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DERMS Terms – Going Beyond the Buzzword

A Distributed Energy Resource Management System (DERMS) represents an intriguing and complex opportunity for utilities. These advanced systems promise to simplify the management of growing utility distributed energy resource (DER) portfolios; however, the broad spectrum of possible capabilities makes evaluation, selection, and justification of a DERMS a challenge.

Today, we have language to describe the fundamental capabilities of a DERMS, the building blocks. We also have terminology to describe where it is used in the grid architecture. However, we lack a set of terms around the benefits provided by a specific DERMS deployment.

DERMS has officially become a buzzword — an onion in need of peeling. Let’s put the term ‘DERMS’ to bed and replace it with more meaningful terminology.

What is a DERMS?
At a fundamental level, a DERMS is a control system specifically designed to handle DERs. A DERMS acts as a switchboard for DER-related protocols and information to simplify the management of these disparate systems and feed information into other utility backend systems for planning, operations, and customer engagement. These DERs can include demand response, solar, energy storage, electric vehicles, or other distributed technologies. A DERMS can fulfill many functions, including:

  • Aggregate – Combining DERs into grid-wide resources to simplify control, monitoring, and management of those systems
  • Simplify – Streamlining settings and data
  • Automate – Employing algorithms to take actions, often in coordination with a distribution management system (DMS)
  • Coordinate – Supply operational information for individual or aggregated DER assets to the DMS
  • Forecast – Provides forecasts of DERs
Source: OATI, Inc.

Utilities and third-parties procuring a DERMS combine these functions, depending on their needs and deployment location. These terms are useful for describing the core capabilities of a DERMS, but don’t provide the necessary context for understanding where and how it is used.

Where is a DERMS used?
A DERMS is commonly classified by how it is positioned within the grid architecture, for example, centralized, fleet, and edge/field DERMS.

A centralized DERMS oversees an organization’s complete DER portfolio, and organizations often integrate them with enterprise systems. An edge DERMS is more focused on grid-edge applications, and may include building or microgrid management systems. A fleet DERMS manages a specific grouping of DERs, such as a fleet of electric vehicles, a specific manufacturer’s storage system, or the DERs under the control of a single aggregator.

DERMS in the field
Green Mountain Power (GMP) uses a form of DERMS for their well-known residential energy storage programs. In addition to their “Bring Your Own Device” program, GMP has partnered with Tesla to provide home batteries and backup power services via a Tesla-supplied management interface which controls the storage systems. As of September 2020, they had 2,000 systems installed with 1,000 more planned this year, and $3 million in annual savings for Vermont ratepayers. This is a good example of a fleet DERMS designed for managing and optimizing a single manufacturer’s product.

Another example of a DERMS comes from the Northwest, where Avista recently demonstrated what they call a “micro-transactive grid” in Spokane, Washington. The utility developed a microgrid that leverages transactive energy in the form of a DERMS to manage a pair of batteries, solar arrays, and load-control capabilities. This is an example of an edge or field DERMS that enables energy trading between two buildings though a form of transactive energy, and the system controls provide resilience benefits for microgrid operation. This trading capability opens new doors for new economic models, which is critically important given policy considerations such as FERC 2222 and rising interest in smart buildings and communities.

Southern California Edison’s (SCE) Grid Management System is a perfect example of a centralized DERMS. Their new system combines several advanced enterprise systems, including elements of a DERMS for DER management, Advanced Distribution Management Solutions (ADMS) for grid management, device management for their Supervisory control and data acquisition (SCADA) systems, reliability and economic optimization, forecasting, historian, and other features. SCE is also developing this system to communicate with DERs at the residential, commercial and industrial, and grid levels. Given California Rule 21 smart inverter requirements and Title 24 100% residential rooftop goals, SCE should have plenty of DERs on their system.

Beyond utility applications of a DERMS, customers also face challenges and opportunities associated with managing these systems. This could include a company interested in managing their campus resources, a community that wants the ability to island, or a tech-savvy homeowner with demand response and generation and a desire to tinker. Behind each of these is a controller of some sort. These systems can take the form of microgrid controllers, energy storage management systems, building or campus management systems, and DER site controllers.

Example role of a microgrid controller

Though these customer systems share many of the same capabilities as a fleet, edge/field, and centralized DERMS, they are not typically acknowledged as a DERMS. Their separate identity highlights the importance of language specificity. For example, the mention of a DERMS usually leads to more questions to identify the purpose of the system. However, the mention of a microgrid controller is clear, leading to assumptions about key integrations including reclosers, communications to a utility DMS, communications to DERs, and optimization algorithms to maintain grid stability.

A path forward – DERMS capabilities
The term DERMS encompasses so much that it means very little. We have terms to identify the fundamental capabilities of a DERMS. We have separate terms to describe where they lie in the grid architecture. What the industry is missing is a new collection of terms that focus on the benefits these systems provide.

As the industry deploys DERMS, we improve our understanding of how to combine the fundamental capabilities of a DERMS (aggregate, simplify, automate, coordinate, and forecast) to create specific, benefit-oriented capabilities. For example:

  • Optimization – Automatic tools that optimize the dispatch, data collection, and data processing of DERs to achieve a preset goal. Example goals include identifying abnormal operating states, optimizing dispatch for economic means, or weighing ideal dispatch scenarios across DER portfolios.
  • Safety or Performance Monitoring – Important for worker safety and performance monitoring to satisfy warranty and design requirements. Monitoring system performance supports DER owners in maintaining their investment and monitoring for abnormal conditions.
  • Demand Management – This key capability for a modern DERMS includes coordinating solar, storage, and flexible loads (water heaters, electric vehicles, smart thermostats, etc) to regulate campus load below a set limit, or dispatching customer demand response devices in alignment with utility programs.
  • Customer Information System Integration – Back-office DERMS integration allows for the appropriate dissemination of DER data across all areas of utility operations. For example, properly defining a customer’s profile to enroll that customer in the appropriate programs and tariffs.
  • Transmission/Distribution System Operator (TSO/DSO) Coordination – SEPA recently released a report on Integrated Distribution Planning, which highlighted the rising need for better coordination between transmission and distribution planning. This is critical in light of rising DER penetration, multi-purpose DERs (e.g. fast frequency response, capacity/generation dispatch, distribution contingency mitigation, etc.), and new opportunities from FERC 2222. Aligning DER growth patterns, timing, and load shape assumptions across generation, transmission, and distribution planning will require an iterative process. A DERMS can help collect and manage some of this data.

This representative list highlights the wide-ranging capabilities a DERMS can offer. It also exposes the need for a third set of terms that focus on DERMS benefits to achieve a more holistic view of each deployment.

Next steps
DERs are here to stay. 46 major utilities have carbon-free or net-zero goals by 2050, according to the SEPA Utility Carbon Reduction Tracker. DERs will play an important part of their journeys to a clean and modern grid.

The industry needs to change how we think and talk about a DERMS. Let’s get in the habit of explicitly describing what a DERMS is, or will do, and ask the right questions to extract that information. Doing so will help us start to peel the DERMS onion, and bring clarity and simplification to our conversations internally, with regulators, and all involved.

SEPA is launching an effort to catalog DERMS variants and modules, document their purpose, compare them to non-DERMS investments, and capture case studies on what utility peers are doing today. The goal is to help bring clarity to the DERMS.

We plan to add this to our DERMS Request For Proposal language repository. We are also working to expand our work on Integrated Distribution Planning to better understand some of the investments that happen in parallel.

Interested in our efforts? Let us know.