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What DERMS Technology means for a Utility

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Across the globe, the energy industry is witnessing increased penetration of distributed generation resources, such as solar PV, energy storage, and microgrids— which are small-scale versions of centralized electric grid.

This past century, most electricity systems have experienced gradual, incremental change.  And electricity has flowed in one direction from centralized generation to consumers. However, over these past 10 years, those electricity systems are now confronting the most transformational period of change.  The widespread adoption of distributed energy resources (DER) such as solar PV and energy storage, energy-efficiency efforts, and declining asset utilization rates are simultaneously driving the industry to reevaluate the way it manages the electricity network. 

Within the next five years, whole regions of an electricity system must be capable of operating securely, reliably and efficiently with conceivably 100% of instantaneous demand met by DERs.  While central generation tends to provide supply from above the distribution substation, DERs are located at the opposite end of the power lines, and even behind electric meters. This presents monumental technical challenges for systems that were all designed for an entirely different time.

Industry Trends

Historically the electric grid was managed using a combination of manual controls, supervisory control and data acquisition (SCADA), and distribution management systems (DMS), which provided basic information and control to electric utility operators.

These systems enable the management of traditional capabilities such as voltage, reactive power (VAR), and monitoring of power flow, but they were designed to support centralized generation and very limited amounts of renewable resources, and of course, DER.  As DER penetration levels increase, utilities and power system operators must look to new control solutions.

SCADA, DMS, and remote microgrid control providers are thus adapting their systems to de-centralized assets with often unpredictable and intermittent generation profiles.  Because these solutions are still based on a centralized framework, they prevent operators and owners from fully leveraging the capabilities of distributed generation.  This, in turn, hinders the development of new value streams derived from DERs’ inherent flexibility. 

As DER systems expand and proliferate, all actors in the power system (local utilities, third-party aggregators, communities, and end-customers) want the value they contribute to it to be recognized.  A platform is needed to manage as a coordinated system such diverse assets as solar, wind, energy storage, combined heat and power, and conventional generators.  

Enter the distributed energy resource management system (DERMS). With it, a utility can ensure power reliability with high amounts of DER, lower costs, and create new value streams for other local utilities, their customers, service providers, developers and site owners. 

Value of DERMS

In the future, energy markets will compensate DER owners who provide valuable grid services to the distribution power system.  Incentives and financing mechanisms will create new opportunities and business models that spur the installation of additional distributed generation, DERMS solutions must adapt to ensure that DER add value, not just shift costs from one user group to another.  As policies and regulation change, a DERMS must be able to extract from the same underlying architecture and DER capabilities values that simultaneously complement different business strategies. 

Any solution that some utility custom-design solutions intending to meet a single need will not be able to adapt the product fast enough to compete with the market. Across the industry, power purchase agreements (PPAs) continue as an important financing instrument for clean energy projects. PPAs between an electric generation seller and buyer of electricity (typically a utility), establish terms to help both parties deal with uncertainties around energy cost and supply. PPAs also create a mechanism for the buyer to receive tax credits or renewable energy credits associated with the energy produced, where appropriate. All these incentives and financing mechanisms are creating new business opportunities and models to spur the installation of distributed generation.  Similarly to PPAs are virtual power plants (VPPs), in that they create a virtual version of either power or load aggregate. In many areas, both of their successes have moved the industry from the early adoption phase to a more mainstream phase.  As this happens, the underlying regulatory environment needs to encourage grid-friendly behavior and fair incentives.  As a result of potential changes to policies, a DERMS solution must be able to navigate this change of policy to ensure that the DER is adding value, not just shifting costs from one user group to another.

As many utility customers are taking advantage of DER technologies and policies, the utility is in danger of losing business and relevance.  The evolution of the power industry has many parallels to the telecommunications industry where dramatic changes in regulation and technology enabled entirely new competitors and eliminated the established monopoly.  A DERMS solution should enable a utility to embrace the public mandate and participate in new business models that enable their customers and themselves to benefit from the transformation. Each utility must seek to get ahead on DER penetration and enable DER proliferation through the DERMS platform. Finally, and over time, utilities will become the distribution system operator for both utility-owned, and non-utility owned DER with appropriate agreements in place. The future state scenario includes creation of a transactive energy market that enables compensation for various entities (including customers) providing valuable grid services through this market structure.

With regard to the above ideas, DERMS platforms will undertake the following roles:

  • Aggregate – take services from individual distributed energy resources and aggregate them in a manageable number
  • Organise – manage DER settings and provide simple grid-related services
  • Optimise – harness the multitude of DERs economically and enhance reliability
  • Translate – communicate to many resources that may use different communication protocols, but interface cohesively through DERMS.

