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The energy industry loves a shiny new object. Something that produces hope for slowing the impacts of climate change, or an innovation that shatters preconceived limitations of The Grid.
Distributed energy resource management systems, or DERMS, land squarely in that bucket. The software’s ability to autonomously control and communicate with millions of potential devices, while facilitating power market participation, could be the Swiss Army Knife the energy transition so desperately needs.
But as it turns out, that shiny object isn’t new at all. Utilities across the country are implementing DERMS to adapt to a rapid shift in how they engage with customers and manage the flow of electricity. And established solution providers, like OATI, have been developing DERMS applications for more than 15 years. The company boasts 10,000 MW of demand response and DER load under command and control with 10% of the largest utilities in the U.S. using its platform.
Nonetheless, the growing market has created an environment of ambiguity. Even the acronym, DERMS, doesn’t have a clear industry definition, creating an opportunity for half-baked solutions to cash in on the optimism.
Electric utilities, however, require certainty. The margin for error for safety and reliability is razor thin. What is a DERMS? That question is likely to solicit a flurry of unique answers, especially since the software can come in many shapes and sizes to fit a utility’s needs.
Demystifying DERMS is an industry imperative to ensure the technology reaches its full potential.
“DERMS is not new to some of us. Let’s demystify DERMS to the point to say, no, it is not only here and now. It has been,” Linda Stevens, OATI’s senior vice president of sales and chief strategy officer for smart grids and smart cities, told POWERGRID International. “It’s a very ripe, robust technology now.”
Watch the full interview on YouTube
What is a Distributed Energy Resource Management System (DERMS)?
The utility industry is beginning to settle on four primary classifications for DERMS applications. That’s in part due to the complicated nature of the platform, but also the modular tools that can support a utility’s individual use cases and existing software, like advanced distribution management systems (ADMS).
Ultimately, structuring a DERMS centers around “freedom of choice,” Stevens said. Every utility is different, as are their internal systems, market challenges, and customers.
Aggregator or edge/Virtual Power Plant DERMS is focused on customer-owned, behind-the-meter assets, handling all customer-facing functions. That includes end consumer engagements and enrollment, forecasting, dispatch, and control of the assets by the utility, customer notifications, and performance calculation and billing determinants.
Aggregator DERMS asset types are most often managed through asset manufacturer head ends and relationships.
A Grid DERMS is centered on grid operations, providing real-time visibility into system operations via a Distribution SCADA or ADMS, and has forecasting and control of dispatchable DER assets. The Grid DERMS provides information directly to the ADMS about DERs and the DER forecasts based on the ADMS needs. Furthermore, a Grid DERMS tends to be more closely tied to large front-of-the-meter assets given their direct grid connection.
Enterprise DERMS is a top node DERMS which serves as a “single pane of glass” for all demand response and DER programs, bridging both commercial and grid operations.
FREE WHITEPAPER: What’s in a Name – DERMS
Enterprise DERMs can directly manage, control, and dispatch select assets and programs, while also incorporating one or multiple third-party aggregator DERMS assets and programs into one common system for streamlined operations.
The Enterprise DERMS is then the single common point that interacts with aggregator DERMS, a grid DERMS, the wholesale market, various legacy systems, and is the single source of validations and settlements across all aggregators and Curtailment Service Providers (CSPs).
“Utilities that understand the need to bridge commercial and grid operations tend to embrace an Enterprise DERMS solution,” Stevens said. “But given prosumer behavior and buying power, a variety of DER types are becoming available and sometimes utilities want to cater to niche solutions that they perceive are better suited for particular asset types.”
Making the case for DERMS
In 2019, NCEMC, an electric cooperative tasked with supplying power to 2.5 million North Carolinians, needed a new DER management platform. But their needs, and use cases, were unique.
The generation and transmission utility, which serves 26 distribution electric cooperatives, couldn’t send event notifications to customers. It didn’t have a comprehensive view of demand response availability or a central way to dispatch multiple programs.
The grid, meanwhile, was in the midst of a transformation—one that blurred the line between transmission and distribution and enabled two-way power flow. Communities demanded resilience without necessarily defining it. NCEMC executives knew they needed a different tool but wanted to maintain a sustainable pace of integration and deployment.
FREE WHITEPAPER: NCEMC DERMS Case Study
OATI’s pitch stood “head and shoulders” above the competition, according to NCEMC CEO Joe Brannan. Its cloud-based DERMS solution would relieve NCEMC’s IT staff of care and maintenance while avoiding many of the integration potholes that plague software additions. The platform also allowed NCEMC’s member cooperatives to independently run their demand management programs.
As a not-for-profit, NCEMC didn’t have millions stashed away for research and development, like some investor-owned utilities do. A reputable partner was critical, and the platform had to work. The utility was familiar with OATI’s dominance in managing electricity markets and believed it had a unique perspective on the interplay between bulk power and distribution.
That “upstream alignment,” as Brannan describes, set OATI apart because of their deep understanding of the transmission system and power flows. NCEMC wasn’t pressured to go too big too fast and could instead layer new functionality onto the system as their needs evolved.
“Part of the journey was realizing that who we worked with had to take as seriously as us both the security and the operational excellence that the grid requires,” Brannan told POWERGRID. “So having a partner like OATI that thinks like us, understands how we’re pacing ourselves, has been very helpful.”
Choosing the right DERMS for you
Utilities have a diverse set of considerations to make when selecting the DERMS provider and platform that fit their needs.
Above all else, Stevens said it’s crucial for utilities to know that DERMS is, and has been, ready for primetime. But she added that utilities should be aware that no standard or agreed-upon classifications exist yet for DERMS. DERMS solution providers, who are not all created equal, develop and characterize their products based on their strengths, which can add to the confusion.
Grid DERMS, as an example, has its roots within the ADMS world and expands from there. The behind-the-meter aggregator vendor pool, however, may have limited knowledge or experience about the grid and grid conditions.
That leads to “pockets of DERMS functionality,” Stevens said, while an Enterprise DERMS bridges those gaps.
“Utilities love standards, and those are great,” Stevens said, adding that the loose classifications that exist today could soon change due to market dynamics. “They’re moving targets. What’s classified as a grid DERMS today might be something different a few years from now.”
DERMS platforms are complex and are not easy to build. Fully understanding the platform’s integration process, application, and maintenance needs is critical for utilities beginning this journey.
Stevens recalled a previous conversation with a representative at an investor-owned utility who was assessing DERMS offerings. He asked, “How many DERMS do I need to have?” There’s no perfect answer, Stevens said, but the journey begins with what’s under the hood at each utility, not a product brochure.
“Stay focused on the utility perspective. Don’t rely solely on the label that a vendor puts on itself,” she said. “What do you really need?”
