocols and open standards around integration.
- Successful DER deployment is a portfolio problem — Today, we want networks comprised of many diverse resources working together; the more diverse the better. “Gone are the early DR days when we used to say that these resources were great — as long as they all looked like an air-conditioner.”
- DERs can present power system problems — “When you start flexing resources that go beyond load-based resources and which actually give back to the grid in the form of power, you are creating a power system problem,” Bud said. “This is very different than the early days of DR or even the recent years where just turned things off and to avoided a peak. Now we are trying to absorb solar and give energy back to do things like energy shifting and moving power around within a distribution grid. Those are real power system problems.”
There’s More
One of the pluses of attending virtual instead of live events (though we LONG for the return of in-person interactions) is that you don’t have to listen to the presentations as they occur. You can catch the full broadcast of all the sessions, including Bud’s, at your convenience — as long as you do so before the end of September. You can listen in on all the talks through September by registering here.