• Microgrid
  • DER
  • DER Trends
  • Utility Transformations

Utilities and the Future of DER Energy

Michael Kelly
May 19, 2022

Guidehouse Insights

Utilities are in the middle of multiple paradigm shifts as digital transformation and the proliferation of distributed energy resources (DER) converge to create increased complexity and opportunity. According to Guidehouse Insights, in 2021, more capacity from DER came online than from centralized generation capacity. 

This shift toward reliance upon DER has been traditionally seen as a negative by incumbent utilities. Likewise, microgrids—capable of islanding off from the larger utility grid during outages—have also historically been viewed as threats, both to traditional utility revenue models and to the structural integrity of existing distribution networks. 

In Guidehouse Insights’ How Utilities Can Enhance Our DER Energy Future white paper, commissioned by Emera Technologies, a better path forward is discussed. The paper talks about combining several fresh technology approaches with a sound financial strategy to address the primary unmet need of today’s microgrid market in North America: the desire of new residential communities to have a more sustainable and resilient energy system that can be deployed and operated by their trusted host utility. 

This white paper lays out a technology solution that includes a financing plan revolving around utility rate-based modular microgrids that leverage technology advances as well as distributed digital controls. These technological macrotrends are discussed below, while more detailed discussion can be found in the white paper.  

Increasing Modularity of Microgrid Offerings

Modularity is a well-known concept within the utility industry given the rise of advanced distribution management systems (ADMSs) and other modular software architectures. This same concept applies to the commoditization of standard microgrids, which can be pieced together to minimize design and deployment costs while simultaneously improving scalability potential. Advances in both hardware and software technologies are driving this segment of the microgrid market. The commoditization of first solar PV and now battery storage is making it more cost-effective to deploy microgrids. Integration with smart inverters and other controls, often used with optimization algorithms in the cloud, hasten the march toward modularity.

Utilities Should Take Advantage of DER and Microgrid Opportunities 

Utilities can and should take the lead in the march toward a new energy paradigm focused on balancing sustainability, resiliency, and equity stakeholder goals. Meeting all three of these objectives is a difficult balancing act. A modular rate-based microgrid solution such as BlockEnergy offers a tool for utilities that addresses many of these challenges. This unique combination of elements offers a promising answer to the challenges facing an energy system undergoing rapid and transformative change. Utilities are in the best position to take advantage of and address these challenges.