For all the opportunity and benefit distributed resources have brought to the grid, they have also made the utility's job much more complicated. What used to be a fairly straight line from generation to demand is now a web of connected, bi-directional resources that must be closely monitored and controlled.

As utilities begin to view the distributed resources as a single large system – a virtual power plant – some are finding significant amounts of load which can be shifted and traditional generation that can be avoided.

That holistic view can be captured by a Distributed Energy Resource Management System, a software-as-solution platform capable of managing a wide range of resources to helping integrate renewables, flatten load curves and control prices.

“DERMS are in their nascent stage,” said Omar Saadeh, a senior analyst with Greentech Media. “These solutions are extremely custom … but we've noticed a significant uptick in interest, in utilities interested in these solutions.”

The very custom nature of a DERM – they are built to a specific utility's resources, and often for a specific goal –  has so far slowed development of the systems and market. But as common standards are created, Saadeh said the market will likely see strong growth.

Those standards don't seem far off. The Electric Power Research Institute (EPRI) and the National Renewable Energy Laboratory (NREL) have been working together on the issue, and earlier this year said they had completed testing of a standard messaging platform. While total spend in 2014 in the DERMS market was just shy of $50 million, that total is expected to reach $110 million by 2018.

“The market will more than double,” Saadeh said, “as utilities invest in platforms that meet their specific needs.”

Saadeh moderated a GTM webinar last week focused on the new systems, specifically diving into New Brunswick Power's “PowerShift Atlantic” project the utility used to free up 17 MW of dispatchable load.

NB Power captures load flexibility

New Brunswick Power, facing a goal of 40% renewables by 2020, has been trying to integrate more wind power into its portfolio. While the intermittent resources are often backed up by more traditional generation, the utility installed a DERMS to capture large amounts of flexible load that existed on its system.

“The big transformation here is really a shift from generation following load, to load following generation,” said Michel Losier, who directs the PowerShift Atlantic project.

The system connects a network of customer loads to keep the power grid in balance, with a focus on equipment with storage capacity that can be run intermittently, such as temperature regulation, hot water heaters, thermal storage units and municipal water pumping stations.

NB Power said that it was able to get 1,400 households and 30 business customers enrolled in the program. Demand-side loads are consolidated and used as a single, dispatchable resource, in this case up to 17 MW of load. 

“We want to reach 40% in a sustainable way,” Losier said. The utility has been able to balance more wind generation using the DERMS, rather than gas-fired power, as energy dispatch requests can be done in 15-minute intervals, giving NB Power a real-time look at the array of resources on its system.

The system is also helping manage demand spikes in the mornings, when people crank up the heat. Losier said the system can see a 700 MW spike in a five to seven hour period. “It's pretty intense on the system,” he said, and leads to running oil units 20 to 30 days a year to meet peaks.

Massachusetts also experimenting with DERMS

DERMS interest has popped up in Massachusetts, where Unitil told regulators that the spread of distributed resources made managing the system increasingly complex.

“As the penetration density of DER continues to increase on the grid, the utility as the grid operator has less insight into the real time conditions of the system,” Unitil told regulators. As part of a grid modernization proceeding, the state directed utilities to envision how their systems could be updated, and Unitil floated the idea of using a DERMS system to control the various distributed resources on its system.

At the moment, Unitil cannot discern when individual distributed resources are operating, as many of them are net metered rather than having generation metered separately. “This makes engineering analysis and planning more difficult to develop models, which accurately depict the actual conditions,” the utility said in its filing. “DERMS will be used by grid operators and engineers for efficient grid operations and planning “

Unitil, which serves more than 100,000 customers in Massachusetts, Maine and New Hampshire, tied its DERMS proposal not to just to demand management, but also evolving business models. The utility said its plan is to evolve into an “enabling platform” that manages distributed resources across its system, rather than a classic generation and transmission utility.

That vision puts Unitil in line with a growing number of utilities across the country who see distributed resources as a transformational force on their business models. Whereas only 11% of executives surveyed by Utility Dive earlier this year identified their companies as an "energy services utility," 32% of them expected that to be their business model in 20 years time:

That was a theme echoed by NB Power's Losier, who said “we really need to reinvent ourselves. New business models will evolve. “ Utilities, he said, are shifting from being a commodity provider to service providers. 

“Customers are now at the center of this,” he said.

Growth of the Virtual Power Plant

The key to making a DERMS approach work is in finding flexible loads. For NB Power, that meant teaming up with aggregators like Enbala, UNB and Integral Analytics to direct customer load shifts. The utility focused on water and space heating, which make up about 80% of a household's energy use.

"We simply tapped into some flexibility that existed and connected it end to end," Losier said.

But widespread use of the systems will ultimately depend on finding ways to streamline installation — what NB Power needs for its system won't look like another utility's program. Standardizing communications between resources and management programs can smooth out some of the bumps.

Earlier this year, EPRI and NREL announced they had developed and tested a standard messaging platform for distributed energy resources, including solar panels, wind turbines, microgrids and battery storage, that use smart inverters to connect to the grid.

"In the near future, DERMS will allow operators to communicate with and control large numbers of emerging resources on the distribution system to help the grid adjust to the peaks and valleys of demand and supply,” Bryan Palmintier, senior research engineer in Energy Systems Integration at NREL, said in a statement announcing the research. “However, achieving this vision will require DERMS to work seamlessly with other utility systems."

But according to Bud Vos, president of Enbala Power Networks and one of NB Power's aggregators on the PowerShift project, the biggest remaining challenge is on the customer side — developing both business models, and trust in the system.

"It really comes down to establishing the correct metrics and the value proposition given to the customer," Vos said. "This is not a technology question anymore, it's how to how to build a value proposition for customers."

"It's really it's extremely important for us right now to build trust," Vos said of the industry and its transformation. "From vegetation management to keeping the lights on, the traditional things we do need to be spot on."