Additionally, a DERMS platform may provide the following benefits:

  • New business models – encourage new product and service development and new revenue streams from these offerings
  • Customer empowerment – provides customers with choice of services, through which customers can sell back to the grid
  • Economic value – reduces cost of ownership while increasing reliability, efficiency and overall system utilisation. Exposes resources to a larger market at the distribution level.
  • Regulatory flexibility – allows jurisdictions to implement higher penetration of DERs, while maintaining power quality within prescribed limits.
  • Societal value – reduces emissions with prolific deployment of DERs and improves management of renewable intermittency and volatility.

The DERMS is responsible to communicate optimization operations to the underlying systems that it oversees; including SCADA, DMS and the relevant DER. It monitors system conditions and current, as well as forecasted, constraints. Constraints can be electrical or contractual. The DERMS must constantly optimize system stability with economics. Therefore, if DER participate in contracts (either through VPPs or direct to the utility through tariffs), the DERMS will also optimize the system’s larger economic outcomes along with the power system requirements.

DERMS architecture

The figure below presents a high-level concept for the DERMS solution that utilities should use as they consider platform deployments.  If energy balancing is occurring from the substation down to the customers, the distribution system appears more closely resembling a microgrid than it does a central grid. Assuming substations are interconnected via transmission lines, each distribution microgrid becomes part of a federated scheme which can share resources across the many. Some of these microgrids could be operated by other utilities, third-party aggregators or other customer-owned DERs. Therefore, DERMS organizes its optimization schemes at various spheres of control: circuit level, neighborhood level, microgrid level, substation level and then the whole system.

DERMS can meet emerging needs for utilities that utilize its benefits across its systems:

  • DER Device Management
  • DER Monitoring and Control – Situational Grid Awareness
  • DER Optimization, Scheduling and Dispatch
    • Grid-connected
    • Island mode
    • Environmental Dispatch
    • Economic Dispatch
    • Customer Load Priority
  • Distribution Services Management
    • Peak Shaving
    • Reliability
    • Voltage/frequency Regulation
    • Energy Arbitrage
    • Circuit Overload Mitigation
    • Support Renewable Smoothing
    • Volt/Var Support
    • Spinning Reserve
  • Demand Response
    • load-driven demand management
    • price-driven demand management
  • Market Operation
    • Transactive Energy

Following are the key functions or features that a DERMS solution shall support to meet the objectives of the above use cases:

  • Systems Operations Centre – Enables operation of the DER through a control centre.
  • Data Acquisition – Acquires and maintains power system topology and parametric data for network connected DER under active management of DERMS.
  • Field Equipment Integration – Enables integration of devices in the field that connect the DER to the DERMS. Allows creation of protection schemes for the DERs to effectively participate in the DERMS area of operation.
  • DER Management – Provides access and enables oversight and management of various DERs under its area of control.
  • Change Management – Allows expansion of DERMS control area through modular change and expansion.
  • Enterprise Integration – Enables integration with backend systems and other systems in the utility’s operations centre.
  • Application Management – Enables incremental extension of capability with modular applications for selective installation or uninstallation.
  • User Access and Management – Enables secure access to authorized users and stakeholders.
  • Security – Implements high-level security functions that enable safe modes of operation for the DERs and protects the data from these resources.

Its useful to note that a mature DERMS platform aggregates DER and grid resources according to the needs of the system operator. Therefore, aggregates can be composed of:

  • DER on a single circuit;
  • All electric storage at 50% charge or higher;
  • All Demand Response within a substation’s network; or
  • Other aggregators.

Since the DERMS can aggregate, it enables the utility to avoid paying for future aggregation services, and thereby reduce the cost of managing operations.

Path Forward

As identified above, utilities are coming under increasing pressure to cope with variable generation resources that they don’t own. Frequency, voltage and economic chaos is become the norm. With the introduction of stable and mature DERMS products readily available in the marketplace today, utilities can start to tame these challenges.

Substantial work has been undertaken to define best practices for DERMS platforms. Since 2012, EPRI and others have held industry discussions on this subject. And more recently, SEPA has developed a template with functional requirements that utilities should consider when planning a DERMS deployment.

The bottom line is that this is not new science. Products are available today for immediate deployment. The time for pilots is over and the industry can move forward to economically calm the system network.

Terry Mohn's picture

Thank Terry for the Post!

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