Governors' Wind Energy Coalition

One of the top challenges facing electric utilities and grid operators over the coming decade will be how to integrate distributed energy, such as that produced by rooftop solar panels and wind turbines, into the electricity mix without compromising the steady flow of electrons to the end-users when and where they need them.

But now, as the costs of renewable energy systems fall to historic lows and the number of ratepayers choosing to become independent power generators rises, utilities across the country must figure out how to manage thousands of new kilowatts of electricity flowing onto their power lines from what has come to be known as “the grid edge.”

One emerging solution, according to experts, is software technology known as “distributed energy resource management systems,” or DERMS. These systems help bridge the transition from older, highly centralized electricity generation and distribution networks to more advanced systems where power inputs and outputs are more fluid and the management of electricity is more agile.

In essence, DERMS provide the highest level of “smart grid” capability by providing real-time information about grid performance using computer algorithms that measure how much distributed generation is flowing onto transmission and distribution networks and tailoring that energy supply to meet specific needs or conditions.

For example, a DERM application might allow a utility or electricity aggregator to adjust the amount of electricity flowing to electric-vehicle charging stations during periods of high or low demand. Another could forecast how much distributed generation — say, from a solar array or wind farm — is expected to come onto a utility’s network based on shifting weather conditions.

Analogy to the emergence of cellphones

Omar Saadeh, a senior grid analyst at GTM Research and expert on utility integration of distributed resources, likened the advent of DERMS to the telecommunications revolution of the 2000s, when a centralized network of landlines controlled by a few large companies gave way to a highly decentralized network that allows untethered smartphones to carry much of the nation’s calls, texts and data transfers.

“As we transition away from centralized generation, utilities have begun to employ DERMS solutions to address the proliferation of distributed resources in a very similar manner,” Saadeh said.

In fact, the North American market for DERMS is projected to see a doubling in growth over the next four years, according to GTM Research, reaching $110 million in direct annual spending by 2018. Much of that spending will be done by utilities and energy developers in states and regions where significant distributed generation is coming online from solar, wind or other nontraditional resources.

The DERMS vendor market is represented by firms with varying backgrounds and aims, from power sector stalwarts like Alstom SA and Siemens AG to relative newcomers like Spirae of Fort Collins, Colo., and LocalGrid of Toronto. Their focus has traditionally been on microgrids but has expanded in recent years to include larger electricity distribution systems.

Spirae, for example, recently helped implement a DERMS project with San Diego Gas & Electric Co., a subsidiary of Sempra Energy, to help the California utility make its power delivery system “fully functional and interfacing with customer loads and resources” by 2020, according to SDG&E’s Smart Grid Deployment Plan.

Other DERMS projects, including several backed by research grants from the Department of Energy, have been implemented in the Pacific Northwest, where 11 distribution utilities adopted a software platform to help trigger the delivery of between 60 and 70 megawatts of distributed generation. In North Carolina, Duke Energy Corp. is working with Alstom to implement a DERM to perform high-level functions with respect to solar generation, energy storage, demand-response systems and electric vehicles.

Bill Becker, Spirae’s business development director, said in an interview that the key to making DERMS work for a large utility is first accounting for generation and other resources that are outside the utility’s direct asset base, things that are at “the edge of the grid and often outside the view of the utilities and beyond their control.”

Once those resources are identified, DERMS can begin to monitor and even manage those energy flows at individual points and, as a result, tailor generation and delivery of electricity in a way that accounts for the intermittency of solar panels or the energy usage profiles of businesses and homeowners.

Moving quickly into a different world

“We’ve come from a world of centralized generation, where the [utlities’] focus was on power plants and transmission lines that moved large amounts of electricity to end-users, and not much happened in the other direction,” Becker said. “Now, instead of one or two large generating stations delivering power in one direction, we have thousands of flexible, controllable points where power comes from distributed resources and moves in the opposite direction.”

“It’s really about how do we connect all of these points on the grid,” said Becker.

James Avery, SDG&E’s senior vice president for power supply, said in an interview that the adoption of DERMS technology, while more evolutionary than revolutionary, has moved the utility into a new information age in which elements of the distribution system — like inverters, switches and transformers — no longer operate as isolated pieces of equipment.

Rather, they are parts of a highly integrated and interactive network that allows managers to adapt to a wide variety of changing conditions, from a rare San Diego cloudy day to a building fire that causes outages at the city block or neighborhood level.

The same capabilities also allow SDG&E to better handle the ebb and flow of intermittent resources from solar panels, wind turbines, fuel cells and other types of distributed generation that today provide roughly 20 percent of all delivered electricity. Lastly, DERMS are integral to helping utilities optimize their demand-response programs, in which customers can take steps to reduce load during periods of grid stress.

“We now have customers who are becoming a key part of the energy equation,” Avery said, either by placing solar panels on their rooftops or by installing smart meters in their homes that allow energy usage data to flow back and forth between the utility and its customers.

With the advent of DERMS, the amount of information flowing across networks, and the management of resources like wind and solar power, can be optimized to better match supply and demand. Or, as Avery put it, DERMS “provide a set of eyes and the ears” to both the utility and the customer that didn’t exist as recently as a decade ago.