Within the energy industry, there is consensus that distributed energy sources can fortify the grid and make it more reliable. To avoid lagging behind as the clean energy transition is underway across the world, utilities must capitalize on the immediate grid edge flexibility offered by DERs ranging from batteries, EVs, heat pumps, and large utility-scale assets like wind turbines and solar farms.
With Federal Energy Regulatory Commission’s (FERC) Order No. 2222 calling for increased participation of DERs in regional grid operators’ electricity markets, there is federal support to onboard new technologies that balance the grid in the US, and good news is that the UK provides a successful blueprint for achieving precisely this.
Best practices from the UK
Innovation-friendly grid values
Over the past year, challenges such as the cost-of-living crisis, rising inflation, and increased capital costs have hit people hard, but the UK’s National Grid Electricity System Operator (NGESO) has emerged as a positive force, proactively addressing these issues, including implementing updates to connection rules, facilitating faster asset integration, and embracing DERs as a power balancing mechanism. NGESO established a market model with a focus on new grid values harnessed by technology — such as a digitalization, rate innovation, and consumer engagement— resulting in the development of innovative products and solutions that tap into energy market values, offering compelling, cost-saving propositions to customers. Because NGESO prioritizes measures to ensure the delivery of a net zero energy system, they’ve removed significant barriers to consumer participation to encourage the use of DERs of all technology type and size to provide grid services..
Financial incentives for utilities
Not only do DERs help stabilize the grid, they can be a revenue-driver for local utilities and communities. Smaller scale assets, in particular EVs, are helping tackle UK energy challenges using vehicle-to-grid technology through participation in an industry-wide ESO-led trial. By using the Balancing Mechanism — a continuous market by which power is traded in real time to balance the grid — utilities or DER aggregators drive revenue that can be shared with customers.
Customer-centric programs
These market updates and incentives have made it easier for customer-led technologies to thrive in the UK and they can be translated in the US to drive the onboarding of more renewable resources, significantly curb the need for fossil fuels during periods of renewable scarcity, and advance our transition to cleaner energy sources – all moves that align with objectives set by FERC.
For instance, initiatives like Octopus Energy’s Fan Club and Kraken’s SmartFlex, show off the success of customer-led products that engage communities while optimizing energy usage. Initiatives that can discount customers whenever their local turbine is spinning or directly integrate with customers’ home energy devices can bring the greenest and cheapest energy to households at times that benefit the grid. In addition, both Fan Club and SmartFlex demonstrate ease of use for customers — when participation is that much easier for the end consumer, programs like these become increasingly popular.
In the US, I have witnessed a significant amount of initiatives to prioritize the integration of grid edge technologies and utilize these assets to meet grid reliability, reduce carbon emissions, and provide a more cost-effective, non-wires alternative to transmission and distribution. While these initiatives are innovative, moving (somewhat) quickly, and occurring all over the country, the policies that underlie these initiatives are fragmented, lack standards, and are ultimately trying to squeeze a new paradigm into an old system. The US can draw inspiration from the UK's success in integrating DERs and empowering grid edge flexibility pave the way for a cleaner, more efficient energy future.
