Electric utilities, especially those in high load-growth regions, often scramble to keep up with the dual challenges of meeting higher demand and minimizing or eliminating their carbon emissions. Fortunately, technology has evolved to allow them to tap into rooftop solar panels and home batteries—and even the “virtual” capacity created by setting back customers’ thermostats, water heaters and other equipment—to gain some breathing room during peak-use periods.
But as these resources have multiplied, keeping track of them at the millisecond scale needed to maintain network operations has become more difficult. Increasingly, utilities are turning to a new class of monitoring and control software called distributed energy resource management systems (DERMS) to help integrate outside equipment into their own grids, bringing the power of artificial intelligence (A.I.) to everyday utility operations.
Shifting expectations
Utilities’ jobs were a whole lot easier a couple decades ago. Back then, and for the century previous, they were tasked with producing all the electricity we used from central generating stations and delivering that power to homes and businesses through the substations, transformers and wires they maintained across their service territories. Yes, the occasional hurricane, fire or tree fall could throw their systems out of whack, but in general, their responsibilities were easy to understand.
That clarity has blurred in the last 20 years and is likely to become even less defined as the grid evolves. The dueling needs to increase capacity and reduce carbon emissions are driving utilities to look beyond their own power portfolio to consider customer-sited rooftop solar, commercial and residential batteries and even demand-side equipment like customers’ HVAC equipment and water heaters. These distributed energy resources (DERs) are increasingly showing up in the integrated resource plans utilities file with their states’ public utility commissions.
“Policy has driven a lot of this, as well as technology advances happening at the same time,” said Christian Grant, principal with the Power, Utilities and Renewables practice of consulting firm Deloitte, New York. He is a co-author of the June report, “Households transforming the grid,” which describes the ways utilities are turning to their customers to help meet growing demand.
“We’re now realizing that, in order to achieve policy targets, we are going to need to leverage all manner of generation, load management, etc., in order to meet the objectives and targets that are out there,” he said.
The Federal Energy Regulatory Commission’s (FERC) Order 2222, released in 2020, opened the door to greater use of these nonutility assets by enabling DERs to participate alongside traditional resources in regional wholesale markets. The order supports aggregating DER output to create power pools large enough to make a meaningful difference in a utility’s power requirements.
Examples include efforts by National Grid in Massachusetts to aggregate home battery system output and support peak demand needs—and to reduce that demand by automatically adjusting connected wireless thermostats up or down a few degrees in bulk.
FERC’s order allows utilities to take advantage of capabilities that have only developed over the last decade. These include technologies such as the internet of things, which has added connectivity to appliances, solar and battery inverters, circuit breakers, and more. This is one reason your new electric water heater came with a Wi-Fi connection.
“The development of low-cost sensors and communications and the use of IP V6 has allowed us to consider numerous, smaller behind-the-meter resources as DERs,” said Jim Waight, senior manager, business development for Siemens Smart Infrastructure, Washington, D.C., using the abbreviation for Internet Protocol Version 6, which enables greater communication capabilities over the internet.
“The advent of cloud technology has made it easier for a utility or an aggregator to scale the number of devices monitored using elastic computer resources,” he said.
Caleb Bicknell, sales director for Generac Grid Services, Denver, said this increased connectivity also has made DERs more dependable for utilities by taking some of the human element out of programs such as residential demand-side management (DSM). Earlier versions of these efforts relied on customers to opt in each time a utility sent out a request to set back thermostats and otherwise reduce electricity use.
Notices still come, but now the choice is whether the consumer wants to opt out of an action that otherwise will happen automatically. Experience has shown that people are more likely to remain active in DSM billing programs if they don’t have to actively opt in at every alert.
“You can eliminate the behavioral part with connectivity directly controlling an asset and be able to have two-way communication,” Bicknell said. “You really have more of a reliable resource and you can understand what capacity you’re providing to the system.”
How DERMS help
While device-level communication opens up great new options for adding capacity, it also creates new management headaches. Instead of a relatively small number of generating stations, utilities can have thousands, or even millions, of individual data points to contend with. This can be especially difficult with variable resources such as solar. When regulators might push utilities to incentivize more panel installations, electricity companies could find themselves stressed to handle the complexities these resources can add to their networks.
