This is part six of our six-part DERMS series. If you missed the previous part, it can be found here:

Part 6: DERMS use cases and pilot projects

Based on original research conducted for ABB, there are DERMS use cases for the various market participants; the most common is related to the ability to correctly forecast loads (demand) and distributed generation (supply). In addition to forecasting, most distribution system operators (DSOs) identify applications for distributed energy resources (DER) registration as well as communicating signals towards other market participants like aggregators, retailers and energy service companies (ESCOs) to control DER as key.

In general, generation companies (GenCos) and independent power producers (IPPs) see limited application of DERMS in their operations and rely mainly on already existing software. Aggregators and retailers, on the other hand, are looking into specific market functions such as responding to price signals, transaction settlements and total demand optimization, to name a few.

Figure 1: DERMS capabilities across four broad categories

DER registration

DER registration and the ability to observe it on the grid has been identified as the most pressing need for utilities across all geographies. The use case has been prioritized in a “plug-n-play” model where basic requirements include location, type, and supply/demand profile. This core functionality is crucial in multi-vendor, residential markets (e.g., Germany, California).

Among additional functionalities, American utilities identified hosting capacity analysis and grid constraints forecasting. For example, American utilities in California, where constraints caused by DER are more prominent, indicate a need to better and more frequently analyze hosting capacity of specific feeders and forecast potential future constraints. European DSOs did not prioritize this use case due to better overall condition of the grid, fewer constraints and lower congestion. Market DERMS use cases are deprioritized in favor of grid control/dispatch among utilities. To make market-centric use cases more urgent, a regulatory push is necessary to achieve higher participation in energy exchange. It should be noted here that in the European Union, DSOs are not allowed to act as retailers, limiting their opportunity to monetize DERMS through market settlements and transaction use cases.

Virtual power plants (VPP)

The aggregator market is established in Europe operating IPP and commercial and industrial assets, while micro-scale residential installations are only picking up with a mixture of supply and demand flexibility and an increasing number of technologically diverse portfolios. US and Australian markets are less mature; most of the aggregator projects rely on subsidies and serve as technology/mechanism demonstrations. Core use cases for VPPs are the ability to precisely forecast supply/demand and execute schedules through direct control of assets. As a second priority, VPPs identified participation in ancillary markets and more flexible aggregation programs.

Figure 2: The DERMS ecosystem

DER forecasting

Finally, retailers prioritized improved forecasting as a promising use case, while ESCOs would value design and planning applications. Especially in Europe, retailers rely on at least 1-year-long contracts with GenCos, which are supplemented with short-term purchases for balancing. In Australia, most companies are organized as “gentailers” (generator–retailers), thus not relying on won supplies . Retailers prioritize integration with other software and market participants, i.e., customer relationship management systems for client interfacing, and distribution management systems, net metering, meter reading systems of DSOs. They are also at risk of losing large parts of their revenue due to a growing prosumers base, necessitating a move to alternative value streams – e.g., multi-fuel energy services. In general, retailers and ESCOs may benefit from a broad range of market specific use cases, though their needs are very geography-specific.

DERMS pilot projects

There are many DER management trial projects ongoing across the globe, and some DER management solutions are now fully operational. There are islands, remote communities and remote industrial facilities that have now facilitated the integration of clean renewable energy sources using battery storage and advanced DER control systems to maintain stable electricity systems. In these cases, the main economic driver is the reduction of diesel fuel usage and dependence. Trials of other DER management solutions are also common, particularly in Europe, the United States and Canada. A couple of interesting examples illustrating the benefits to DSOs, TSOs and their customers include:

  • Central Hudson Gas and Electric, operating in New York State, has employed a range of DER control to provide load relief for several transmission circuits to avoid the need for expensive reinforcement.* DER has included residential thermostats, air conditioners, backup generators and pool pumps as well as commercial lighting, thermostats and air conditioners. One interesting feature is the domestic backup generators (propane or natural gas powered) – many of these were installed by one company following a storm, and households now pay for these to be maintained but the DER management scheme helps the customers pay for the generator maintenance. Also, the generators are now fitted by the supplier with communications and control capability ready for the DSO DER scheme.
  • The “Power Potential” project in the UK is a collaboration between UK Power Networks, the local DSO, and National Grid, the TSO.** To enable DERs to provide new services to the electricity transmission system, a management platform is currently being developed that will facilitate communication between DERs connected to the DSO network and the TSO, National Grid. This DER management-based initiative aims to create a new reactive power market for DER and generate additional capacity on the transmission network.

*Case study from SEPA webinar on non-wires alternatives, 6 Dec 2018. Supporting report at https://e4thefuture.org/wp-content/uploads/2018/11/2018-Non-Wires-Alternatives-Report_FINAL.pdf

**Source: https://www.nationalgrideso.com/innovation/projects/power-potential


To improve cost-effective operation, many DSOs may look to customers to engage in network management directly or through third parties, as operators take advantage of the DER on their networks. This is already happening around the globe.

The transition from passive distribution networks to digital technology-based active networks will require network control software that can help distribution system operators communicate with DER and make operational decisions to provide safe, reliable and cost-effective services to all customers. As the number of DERs to be managed increases, DERMS will go from “nice to have” to “need to have.”

This is the conclusion of our six-part DERMS series. If you’ve enjoyed the series and would like to download a PDF of the full content, click here.

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ABB Enterprise Software


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