Sep 5, 2023

Introduction

Decarbonization is impacting the way we generate, distribute, and consume energy. As we strive for cleaner, more efficient, and resilient energy systems, the spotlight is increasingly turning to a game-changing concept: Distributed Energy Resources, or DERs. 

DERs refer to small-scale, decentralized energy generation and storage technologies that  reside within the grid's distribution network as opposed to the transmission network. (See DecarbToday's The Electric Grid 101 for an overview of the grid.)  Because of this, DERs buck the traditional model of centralized power plants that generate electricity at a large scale and then transmit it over long distances.  As a result, DERs have the potential to revolutionize our energy landscape and play a significant role in mitigating the effects of climate change.  DERs encompass a wide range of technologies such as:

• Solar Panels
• Wind Turbines
• Battery  Storage 
• Community Solar Farms
• EVs
• EV Charging Stations
• Small Scale Hydropower Systems
• Geothermal Heat Pumps
• Distributed Natural Gas Generators
• Biogas and Biomass Systems
• Smart Inverters and Grid-Interactive Devices(1)
• Microgrids(2)

In Front or Behind the Meter?

An important aspect of DERs is that they can be located either in front of the customer meter or behind it.  There are implications associated with where a DER is located.  Here are attributes of both:

Behind the Meter (BTM)

• These resources are owned and controlled by the customer and are primarily intended to meet their on-site energy needs.
• Common examples include rooftop solar panels, energy storage systems (e.g. batteries), and backup generators.
• They are often used to reduce electricity bills, increase energy independence, and provide backup power during outages. Excess energy generated can sometimes be exported back to the grid for compensation, depending on local regulations and utility policies (e.g. net metering).

In Front of the Meter (FTM)

• These resources are typically larger-scale energy resources that are interconnected directly to the  grid and owned and operated by third parties, such as independent power producers or utility companies.
• Examples include utility-scale solar farms, wind farms, large energy storage facilities, and natural gas peaker plants.
• They are used  to increase the share of renewable energy in the grid, improve grid reliability, and provide grid services such as frequency regulation and demand response.

It's important to note that the distinction between BTM and FTM DERs is not always strict, as some DERs may have characteristics of both. For example, a community solar project could be considered an FTM DER because it feeds electricity into the grid, but it may provide energy credits to participating households, effectively functioning as a BTM DER for those customers.

The DER Potential

Looking at DERs as a whole, the potential is huge for the grid of tomorrow:

• Renewable intermittency mitigation: The storage component of DERs provide a means to mitigate the intermittency issue with solar and wind energies. They store excess renewable energy for use when the sun isn't shining or the wind isn't blowing, ensuring a continuous and reliable energy supply.
• Grid Stability and Reliability: By providing local energy supplies, DERs reduce strain on the centralized grid. This reduces the risk of blackouts and brownouts and ensures a more reliable energy supply.
• Demand Response and Load Management: DERs enable more intelligent demand response strategies and load management. With advanced control systems, DERs can adjust their output based on real-time electricity demand, helping to balance the grid. This not only lowers energy costs but also decreases the need for fossil fuel-based peaker plants, which emit high levels of greenhouse gases.

DER Issues

While the benefits of DERs identify them as being a key component in the grid's future, they also come with several challenges that need to be addressed:

• Grid Integration: One of the primary challenges with DERs is integrating them into the existing grid. The grid was designed around centralized power generation and transmission. DERs challenge the fundamentals of this design. Generating within the distribution network (as opposed the transmission network) introduces technical challenges.  Having electricity put onto the distribution network from many smaller DER sources makes that challenge even more difficult.
• Grid Management: Managing a grid with a high penetration of DERs requires advanced control and monitoring systems to balance supply and demand, maintain grid stability, and prevent congestion
• Power Quality: DERs can affect power quality, causing issues such as harmonics, voltage flicker, and waveform distortion, which may impact sensitive equipment.
• Regulatory Hurdles: Complex and inconsistent regulations can slow down DER adoption and integration, making it difficult for utilities and consumers to navigate the changing energy landscape.
• Consumer Awareness and Education: Many consumers are not fully aware of the benefits and capabilities of DERs or how to best utilize them. Effective education and outreach efforts are needed to help consumers make informed decisions about DER adoption and usage.

Addressing these issues requires collaboration between utilities, regulators, technology providers, and consumers. It also involves ongoing research and innovation to develop better grid management and energy storage solutions, as well as the development of updated policies and regulations that support the integration of DERs into the energy ecosystem.

Do Utilities Like DERs?

Electric utility attitudes toward DERs vary widely depending on several factors, such as the specific utility, its location, regulatory environment, and the nature of the DERs themselves. Some utilities see DERs as an opportunity to improve grid performance, reduce environmental impact, and enhance customer engagement. Others may view them as disruptive to their traditional business models. The extent to which utilities embrace DERs depends on local market dynamics, regulatory frameworks, and the strategic vision of the utility itself. 

Conclusion

DERs are instrumental in the battle against climate change due to their ability to integrate renewable energy, enhance grid resilience, improve energy efficiency, enable demand response, support transportation electrification, and provide essential energy storage. As we transition towards a more sustainable and decarbonized energy world, DERs will play a pivotal role in reducing greenhouse gas emissions and mitigating the effects of climate change. Their decentralized and adaptive nature make them a key component of a greener, more sustainable future.

(1) Smart Inverters and Grid-Interactive Devices are advanced inverters and devices that enable DERs to communicate with the grid, providing opportunities for grid services.

(2) Microgrids are small-scale, localized grids that can operate independently or in conjunction with the main grid, providing resilience and flexibility during power outages.