DER and the Role of Aggregated Demand Management

The California investor-owned utilities—Pacific Gas and Electric, Southern California Edison, and San Diego Gas and Electric—recently concluded the latest Demand Response Auction Mechanism (DRAM) for 2019. DRAM bidders include traditional demand response (DR) aggregators, energy storage vendors, and EV charging providers.

The Evolution of DR Aggregation

DR aggregators have been enrolling commercial and industrial (C&I) customers in DR programs for 2 decades. The business model is mature and customers are comfortable with their benefits and responsibilities. More recently, other types of distributed energy resources (DER) such as energy efficiency, solar PV, energy storage, generator sets, and EVs have started to proliferate and become eligible for energy market participation. However, it is not necessarily a simple endeavor to integrate different resource types or to find the right mix of vendors to provide them.

While the concepts and technologies behind utilizing DER have been developing since the energy crisis in the 1970s, each asset type has been developing at its own independent pace due to different drivers for growth, without full consideration of how they could be integrated and optimized. As the cost of DER have come down, demand-related charges have continued to increase rapidly. It is just in the past few years that technological, economic, and regulatory changes have made the idea of integrated DER feasible for C&I customers. The control systems to optimize them and the aggregation platforms to connect them create the link between DER assets and the grid.

Since DR programs have matured in the market, other technologies have been used to increase grid reliability and reduce a C&I customer’s net energy spend. Assets such as curtailment, storage, and dispatchable generators can fill in for or operate in parallel with DER that are not controllable, such as solar, fuel cells, and cogeneration units. Revenue from these assets can then be used to revenue stack multiple programs using multiple resources.

What Can Customers Do to Efficiently Integrate DER Value?

To take DER programs to the next level of optimization, integrated DER has been conceptualized in the US in the last decade. However, efforts to integrate local generation, energy efficiency, and DR thus far have been challenging and little progress has been made. Traditionally, energy efficiency and DR have been siloed within utilities, with misaligned goals and barriers to transferring funds between programs, while distributed generation has happened outside the utility realm.

Barriers to integration include different vendors for different resource types, different purchasing agents at customers, different financing models, different technology platforms, and regional differences in DER market rules and access. These obstacles may seem daunting to overcome and lead to paralysis or piecemeal DER adoption; however, there are examples of customers successfully managing these challenges. To address these barriers, customers can take certain actions to assure a more cohesive DER aggregation approach.

Join me on July 25, I am moderating a discussion with CPower on how companies can act to assure a cohesive DER aggregation approach. This free webinar will provide some background on the technologies, highlight the major integration issues, and offer recommendations for customers to choose the right vendor(s) for their situation.