A new report by Wood Mackenzie suggests that the exponential growth of distributed energy resources (DERs), such as wind, solar and battery storage, pose both benefits and challenges for electric utilities, largely due to the variability factor of the various technologies.
The report added that the regulatory approval for grid expansion and reinforcement is a multi-year and often political process that results in bill increases for customers. At the same time, utilities are exploring ways to incrementally mitigate the rising complexities of their grids.
According to Wood Mackenzie, this is where DER management systems (DERMS) and software solutions can help meet utility objectives and address DER-related issues swiftly and economically.
The report defines DERMS as “software-based platforms that provide the ability to continuously manage diverse and dispersed DERs, both individually and in aggregate to support multiple objectives related to distribution grid operations, end-customers value, or market participation.”
DERMS software helps grid operators ensure system reliability while maintaining customer comfort. Although every DERMS provider’s single software platform can aggregate and orchestrate all DERs, utilities increasingly prefer to work with a combination of DERMS software providers to solve specific, and often complex, issues, according to the report.
For example, during the summer of 2020, operators in various cities used DERs frequently to balance the grid during heatwaves. Specifically, California utilities used all available demand-side resources through the Aug. 14 and 15 energy shortages, orchestrating these through multiple DERMS systems to address local constraints and achieve system-wide peak reduction.
Beyond mapping and dispatching DERs for system-wide or targeted grid benefits, DERMS providers often used proprietary analytics to optimize DERs’ participation in wholesale markets and tap into available revenue streams for DER owners and operators.
“The more revenue streams a DER can tap into, the more compelling the business case for customer adoption,” said the report.