Is demand response the key to integrating DER?
There’s no way to sugarcoat it: distributed energy resources (DER) are moving into the mainstream. Not only is the proliferation of DER – solar PV, energy storage, and electric vehicles – becoming self-apparent, they are increasingly becoming integrated with the grid. As a result, utilities are getting hard-pressed to come up with a game plan to deal with the integration of DER and ensure reliable, efficient, and predictable energy flows.
The business value of integrating DER should not be understated. According to a recent report from Navigant Research, global revenue for grid edge technologies for DER integration is expected to reach $14.5 billion annually by 2024. It is clear there is a growing need for more intelligence, more control, and more agility in operating the grid, so how should utilities go about maintaining an efficient energy grid while also ensuring the integration of more DER?
Enter demand response. Already technically a DER itself, demand response is being recognized as a key resource to help harness the power of distributed energy. This includes automated demand response programs (ADR), load forecasting, network energy management, and other concepts that put consumers in control of their energy usage. Demand response can help speed the path to fewer traditional central power plants and more DER by balancing supply and demand, and giving customers more control over how much energy they consume and when, precisely the kind of data and control necessary for the successful integration of DER.
Utilities and energy companies are not blind to the benefits demand response has to offer. Navigant predicts that demand response spending will grow from $183.8 million in 2015 to more than $1.3 billion in 2024, while the market for energy service companies will reach $11.5 billion, up from $6.3 billion this year. That growth is being fueled in part by demand for energy efficiency retrofits by large energy consumers and critical facilities. Already research institutions are developing new technologies that will advance demand response in order to complement DER integration. The Electric Power Research Institute (EPRI), for example, is leading an effort in collaboration with the National Renewable Energy Laboratory to develop intelligent control of grid-connected devices, evaluating thermostats, pool pumps, electric vehicle charges, solar PV inverters, and community battery energy storage devices, integrating operation of different domains within distribution systems.
In addition, grid operators are slowly realizing that DER, including demand response, could become market players themselves, and in the midst of developing rules and market structures to integrate DER as if they were a traditional generation asset. Last week, the California ISO published a proposal that would create a new class of grid market players, called distributed energy resource providers (DERPs), which could be aggregated and dispatched to serve the same markets open to a traditional utility-scale installation, such as coal-fired power plant.
As more and more DER become online and integrated with the grid, it will be interesting to see how utilities utilize demand response as a resource for DER management and load optimization, and what that will mean for the grid going forward.