What comes first: Digital DER or transactive energy?

As distributed energy resources grow across the network, the method of managing DERs becomes an increasingly digital process – including opening new energy markets at the edge of the distribution grid. This is a very big opportunity for electric utility companies, but are they ready?

The evolution of “digital DER” has seen the establishment of DER interconnection platforms, complete with DER databases, API interfaces, and even a “digital customer experience” for customers applying for DER interconnection. The next step is to take the DER master data from the interconnection application process and make this information available to a range of OT and IT systems. Utilities are finding valuable opportunities to merge OT and DER data to increase accuracy of power flow simulations, understand the impact of cold load pick-up impact for a feeder, and soon DER control through Advanced Distribution Management Systems (ADMS). Leveraging digital DER control is the premise of ADMS, to optimize power quality in the distribution system when larger amounts of DER are deployed. ADMS represents a significant evolution within utility operations to more actively control power flow and power quality at the grid edge. Utilities will need to facilitate communication with DER systems, owners, and operators to monitor the state of DER assets system-wide, and communicate relevant signals to DERs to achieve grid objectives and fully realize the capabilities of the ADMS in the future.

The Emergence of Transactive Energy

Utilities, regulators, and DER operators are still trying to wrap their minds around what it means to open up energy markets at the grid edge. “Transactive Energy” frameworks aim to facilitate energy markets to leverage DER data in new ways. The question is, how do you make Transactive Energy insightful and intuitive, rather than buried in the weeds of high volume transactions? The data required to determine prices at the grid edge is specific to each DER location, time of day, and area capacity factors. But how do you assess capacity at the grid edge if you are not analyzing that data in real-time? In terms of building blocks, traditional SCADA, GIS, asset, and smart meter data become an important baseline. From there, the ability to interface digital DER static and operation data with the baseline operational data introduces the opportunity to apply analytics to generate the insights needed to comprehend what is happening at the grid edge, and identify opportunities for DER operators to use their resources to improve grid performance if necessary.

In a future where digital DER together with analytics drives insights enabling DER controls could improve grid performance, it is possible to determine efficient pricing of energy at the grid edge, and dispatch DER in the distribution grid. This Transactive Energy model can enable prosumers at the grid edge to buy and sell power, and be compensated for providing ancillary services to support the grid. This progressive evolution of digital operations will not happen all at once for every utility, but rather will be incrementally deployed as utilities find opportunities to leverage third party DER to address issues like supply-side Non-Wire Alternatives, and energy storage in a more creative way.

The Race to Market Leadership

In adopting the new role of “distributed system operator” or DSO, utilities can position themselves to be the manager of grid edge transactions – facilitating a new energy market ecosystem that goes beyond the static PPAs and net metering agreements traditionally used to compensate DER operators today. This can potentially elevate the position of the DSO to the agent of authority, the guarantor of price and payment, as well as improving supply and grid reliability. Because there are private third-party companies that also seek to secure the “Holy Grail” of Transactive Energy markets, the coming years will be very interesting.