At a base level, these challenges include “knowing where these resources are in the context of the grid and understanding how, when and where to best leverage them,” Waight said. This need for better real-time insights, he added, is driving demand for control systems that can manage the variability solar introduces into grid operations, and optimize multiple services, such as energy, voltage control and congestion.
These are exactly the issues DERMS are helping utilities address.
“Think of them as a central control system or platform for utilities to gain visibility, control and optimization of their distribution network,” said Michael Ruth, vice president of product with Generac Grid Services, using the example of a feeder line in a neighborhood where rooftop solar systems are prevalent. “The DERMS can provide very targeted, localized control and support to address just such problem areas.”
And more than just monitor local solar systems’ output, DERMS can help utilities control that output to provide ancillary services such as frequency and voltage support.
“You can then use those DERs to help keep frequency within its tolerances,” Ruth said. “All of those are integral to what a DERMS platform can provide. It’s not just about controlling power and energy.”
Because utilities often turn to outside companies, called aggregators, to manage the operations of their DSM and virtual power plant programs, DERMS also must connect to these cloud-based operations.
“DERMS will likely connect to several vendors’ cloud systems,” said Coral Siminovich, product portfolio manager for Siemens’ NextGen Grid Management Software. “Other examples could be electric vehicle supply equipment (EVSE) that is monitored and controlled by an EVSE vendor cloud system or through the EV telematics system.”
More DERs and more DERMS
Grant sees enormous growth ahead for DERMS technology. The paper he co-authored estimates that up to 1,500 gigawatts (GW) of added capacity could come out of household DERs by 2035.
“That’s a massive opportunity that offsets the need to generate that same amount of capacity somewhere else,” Grant said.
But, he added, maximizing that potential will require highly sophisticated controls. “I think you get to a world where we really do need A.I. to operate the grid, because humans won’t be able to keep up with the number of decisions that have to happen within milliseconds.”
And those decisions will be increasing quickly over the next decade if the load-growth estimates utilities are now seeing become reality. A December 2023 report from consulting firm Grid Strategies forecasts peak demand growth of 38 GW through 2028. The biggest contributors to this shift are investments in new manufacturing, industrial and data center facilities.
Data centers
“Most of the news is around data centers and the massive loads that they’re bringing onto the system, and how do we deal with that,” Grant said, noting that residential DERs wouldn’t necessarily address data center loads, but could support neighborhood needs elsewhere in a utility’s grid, freeing up that capacity in the process.
“What we can try to do is minimize the need to satisfy demand inside those residential pockets—we could construct a future where that is possible,” Grant said, describing the all-of-the-above approach he says is critical to addressing future load growth. “There’s no aspect of the system that we can’t look to for solutions to help solve this problem where demand could be outpacing supply.”
As Waight suggests, greater proliferation of DERs will, by necessity, drive greater DERMS adoption.
“Over the next years, planning for the use of DER flexibility in operations will become increasingly important and will need to be considered and integrated with DERMS,” he said. “Systems will evolve to include more automation and the use of co-pilots to help operators manage complex situations. And they’ll also evolve to consider probabilistic grid behavior for modeling and optimization.”
Ruth and Bicknell note that economics will also drive DERMS adoption.
“As DERs continue to proliferate and load continues to increase, utilities are going to continue to look for ways to advance use of these assets rather than having to build more power plants,” Ruth said. “At the end of the day, all of our assets that are controllable and communicate-able are accessible to these types of DERMS platforms.”
But, Bicknell emphasized, this adoption will happen on different schedules, depending on each utility’s particular requirements.
“I think it’s important to note that each utility is on a different journey—some are very early stage, and some are deploying DERMS,” he said. “Soon, I think, for one utility versus another, the evolution of technology might look a bit different, depending on where they are today.”
Header image: Getty Images / NatalyaBurova
About The Author
ROSS has covered building and energy technologies and electric-utility business issues for more than 25 years. Contact him at [email protected].