"Cities swallowed by dust. Human history drowned by the sea. Economies devastated, lives ruined."
These are the opening three sentences of The New York Times' powerful interactive essay "Postcards from a World on Fire," published on December 13, 2021, demonstrating the visceral impact of climate change in 193 countries. Every nation is being transformed; there is no silver bullet that alone can save our world. Together, we must develop multiple technologies that reduce our reliance on fossil fuels and use—and reuse—our natural resources wisely.
There are several paths to satisfying global decarbonization and electrification goals. Demand response (DR) programs, which encourage and often incentivize utility customers to shift electricity usage during peak power use periods, are a proven strategy to lower the cost of electricity and reduce the reliance on more expensive, dirtier fossil fuels that damage the environment. In fact, the global demand response market is projected to increase by $1.71 billion from 2021 to 2025, according to Technavio. Along with DR programs, distributed energy resources (DERs) offer energy providers a fresh opportunity to reimagine the modern grid. To manage the growth of these initiatives, utilities can employ a distributed energy resources management system (DERMS).
What is DERMS?
Through affordable and accessible individual green technologies, energy resources ranging from rooftop solar to wind turbines to residential storage batteries to electric vehicles have become increasingly decentralized. Utilities leverage these and other distributed energy resources (DERs) to meet their demand-side and distribution objectives. A distributed energy resource management system (DERMS) uses software to monitor, control and integrate these electric power sources. DERMS play a pivotal background role in helping to balance the grid, increasing efficiency and reliability for consumers and utilities while reducing their carbon footprint.
When the Smart Electric Power Alliance (SEPA) published a blog back in 2019 looking at the current state of demand response, it found that "Demand Response is Evolving. Again." More than two years ago, the authors noted that "traditional demand response—which engaged large commercial and industrial (C&I) customers a few times per year—is quickly becoming the equivalent of Henry Ford's Model T: the thing that established a new class of product or service, but which has become eclipsed by time and technological advancement."
To continue this car analogy, as the old advertising slogan goes, "this is not your father's Oldsmobile." Demand response—and DERMS—have grown increasingly sophisticated, engaging and results-driven.
Types of DERMS
There are three types of DERMS:
- Purpose-Built: Uniquely designed for each utility, purpose-built DERMS come fully loaded with all the bells and whistles plus options intended to anticipate future grid needs and still-emerging technologies. Because of the high degree of customization, this choice typically requires significant IT resources and can be unwieldy. Building the infrastructure can slow device and customer enrollment, and for some, the typically large price tag can lead to the "sunk-cost fallacy" of sticking with the purpose-built DERMS platform because of the time, effort and dollars invested upfront.
- Vendor-Led: For utilities seeking fast and easy access to DERMS technology, the vendor-led option can be a quick solution. However, the vendor—not the utility—controls everything from enrollment to when to call demand events and more. In addition, some vendors utilize device partners that may not integrate well with the utility's operations, potentially limiting the number of customers who can participate in pilots and programs. Because the technology is outsourced, utilities can miss out on direct access to valuable customer engagement opportunities as well as the real-time data that can help them evaluate and improve the customer experience.
- Modular: The modular approach provides utilities with a flexible DERMS that encourages utilities to select what they need, as they need it. Since each modular element can operate independently, this method makes it easy to scale up from pilot to program and to integrate a wide range of device partners selected by the utility. While the DERMS vendor acts as a partner, the utility takes the rightful lead on customer engagement, event calling and data management to continually fine-tune and develop their program.
Scaling DERMS to Suit Your Needs
Gordon Moore, a co-founder of Intel, once said that the number of transistors on a microchip doubles about every two years. At the same time, the cost of computers housing the microchips is halved.
Today, "Moore's Law" actually moves faster: Technological innovation continues to accelerate. But, its corollary proposition connotes that technological obsolescence moves at the same quickening speed. Modularity provides a way for utilities to stay ahead of the curve, planned or otherwise. Scaling up to meet ever-greater needs is what it's all about.
