Parallelism: Managing Massive Storage and DERs with Smart Systems

The next stratum of electricity and grid development over the coming two decades appears more and more clear. Major utilities methodically move through the regulatory and practical deployment of smarter communicating grid technology and advanced metering. This continues the centralized command and control type system that has been in place since the original wires were strung in Manhattan by Edison’s DC and the Westinghouse AC companies.

Meanwhile, two side by side developments bring an opposing force to this command/control legacy system. One — distributed resources themselves; and two — the communications and software applications to manage them. These market developments are not unlike the dramatic shift from large scale central computing to personal computers in the ’80s and ’90s, followed by the dramatic increase in networking and near ubiquity of internet access that has spawned distributed smart programs and “X,Y,Z as a Service” applications. From Cray to the smart phone in your pocket, we now interact with this vast cloudlike distributed application platform every hour. 

Yet there is a third development: much less pedestrian in computing … which signals the real power of aggregation.


Parallelism in the zero-one world uses many dispersed but coordinated small-scale computers to work collectively in parallel on massive compute problems, such as climate, astronomy, forecasts and other complex calculations. Bringing intelligence, software and communications to DERs will have a similar effect on electricity generation, conservation and distribution. 

The first major development is ongoing: the very low penetration of distributed generation which will be accelerated by the advent of affordable battery storage. These two distributed resources by themselves offer both benefits and strains on the existing command/control electric delivery system. And since there is almost no alignment in the business models of distributed resources and centralized electric utilities, we find a wide difference of opinion on the value of solar and storage depending on which side of the divide you sit. This is a bone of contention between many central electric utilities and the providers and customers of solar and storage.

The second necessary development is smart communications currently being designed and deployed by major embedded vendors and brand-new players. California’s long deliberated CPUC Rule 21 is now deploying Phase 1 protocols for smart inverters providing manageable and autonomous new functionality, including anti-islanding, ride-through of high/low voltage and frequency excursions beyond normal limits and volt/var controls among others.

Phase 2 will mandate industry standard communications protocols, with Phase 3 bringing further DER functions and communications capabilities. Rule 21 sets in motion a new age of communicating, programmed and managed DERs.

The third major development will aggregate these resources into power pools made up of granular electricity origination that can be managed and dispatched. While some of this dispatched electricity will be spinning, storage becomes a most critical new distributed functionality. Storage allows a more manageable “pitch” and “catch” dispatch of electricity services to the central command and control grid along with other grid benefits. This parallelism in the future electric utility marketplace brings large and small generating sources of electricity pooled to provide meaningful resources into the legacy command/control industry.

What will drive this dispersion of generation and storage from a central system? Of course, continued price improvement of generation and storage is key, with that trend well in motion. However, the long standing and near universal use of demand-based electricity rate design may be the biggest catalyst to rationalize storage and storage + solar for the large and diverse commercial and industrial (C&I) market. Storage is an outstanding way to effectively manage peak demand behind the meter for the C&I market segment. Storage plus onsite generation using solar can often improve storage ROI depending on rate design, energy costs and other market factors.

Demand-based rate designs are ubiquitous for mid- to large-size C&I ratepayers as part of longstanding principals of good rate design, which attempts to marry energy costs with cost causation. Peak demand from larger ratepayers becomes a principal cause of capitalized and acquired peaking power, generally the costliest power of typical utilities. Demand rates charge larger customers more for their high peaking electricity requirements. For the C&I ratepayer, the demand components of their bill often exceed 50 percent of total electricity costs.

While demand and usage rate components combine to arrive at total cost of electricity, net metering policy does not apply an analogous “demand + usage credit.” In fact, with few exceptions, such as in Vermont, net metering applied to demand-based ratepayers applies only to the usage portion of the ratepayer’s total cost of electricity. Because of this mismatch, it is a solar industry best practice to project little to any solar impact to reduce C&I peak demand charges. 

Storage companies like Stem and Greensmith are emerging to dispatch and manage storage at C&I and utility levels — with many customer benefits, including peak demand reduction. Massive utility-scale storage is being deployed, while commercial behind-the-meter storage is also experiencing dramatic growth as reported by the Smart Electric Power Alliance. Of the cumulative 94 MW of C&I storage to date, 50 MW was deployed during 2016 and mostly in California.

Companies like Enbala working with ABB, plus Siemens, GE and others are developing systems for management of DERs for both utilities and commercial behind-the-meter customers. These companies are the pioneers of the important third wave of development, the aggregation of these resources. 

Communication and smart software is what turns those storage or storage + solar resources into true DERs. Now those resources have real tangible benefits to the central utility in managing peaking plant, volt/var, and other grid operational requirements. And for those companies that develop parallel systems to aggregate and manage these disperse DERs, they can pool energy and electricity benefits and in-turn profit by making certain services available to the utility, including spinning electricity, stored electricity and other grid benefits. 

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