Since we started Packetized Energy 5 years ago, we have seen enormous changes in the distributed energy space. When we started, the term “distributed energy resources” (DERs) primarily referred to small rooftop solar power plants or backup diesel generators. Today, DER can refer to any one of a host of smart energy devices from a home thermostat to a distributed battery system, to an EV charging station, to a grid-interactive water heater. And, with federal and state regulators, utilities, and ISO/RTOs all designing new regulatory structures and programs to support the growth of DERs, new opportunities are emerging that have the potential to provide savings and resilience for energy customers, new business models for utilities, and also improve reliability and economics for the bulk grid.
With this change has come a proliferation of terms and acronyms to describe the types of programs and services that can meet these new opportunities, especially at the grid-edge. For example, we have: “distributed energy resource management (DERMS),” “virtual power plants (VPPs),” “virtual batteries,”“home energy management,” “demand response,” and “demand flexibility.”
What follows is a discussion of how we see these terms relating to one another, with a deeper dive into how different types of DERMS and DER aggregation solutions compare to one another.
- DERMS: Distributed Energy Resource Management System. Software used to coordinate a fleet of distributed energy resources. This is a broad term, with many subtypes, as described below.
- Virtual Power Plant (VPP): An aggregation of DERs that provide grid balancing or economic services to a utility and/or to wholesale electricity markets (e.g., CAISO, or ISO New England).
- Virtual Battery (VB): A somewhat less common term used by Packetized and a few other market players to describe an aggregation of DERs. We use the term Virtual Battery rather than VPP, because of the way that our software models both energy storage and power capacity limits in detail, which allows us to more accurately dispatch these resources, relative to conventional VPP solutions.
- Demand Response and Demand Flexibility: Terms used, sometimes interchangeably, to describe the coordination of demand-side resources. Demand Response (DR) tends to be used to describe simple thermostat-management systems or direct load control switches to reduce demand during peak periods. Demand Flexibility is typically used to describe a system that can provide a broader set of grid services, relative to DR, which tend to refer to simple peak load reduction.
- Home Energy Management: A system designed for the end use consumer to manage their home energy devices. Sometimes these systems also include the ability to monetize flexibility through certain demand flexibility programs. However, there are few truly comprehensive solutions in this space.
Looking specifically at the category of DERMS solutions, we find variations as well:
- Supply-side DERMS to manage power distribution networks, distributed batteries and distributed wind and solar plants. Utilities need this when they get to very high levels of distributed solar, wind and batteries, with large amounts of advanced sensing and control equipment in their power distribution systems. At these high levels voltage fluctuations can be fairly extreme and can threaten grid reliability. A supply-side DERMS often overlaps with functions that are included in ADMS (Advanced Distribution Management Functions), OMS (Outage Management Systems) and potentially also Supervisory Control and Data Acquisition (SCADA) systems.
- Planning DERMS to support distribution system planning and forecasting. Utilities know that a future with large amounts of distributed energy is coming soon, but don’t always know exactly how that future will impact their infrastructure. Some DERMS solutions aim to operate DERs that are deployed today, while also allowing one to plan for future DER growth..
- Demand-side DERMS for operating residential and small commercial demand response. While typically offered to utility customers as bring-your-own-device programs, these programs often only capture value from peak load periods (for example, by adjusting thermostat set points), require ratepayer-funded capital to provide customers with incentives and to perform program marketing, and don’t provide enough customer value to prevent program drop-outs.
- Commercial & Industrial DERMS provide demand response services for utilities and wholesale electricity markets from commercial and industrial facilities using specialized skills for commercial building management and customized optimization of assets.
- DER Aggregation for Wholesale Market Integration is a new service that has emerged from changes in wholesale markets that allow for demand-side aggregators to participate in market transactions. Rather than working with utilities, companies contract directly with utility customers to connect devices to be managed in ways that create value from energy flexibility.
VPP solutions typically fit somewhere between items 3,4 and 5. In some cases, a VPP will be an asset that is controlled by a separate top-level DERMS.
Many companies are developing solutions that address some combination of the elements above, but there are few, if any truly comprehensive solutions that allow customers, utilities and bulk grid operators to benefit from DERs in a truly seamless way.
While Packetized Energy’s Nimble platform does not yet address all of the challenges associated with the growth of DERs, we are building something that uniquely combines together value for energy customers, utilities and load-serving entities, and the bulk grid. Our approach is to bring together the needs of energy consumers with new value streams available to utilities to create programs that make clean energy affordable and easy to use. For us, that means providing utilities and load-serving entities (LSEs) valuable grid services and program management tools that will enhance customer engagement with clean and flexible energy. These include:
- Demand-side DERMS programs that unlock multiple value streams from flexible demand, financed based on the performance of the program, not ratepayer capital, and offering multiple types of customer value.
- Tools that assist utilities and LSEs to plan effectively for the future of DERs, while also using real-world data to more efficiently operate the system that exists today.
- The ability to securely communicate with other systems, such as commercial and industrial demand response systems through open protocols, such as OpenADR and IEEE 2030.5.
What do you think about the evolution within the DERMS space? Or, maybe you’d like to learn more about our solutions. Reach out! We’d love to hear from you!