The global DERMS market is expected to grow by more than 350%, from $167.29 million to $605.55 million, between 2020 and 2028, according to a report from Verified Market Research. Four key features are driving the rapid growth of DERMS.
Distributed Energy Resources (DERs): Renewables, Open-Source Software
The expansion of distributed energy resources (DERs) can be aligned with at least two important utility industry trends: the need to employ renewable energies to meet global decarbonization goals, and the implementation of open-source application programming interfaces (APIs) that allow two (or more) software applications to easily talk with each other.
The internet of things (IoT) and the proliferation of smart, WiFi-enabled devices have provided many paths to renewable energy access and enhanced conservation efforts. To manage this rapid growth, utilities are turning to open-specification APIs that can seamlessly bring together best practices for utility customers, original equipment manufacturers (OEMs) and software developers to accelerate the deployment of DERs. With more DERMS talking to more smart devices, barriers to customer participation and buy-in will continue to lower.
Demand Response Adoption: BYOD
Prior to the widespread availability of smart devices, utility providers managed their demand response programs through individually installed devices that could then manage the targeted appliance remotely. This process slows down program enrollment, presents a customer privacy issue and reduces the utility's return-on-investment. With the widespread adoption of bring-your-own-device (BYOD) initiatives, demand response has become much more accessible—and customizable—for customers and created greater opportunities for utilities.
In addition, government programs are augmenting the growth of DERMS. Policies and incentives include the USDA-Rural Energy for America Program (REAP) renewable energy/energy efficiency loans and grants, renewable energy tax credits (fuel cells, small wind turbines, geothermal heat pumps, solar energy systems, biomass fuel stoves), plus corporate tax incentives bolster market development.
Electric Vehicle Bidirectional Charging
The electric grid is changing, and electric vehicles (EVs)—pardon the pun—are driving a big part of the transformation. Estimates vary, but according to a survey of automotive executives conducted by KPMG, on average they expect more than half (52%) of new vehicle sales to be all-electric by 2030. With significantly more EVs on the road, and charging in garages, peak load times, which have traditionally occurred during the late afternoon/early afternoon, will evolve, demanding more power and reimaging the load shape.
Some think that the expanding EV market will blow up the electric grid. Writing recently in Forbes, James Morris argues how the grid can easily handle EVs if properly managed. Bidirectional smart charging, or vehicle-to-grid (V2G), can both optimize vehicle charging and store renewable energy in the battery that can be discharged to the grid (when not on the road) during peak consumption periods, a process that DERMS manages.
Customer Engagement and the Environment
The days of utility-generated "Dear Ratepayer" letters are over. Utility customers want—and deserve—full engagement that meets their needs. A modern DERMS platform should have features that improve load flexibility and motivate customers to participate in a distributed energy future. Every touchpoint—from enrollment to participation to event calling—represents an opportunity to enhance and develop that relationship. Through ongoing education and the use of leaderboards within a customer app, some utilities have gamified participation. Communicating savings to participants both encourages homeowners to reduce energy usage (and preserve the environment) and to inform utilities on their continued program design. In-app messaging widgets and energy-saving tips continue that education and aid utility conservation efforts, while enrollment and incentive processing tools native to DERMS help minimize programmatic costs for energy providers.
193 countries are member states of the United Nations, and the Times' "Postcards from a World on Fire" provides harrowing examples of how climate change is reshaping daily life in each of these nations around the globe. But, as noted in the essay's conclusion, the world doesn't have to keep burning.
Together, we can develop, support, and implement technologies and initiatives that can help decarbonize the grid and create a more sustainable future. DERMS are an important part of that solution.
William (Bill) Burke, Ph.D., is the founder and CEO of Virtual Peaker, a cloud-based SaaS company that empowers modern utilities with the friendliest distributed energy resources platform on the planet.