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The crucial role of DERMS in the clean energy transition

Image: Smarter Grid Solutions.

As we move towards net zero carbon emissions targets, there are many innovations that the energy industry needs to embrace within renewable and Distributed Energy Resource (DER) assets and their management.

With more renewable and DER assets connected to our grids than ever before - and many more expected in future - there needs to be an increased focus on how we use these assets to balance more variable supply and demand. Additionally, there are many local grid issues, customer preferences and market opportunities to be addressed.

So what can be done to help system operators, distribution utilities and energy asset owners alike meet this challenge? Distributed Energy Resource Management Systems (DERMS) could be the answer. Here, we take the covers off the DERMS domain to identify its applications, key features and future directions.

DERMS and their role in the transitioning electricity system

Firstly, what are DERMS? They might not be as familiar a concept as many of the other core energy transition essentials such as flexibility, markets, data, net zero carbon and new business models. However, DERMS are an essential component of the delivery of each of those other areas and are often the platform on which flexibility services, flexible connections, virtual power plants and other new operating and business models are built.

DERMS provide the capabilities to monitor, manage and integrate low carbon technologies and DER assets of many types to the grid and markets. Typical DER assets managed by DERMS today include renewable energy generation, flexible loads such as electric heating and EV charging and energy storage. They play a vital role in addressing the grid’s ever evolving and multi-faceted clean energy supply and demand balancing challenge.

Essentially, DERMS can be thought of as the connectivity between all these different physical systems and a wide range of new energy actors, providing the necessary data, communications and control infrastructure to manage the distribution grid and the energy assets connected to it and the energy and flexibility markets.

Additionally, they can facilitate the curtailment of surplus production when demand is low and grid constraints emerge and can optimise the activation of customer provided flexibility services as well as the charging and discharging of energy storage. Properly implemented, DERMS enables the large-scale roll-out of distributed energy by creating an ecosystem of DER and management infrastructure that provides value to a range of clean energy players of various sizes and types.

Types of DERMS and their application

DERMS come in a number of different forms depending on the type of energy market player and their goals, most often in fleet, utility and microgrid DERMS configurations. These different types of DERMS have common features, such as being able to monitor and control DER, but they also have important differences. A DERMS being used to coordinate black start responses, for example, is very different from a DERMS deployment used by an energy retailer to monetise aggregated flexibility services.

To address those different needs, DERMS technology needs to serve the diverse markets and customer objectives, any type and size of DER, and using a broad range of decision-making and control methods tailored for the different applications.

Which begs the question - what are the must have items for DERMS functionality that energy asset operators, network operators, and emerging Distribution System Operators (DSOs) should look out for?

Real-time, secure DER management

DERMS need to enable the generation (or load) hosting capacity of a network to be increased without diminishing network security. Because DER can be managed in real-time based on live network conditions and fail-to-safes, there is a direct relationship between speed of control and level of network access for customers. Slower control leads to greater operating margins and less network access or greater levels of curtailment. This is crucial for efficient use of existing network infrastructure and to avoid lengthy and expensive customer connection and headroom access.

Effective fail-to-safe functions provide network operators with the necessary assurances that stretching and flexing their grids for enhanced customer access will not degrade supply security for all customers. Similarly, additional layers of network investment efficiency and supply security can be added through DSO flexibility service coordination and flexible network operation in much the same way that ancillary services - such as frequency response - supports the operation of the wider system today.

DERMS can act as the coordination point for fast, secure and effective control of all flexibility from DER in distribution networks. The real-time flexible generation connection is often badged an ‘ANM’ connection (for active network management) but this is only one application of real-time DER management. The flexible generation (ANM) connection manages network constraints and is an essential application if excessive network connection and reinforcement costs are to be avoided. This is true irrespective of who pays for the connection and curtailment costs under different cost allocations.

Economic optimisation and scheduled dispatch

Increasingly, grid supporting services will be provided by DER, which will require DSOs to perform the same economic optimisation functions as performed by energy market and system operators today. DSOs will build portfolios of flexible DER service providers and contract, maintain availability and utilise the required flexibility through optimal, market-based dispatch. In time, this will include the use of generation, demand and storage flexibility orchestrated through the same DERMS and associated market platforms.

This can provide cost and carbon optimisation of all DER and support new customer business models and objectives, with DERMS complementing market-based approaches to network access and flexibility and vice versa.

DERMS can coordinate the execution of contracted DER flexibility positions safely, securely and with necessary remediations and fail-safes, as required for a system based on flexibility at scale. Likewise, market-based approaches enhance the customer options and value from tradeable curtailment.

Integration with network management and market systems

In order to create a smarter and more flexible system, DERMS software must be able to integrate with other operational systems already in place; for example, advanced distribution management systems (ADMS) in distribution utilities.

This means that control room operators can manage the network through ADMS while the DERMS can monitor and control the DER autonomously, providing visibility of DER and DERMS operation through the single operational window of the ADMS. This two-way integration unlocks much more capability in both the DERMS and the ADMS, including DERMS access to ADMS data to autoconfigure itself to the wider network operating state and for ADMS users to have supervisory control over all automated DERMS provided functions.

Such integration also allows network operators to scale their flexible network operations to the wider network, including customer flexibility markets platforms, with ease and without the additional system or operational costs.

Operational forecasting

As DERs become more prevalent and load patterns and technologies change, DSOs are becoming more reliant on reliable operational forecast information for scheduling flexibility from DERs, for example, demand response and flex services. This will provide additional opportunity to EV charge operators, battery owners, flexible loads and wind farms to deliver network services as well as coordinate their own operations with the DSO.

Market participating DER owners and operators also require access to different load, network and market forecasts to optimise their operations and trading positions. Forecast integration is becoming a core requirement for DERMS.

Data analytics and access

The DSO operating model is changing to introduce increased interaction between energy consumers, energy asset operators, DSOs and other service providers. DERMS users and stakeholders require greater visibility of the wider system and market state in real-time and a better understanding of past operating actions and service delivery. This creates the audit trail for verification and settlement in more complex on-site, grid and market operations.

DERMS captured data can be used by DSOs, DER operators and other network users and market participants to better respond to ongoing events while also better anticipating future events and opportunities. Leading DERMS provide support for data capture, sharing and analytics. Examples of such open, and collaborative, approaches to operational and planning data access and advanced uses of it are already emerging with more now expected by all system actors.

Into the future

DERMS technology provides scope to scale the flexibility from low carbon energy technologies integrated into grids and markets. DERMS can put DSOs in a stronger position to deliver multiple value streams to customers, gain more visibility and have the required control over their systems. Additionally, DERMS also provides the means for DER fleet operators, energy service providers and aggregators to physically implement their commercial and market objectives.

The bottom line? By implementing the above must-have DERMS functionality, the road to net zero could be much smoother, faster, less expensive and more value adding for utilities, customers and other distributed energy players. Low carbon technologies, flexibility markets and new business models are essential components in the clean, distributed energy transition and DERMS complements these with the necessary backbone of connectivity and control for a range of different participants.

Graham Ault's photo

Graham Ault Executive director, Smarter Grid Solutions

Dr Graham Ault is co-founder and executive director of Smarter Grid Solutions.


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