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Transforming the Power Industry with DERMS Deployments and Beyond

The shift from energy consumers to prosumers is fundamentally changing the relationship between utilities and their customers. Behind-the-meter distributed energy resources (DERs) transform the ways households consume, generate, and store power. In the U.S., there are now about 15 million smart thermostats, 2 million solar installations, and 1.5 million electric vehicles (EVs) on the road. And it’s still the early days, by 2025, total DER capacity in the U.S. is projected to reach 387 GW

At the same time, more utilities are committing to aggressive decarbonization goals. SEPA reports that 57 utilities serving 68% of households in America have made commitments to reduce their carbon emissions. While the affordability of renewable energy has been a boon to decarbonization, utilities must overcome issues of renewable firmness, availability, and power quality on the path to decarbonization.

Rather than shaping energy generation to meet demand, utilities are starting to think about shaping demand to meet renewable generation. DERs can shift load, quickly balance intermittent renewables, and provide grid operators with new control levers for the distribution network. DERs enable utilities and their customers to partner together to create a cleaner, more reliable energy system. The outcome is a win-win for customers and the grid.

Evolving from BYOT to DER Portfolios

The bring-your-own (BYO) model emerged through our work pioneering Bring Your Own Thermostat (BYOT) programs for utilities. BYOT demonstrated how utilities could rapidly scale their DER portfolios, reward customers for their participation, and provide real value to the grid. As a result, today, we manage the largest portfolio of thermostats of any distributed energy resource management system (DERMS) provider in the country.

However, emerging trends in EVs and storage meant we could not stop there. Working with utilities, we scaled the model for all classes: thermostats, EV charging equipment, residential storage, solar inverters, water heaters, and commercial and industrial sites and aggregators. By studying technical details and behavioral habits, the complexity and nuance of hundreds of thousands of customer-owned assets is turned into simple but powerful DER portfolios with material impacts for utilities.

DERs’ Role in Transportation Electrification

Harnessing the flexibility of EV charging has emerged as a top priority for utilities. With dozens of new EVs being readied for launch, the Edison Electric Institute (EEI) forecasts that 18.7 million EVs will be on the road by 2030 and have a substantial impact on the grid.

Electrification poses an opportunity for utilities to provide clean electricity to replace carbon-intensive fuels. However, if everyone plugs in their cars at the end of the workday, today’s load peak will grow exponentially. Thankfully, analyzing the behavior behind EV charging has revealed that this load is highly flexible. EV owners on average leave their vehicles plugged in for 10 hours each night, while the average charging period lasts only about two hours.

By accounting for customers’ charging behavior, we can refine the incentives, rate structures, and other elements of EV program design that will motivate customers to participate. This is the type of work we’re doing with utilities such as Eversource and Baltimore Gas & Electric to develop charging strategies that take advantage of this huge flexibility and better align charging load with grid conditions, wind and solar output, and market prices.

Solar + Storage, and More

In many ways, batteries are the perfect grid resource. They can shift demand both up and down, provide grid support in milliseconds, and be dispatched frequently without impacting customer comfort. Recognizing that batteries deliver a lot of value to the grid, National Grid was the nation’s first to deploy a bring-your-own-battery program with a performance-based incentive. After just two years the company has built a sizable grid resource with more than 1,000 batteries that continues to grow rapidly. Arizona Public Service (APS) has also taken advantage of battery flexibility to shift load on a daily basis, absorbing midday solar production, minimizing local evening peaks, and optimizing conditions on the distribution grid. 

One of the main learnings from these programs is that to integrate and manage all classes of DERs, utilities need a single platform—whether it’s commercial and industrial (C&I) assets, residential resources, or both. So that’s what we did—developed one platform to manage all grid-edge DERs, utility- and customer-owned, commercial and residential.

Breaking Out of Yet Another Utility Silo

Utilities are headed in the right direction with integrating DERs at scale, but one barrier stands in the way of capturing the full value—programs tend to be confined within isolated utility silos. Utilities will ultimately need to build bridges between customer engagement, demand-side management (DSM), grid operators, and market-facing functions. 

Utilities that are leading the way are integrating with the systems the control room uses so the operator knows what these resources are doing and the flexibility they can provide. We encourage all utilities to take this next step by collaborating across teams: distribution engineering and operations, the trading desk, and any other significant stakeholders. All utilities should start thinking about what it will look like to manage thousands of MWs of DER flexibility. What new relationships and work streams will be necessary? 

Figuring out that piece of the puzzle will put utilities on the path of a clean, customer- and DER-centric grid. Utilities that get it right will show us the future: engaging customers, improving reliability, electrifying transportation, and decarbonizing the energy supply.

Seth Frader-Thompson is president of EnergyHub.

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