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3 Actions for Utilities to Support a Complex Grid

Charles Bayless's picture
Retired CEO Tucson Electric Power

Mr. Bayless is a retired Utility Executive and a lecturer on Energy Policy, Climate Change and Ocean Acidification. Until June 30, 2008 Mr. Bayless was President and Provost of the West Virginia...

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  • Mar 28, 2022
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By Andy Bennett, CEO of mPrest, Inc. & Charles E. Bayless, Board Member at the Puerto Rico Electric Power Authority

 

In a July 2021 article we co-authored for Energy Central, we noted an urgent need for increased integration of distributed, renewable energy resources by utilities to lower greenhouse gas emissions and future-proof global energy grids. Even in the brief period since then, this challenge has only grown in awareness and scope, as has momentum for proposed solutions, both at the public and private level.

Statista forecasts that the renewable energy market could exceed $2.15 trillion by 2025. Increased awareness and consumer adoption of assets like residential solar + storage and electric vehicles (and their chargers!) will play a major hand in driving new distributed energy resource (DER) capacity and contribute to this growth. The Energy Information Administration (EIA) defines DER as assets smaller than 1 MW in capacity. An estimated 5,100 MW of DER growth occurred in 2021.

In the face of innovation, growing incentive and awareness programs and external factors driving urgent need for energy diversity and independence, utilities must take action to support the increasingly complex global grid system. There’s a lot of work to be done but developers of new grid-edge control technologies must pursue collaboration with public and private entities across the value chain and become fundamental change leaders in the energy transition.

 

Adopt Grid-Edge Technologies Now

Across nearly all regions and nations, the path to energy independence and a more complex, modern grid must involve effective integration and management of DERs. Utilities wishing to integrate more clean, distributed generation sources into their energy mix cannot effectively do so without tools that provide visibility of these assets and insights for efficient management. To call on an analogy from our first article, we’re looking to make the transition from a grid powered by a smaller number of large assets (hundreds of 1000-MW elephants) to one powered by a higher volume of smaller assets (millions of 1-MW mice). To do this, greater awareness of generation sources is a must.

An optimized grid is an efficient and reliable grid. An overall lack of consistent and actionable data gathering on DER integration and use is a major hurdle to grid optimization. Optimizing multiple aspects of the system in tandem with one another will always be more effective than focusing too heavily on one area.

Achieving this type of holistic optimization requires scalable, digital and cloud-based software solutions utilities can integrate seamlessly with legacy processes and adjust with their needs and shifts in the market. Distributed energy resource management systems (DERMS) are one such technology that facilitates orchestration of behind-the-meter DERs, breaking down one of the biggest hurdles to effective awareness and use of these technologies at the grid edge. What’s more, in pilot and production-level programs, DERMS platforms have demonstrated efficient scalability with legacy and emerging assets across diverse markets. We won’t be the first or last to say that the time to adopt these solutions is now, not down the road when the grid landscape has changed further or energy management needs become more urgent.

 

Identify and Address Potential Challenges Early

Speaking of 1000 MW elephants, one major elephant in the room is how utilities should navigate cost allocation and asset ownership in a grid system that’s approaching 100% renewable generation. In a more complex grid, existing externality costs owned by utilities (including grid control, backup power, and more) will only increase. Efforts to leverage new generation sources will also bring about new costs that utilities and customers must grapple with.

A higher volume of behind-the-meter, customer-owned DERs represents a great opportunity for a utility to tap into clean, renewable energy. However, in many cases, the customers themselves are facing a new role in the utility ecosystem – one that allows them to act both as a producer of energy and a traditional consumer. With different customers and regions within the same utility service area representing vastly different usage patterns and needs, it’s imperative that utilities look at these details before making changes to price signals or transmission paths. 

By using DERMS and other management platforms, utilities can leverage and deploy energy generated by small DERs to take advantage of price structures created by common demand constraints which can impact costs. For instance, this can occur when areas of high energy generation are not located physically near areas of high energy demand. While DERMS cannot enable utilities to move energy through space, they can give visibility and insights into price models and demand patterns in these scenarios. This helps identify optimal times for operators to utilize alternative sources of energy, such as aggregated, behind-the-meter DERs.

Integration of DERs will occur at different speeds across different markets due to varied regulations, consumer awareness of these technologies and countless other factors. Regardless of speed and DER makeup, eventually all behind the meter resources will need to be accessible to grid operators. It’s also important to note the essential role of supportive legislation and market facilitation in achieving greater grid control for operators. For instance, 2020’s FERC Order 2222 opened up regional wholesale energy markets in the U.S. to DER participation. While the broader, long-term implications of this order are still being realized, it’s a crucial step to providing operators with more consistent access to and understanding of DER assets available on their grid.  

Across the board, the grid transformation will require collaboration and, in many cases, compromise between groups spanning the entire value chain: governing bodies, industry regulators, utilities, system operators, technology providers and customers. Larger groups will be most likely to find themselves facing new cost burdens and challenges that must be addressed to maintain momentum and innovation toward a more reliable, decentralized grid.

 

Look Ahead and Lead Change

By now we’ve made it clear that the grid transition, even on a small scale or at a regional level, will require involvement from many parties to be successful. If the end goal remains increased optionality and scalability for the broader energy grid, everyone – customers, stakeholders, grid operators and the environment as a whole – can win in one way or another.

This effort must start from the top. Utilities have a unique opportunity to lead change with a big-picture view of current models, emerging technologies and existing examples of these innovations put into practice. In doing so, they can identify even small-scale opportunities to optimize their processes. Adopting an intelligent control system that makes it easier to integrate and leverage new and emerging classes of DERs can help utilities and operators engage in more diverse markets. In this way and in many markets, platforms like DERMS could be the key to increasing a utility’s rate of return on renewable assets. Continued physical and digital infrastructure upgrades will also be required to take utilities from a system that leverages only the energy resources readily available to them to one that allows producers and consumers to participate in new markets as well.

We’re in the midst of a period of rapid innovation and transformation for power grids and advanced energy technologies, one which will only continue for the foreseeable future. To support current and future changes and usher in a more complex, resilient grid, utilities must be prepared to lead changes in their operations, technology adoption and customer service.

 

About the Authors

Charles E. Bayless is a member of the Board of Directors of the Puerto Rico Electric Power Authority and a retired Utility Executive and University President.

Andy Bennett is CEO of mPrest, Inc., heading up the Company’s North American energy division. mPrest is a developer of world-leading distributed asset orchestration and grid-optimization software.

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Thank Charles for the Post!
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