By: Peter Asmus
Due to climate change, organizations and governments are navigating the energy transformation that is already underway. Technology advances and evolving market rules such as the recent US Federal Energy Regulatory Commission Order No. 2222 require new approaches to integrating distributed energy resources (DER) with the grid. The key to value creation lies in the ways these DER assets are integrated into onsite energy networks to bolster resiliency and foster sustainability. It also requires innovative business models that recognize previously hidden value for end users and stakeholders across the broader energy system.
A fundamental rethink of strategy and planning as well as organization and system operations that embrace DER networks will be needed for a successful transformation. The result should be an energy system better attuned to evolving demand and customer needs and more compatible with a rapidly changing policy and regulatory environment.
That’s the big picture and the fundamental premises underlying Guidehouse Insights’ overarching concept of the Energy Cloud. But what do these generalizations mean when getting down to the details as rapid change sweeps through our energy, mobility, and urban infrastructure? The value of DER assets can only be realized fully if they are integrated into markets, customer sites, and the grid in a way that creates shared value. Most use cases for DER support electrification goals and focus on behind-the-meter applications such as onsite power generation, but they do not support the larger grid network or incumbent utility suppliers.
Taking Steps to Build a More Sustainable and Shared Energy Future
A new Guidehouse Insights white paper, Integrated DER: Orchestrating the Grid’s Last Mile, spells out a step-by-step process to transform this vision of a more sustainable and shared energy future into reality. The stakes are high as DER asset capacity should surpass centralized generation capacity in 2021, a shift that should accelerate dramatically over time. The shift away from centralized generation requires integration platforms that can aggregate, organize, optimize, schedule, and settle rapid-fire transactions that are necessary to keep the grid in balance. The white paper profiles three of these core platforms:
- Virtual power plants (VPPs): The ability to create a bridge between retail and wholesale markets is crucial to DER integration. That’s why VPPs that rely upon AI to remotely and automatically dispatch integrated DER (iDER) services are a critical advancement taking hold in Europe, the US, and Asia Pacific markets in Australia and Japan to realize more shared value from DER assets.
- Distributed energy resource management systems (DERMSs): While VPPs are often driven by price signals and can help resolve frequency issues on the larger grid, DERMSs view DER assets from the vantage point of a grid operator. This platform can launch surgical interventions on distribution networks to resolve voltage sags and surges, and its primary purpose is maintaining the physical integrity of the power grid.
- Microgrids: One of the primary impacts of extreme weather linked to climate change is an increase in power outages due to hurricanes and wildfires. The distinguishing feature of a microgrid is the ability to island, which allows renewable DER to keep operating when the larger utility grid goes down.
The concept of iDER extends beyond these three platforms, which are not mutually exclusive. Evidence of overlap—which is expected to increase over time—is presented in another Guidehouse Insights white paper (sponsored by PXiSE Energy Solutions). The underlying proposition of this white paper is that utilities can be microgrid leaders, citing projects by Portland General Electric
and San Diego Gas & Electric.
In the end, iDER is not a choice but a necessity. Both white papers outline some tools and key concepts to align stakeholders with a common mission: a more sustainable and decarbonized energy future.