DERs - A Threat or an Opportunity? (Part 2)
In Part 1 of this series, we discussed a number of perceived threats, as well as technical and operational challenges, that the constant growth of DERs poses to the modern power grid. In this post, we'll take a look at how utilities can benefit from DER integration.
Turn the Modern Grid's Lemons into Lemonade
Recognizing the irreversibility of this trend, forward-looking utilities are finding ways to turn the growth of DERs into an opportunity. In fact, DER integration may be the best way to address the inherent inefficiency plaguing today's grid operations. By leveraging the energy generated by DERs and stored in home, businesses and grid-scale batteries, utilities can smooth out demand peaks and valleys (duck curve) and overcome planned and un-planned maintenance events and constraints. By that utilities can reduce investments in infrastructure such as larger substations, transformers and new feeders, avoid power outages and minimize energy costs. In addition, modern DER management systems can improve the power quality across the modern grid (frequency and Volt/VAr).
Thus, utilities have a vested interest in connecting to and controlling DERs in order to ensure high-quality electricity for customers. Efficient integration of DERs requires a new set of capabilities for managing energy flow across the grid, including load forecast, management and optimization as well as DER aggregation, analysis and integration. These functions could and should be handled automatically by modern grid management applications rather than manually by operators in the control room.
DER integration also provides benefits related to customer satisfaction and loyalty. Utilities can encourage and facilitate customers to become "prosumers" that produce, sell and store their own energy using battery technology. Prosumers can sell energy to one another (peer-to-peer) or to the utility.
Eneco in the Netherlands is a good example of a utility that realized the potential of leveraging DER-driven power. It built a network called CrowdNett which is advertised to "turn homes into power plants." Eneco looks for people who already have solar panels at home and tries to sell them a large home battery. Surplus power generated by the solar panels is stored in the battery, which Eneco taps into as needed to help balance the electricity grid. Customers receive a substantial annual credit for allowing use of their batteries.
The growth of electric vehicles (EVs) also represents a major opportunity for utilities. Utilities are well-positioned to build the infrastructure for fast charging stations for EVs (private cars and busses), as well as operating their own stations and selling electricity to EV owners.
While the DER opportunity is likely to attract a host of new players, incumbent utilities have a distinct home-turf advantage when it comes to deploying, integrating and supporting DERs. Savvy utilities can capitalize on this opportunity now, before their challengers chip away at their customer base.
Intelligent Grid Management Is the Missing Ingredient
The constant growth of DERs is encouraging utilities to rethink the way they operate their grids. Once considered a potential threat to the traditional utility business model, distributed energy now represents an exciting opportunity for the modern utility.
To address their business and operational challenges, utilities require comprehensive intelligent grid management systems (DERMS) that can monitor, control and optimize the energy flow across millions of DERs. This will allow them to optimize grid efficiency, meet ever-growing demand and minimize energy costs. At the same time, smart grid management enables utilities to offer innovative service-oriented business models, as well as supporting renewable energy and demand response initiatives.