From wildfires caused by temperature extremes to erratic weather creating grid instability, the challenges caused by climate change are increasingly met with the use of distributed energy resources (DERs), including solar, EVs, battery storage, thermostats, and more. These technologies are gaining consumer buy-in, and provide an opportunity for utilities to meet public needs during crises, while decarbonizing, enhancing energy security, and lowering peak demand energy costs. To realize these ambitions, utilities have turned to distributed energy resource management systems (DERMS), which can aggregate and control WiFi-enabled DER technologies to use in demand flexibility programs like demand response or EV managed charging. DERMS technology has a wide array of applications designed to help utilities meet demand flexibility needs and come in all shapes and sizes. So how do you select the best vendor?
What’s in a DERMS?
In short, a distributed energy resource management system (DERMS) is a control mechanism that manages otherwise disparate distributed energy resources (DERs) to shift load as needed. As such, DERMS platforms are the backbone of any demand flexibility solution, as they provide a path for utility program managers to manage the load curve during peak demand events, whether that’s through conservation tactics like demand response, or by amalgamating resources into a virtual power plant (VPP). Some DERMS provide real-time and historical data to better shape and plan for any load reduction strategies. In some instances, DERMS offers:
- Simplified event dispatch capacity
- Visual reporting capabilities to show ROI post-event
- Baseline reporting for forecasting needs
At times, DERMS can feature complementary software to better connect and build rapport with your customer base, which is critical to developing customer participation and, later, scaling your programs. Likewise, some software providers feature online web portals that allow for a more fluid customer experience, while providing opportunities to further communicate with customers. These various characteristics provide value to utilities by fostering conservation during peak times of demand through community participation.
The Value of DERMS
The distributed energy resource management system (DERMS) market is anticipated to hit $750m by 2026, and for good reason: customers are ready and willing to put in the effort to decarbonize and invest in clean power. Once identified as a prosumer class of customer, the rapid acceptance and adoption of DER technologies paint a different picture, that what was once unique—customers investing in their own power generation technologies—is increasingly commonplace and culturally accepted. Legislation like the Inflation Reduction Act or Bipartisan Infrastructure Law was crafted to develop the necessary infrastructure needs to meet EV charging demand while helping mitigate energy insecurity. These laws reflect the national priority that the U.S. has invested in both hitting decarbonization goals and increasing opportunities for DER adopters alike, all with the long-term success of the utility in mind.
Types of DERMS Vendors
Distributed energy resource management systems (DERMS) provide a similar service irrespective of their configuration. In general, DERMS platforms aggregate otherwise disparate resources for redistribution or other demand flexibility initiatives. Still, there are three types of DERMS models that are most commonly available. Here is what to look for when considering your software vendor.
- Purpose Built DERMS - This type of DERMS is a bespoke platform designed uniquely to meet the needs of a specific utility operation. This type of DERMS requires greater upfront costs that involve both development and deployment time, as well as securing the proper API necessary to integrate with the device type that drives the program. As such, purpose-built DERMS can feature expensive, upfront costs, as well as longer development times, decreasing the long-term value of the investment.
- Vendor-Led Solution - As the name suggests, a vendor-led solution relies on third-party operators to manage. While that decreases potential development costs and deployment time, it in turn cedes control of the customer experience to a third party, who may not be as invested in building rapport with its constituency, which can have a negative impact on customer buy-in and participation.
- Flexible Self-Service SaaS - This type of DERMS is a subscription-based model that has the benefits of both purpose-built and vendor-led DERMS solutions, without the same shortcomings. With a flexible self-service SaaS DERMS, utilities are provided the tools to meet a variety of demand flexibility needs, including the requisite API integrations, thus expediting program development and deployment times. This allows utilities to manage the entire lifecycle of a program while keeping the customer journey—and experience—in the hands of service providers in the area. In turn, a flexible self-service SaaS DERMS affords program managers access to a robust set of customer data to better plan for future events.
DERMS Benefits
Let’s look at a few of DERMS's benefits for utility providers, beyond the immediate and obvious benefits of device control.
Program Stacking
Demand flexibility programs manifest as a variety of opportunities. For conservation efforts, demand response and EV managed charging are effective mitigations designed to minimize usage during periods of peak demand. Conversely, these same DER assets in the community can provide power reciprocally through V2G charging strategies, battery programs, and in some cases virtual power plants, depending on the type of VPP strategy at play.
Fortunately, there is no limit to the total overall demand flexibility initiatives that a distributed energy resource management system (DERMS) can handle; why settle for a DERMS that provides limited opportunities for growth? Some DERMS are designed to manage all distributed energy resources (DERs) from batteries or photovoltaic solar to WiFi-enabled smart home devices like thermostats or water heaters. As such, DERMS enables program managers the capacity to institute, test, and continuously develop their demand-side management initiatives with great ease.
Scalability
Relative to the above, DERMS provides opportunities for unparalleled programmatic scalability. Because DERMS technologies aren't specifically limited in scale or capacity, every program started is a pilot program. For example, suppose the initiative is a large-scale demand response program. In that case, although the program is already designed for a larger scale if data supports that the program is successful, it can scale even higher. Likewise, because DERMS controls DER technologies, parallel or complementary programs are easier to institute, especially through flexible self-service SaaS models, which allow utility program managers total control of their customer lifecycles.
Integrations
Device integrations are an integral aspect of any demand flexibility initiative. Often, the smart device assets on the market may have different communications protocols, which can make for an expensive challenge to meet both the device and partner needs to connect devices to their requisite DERMS. Fortunately, some DERMS vendors provide API support to ameliorate these challenges. Consider asking your potential vendor about their integrations and how that may expedite program deployment and scaling.
Evaluating Your Potential DERMS Conclusion
Between the electrification efforts driving DER technologies and the existential threat of climate change, it's no wonder that investments in clean energy, infrastructure, and load management strategies have become a fiscal priority. Fortunately, distributed energy resource management systems (DERMS) provide an elastic load management solution that can satisfy a variety of demand flexibility needs, further justifying any long-term investment.