Forging Win-Win Solutions in the Evolving DER Integration Landscape

By Peter Asmus

The stars appear to have aligned for distributed energy resources (DER) to play an increasingly important role in providing energy services to consumers. Some see this growth in capacity from devices such as solar photovoltaic (PV) panels, fuel cells, advanced batteries, and other forms of DER as the supreme threat to incumbent distribution utilities, echoing the much-ballyhooed “utility death spiral” story line. Others see this evolution as an opportunity for utilities to reinvent themselves, aligning their business strategy and business models with the emerging digital economy.

Either way, it is going to be a bumpy ride into the future. Yet there are signs that it is possible to create win-win scenarios by leveraging the diverse services that energy storage can provide. Advances in software that can optimize DER to provide bidirectional value along with the bridging capabilities that energy storage brings to the market can create order out of what would otherwise be chaos.

Is there a way for everyone to come out as winners? The key is intelligent distribution networks, an ecosystem of solutions that spans concepts such as nanogrids, microgrids, and virtual power plants (VPPs.)

Drawing Lines between Distribution Networks

Navigant Research has been sizing and forecasting aggregation and optimization platforms for DER since 2009. It has come up with the following definitions of three approaches to organizing DER technologies so that they can provide the most value possible.

The most established of distribution network concepts is the microgrid. Borrowing largely from a U.S. Department of Energy definition, Navigant Research defines a microgrid as the following:

A microgrid is a distribution network that incorporates a variety of possible DER that can be optimized and aggregated into single system that can balance loads and generation with or without energy storage and is capable of islanding whether connected or not connected to a traditional utility power grid.

There is much less consensus about what differentiates a nanogrid from a microgrid, or even a nanogrid from a relatively simple distributed generation (DG) installation. Here is the Navigant Research definition of a nanogrid:

A small electrical domain connected to the grid of no greater than 100 kW and limited to a single building structure, primary load, or a network of off-grid loads not exceeding 5 kW, both categories representing devices (such as DG, batteries, electric vehicles, and smart loads) capable of islanding and/or energy self-sufficiency through some level of intelligent DER management or controls.

Last but not least is the VPP. Closely related to both nanogrids and microgrids, here is the Navigant Research definition of a VPP:

Virtual Power Plants (VPP)
A system that relies upon software and a smart grid to remotely and automatically dispatch and optimize DER via an aggregation and optimization platform linking retail to wholesale markets.

VPPs can be viewed as one manifestation of the concept of transactive energy, transforming formerly passive consumers into active prosumers. In essence, prosumers are active participants in delivering services tailored to their own needs and preferences that also serve the larger grid. Another way to describe the VPP vision of the future is the Energy Cloud, a term Navigant Research uses to describe how DER can be managed virtually via software that can deploy hardware in a dispersed network.

The table below puts these related networking platforms into context based on key market characteristics.

Lexicon of Nanogrids, Microgrids, and VPPs

Lexicon of MIcrogrids, VPPs and Nanogrids

Two companies are proving that the boundaries between these three unique market applications are blurring, thanks to innovative utility business models and the creative aggregation and optimization possibilities attached to energy storage.

Creative Partnerships: PowerStream and Sunverge

PowerStream, the second largest municipally owned utility in Ontario, Canada, is developing an innovative pilot project that involves 20 residential units, each to be equipped with a 5 kW solar PV array and a 6.8 kW/12 kWh lithium ion battery. The project is designed to enroll homes on select feeders (which may not be adjacent to each other) in order to provide system benefits.

Perhaps the most innovative aspect of the project is the business model dubbed DBOOME (Design, Build, Own, Operate, Maintain, and Energize). Customers have an opportunity to participate in a hassle-free, zero-maintenance solar storage program with an upfront cost to partially cover installation, followed by a nominal monthly service fee for a 5-year program. (This DMOOME approach is also the model PowerStream plans to deploy for its microgrid program.) In exchange for the customer’s upfront payment and ongoing service fee, PowerStream offers customers significantly reduced electricity bills and resilience.

The key vendor partnering with PowerStream is Sunverge, which provides residential and commercial building-sited energy storage solutions that integrate renewables such as solar PV. Sunverge offers a combination of onsite hardware and cloud-based services that enable remote monitoring and control of nanogrids, aggregating them up into VPPs. (The company has also partnered with the Sacramento Municipal Utility District on a hybrid net zero energy nanogrid/microgrid.)

To learn more about how public power utilities and energy storage innovators are forging win-win DER solutions, listen to the Navigant Research webinar on Tuesday, March 15 at 2:00 p.m. EDT.

Peter Asmus is a principal research analyst contributing to Navigant Research’s Energy Technologies program, with a focus on wind energy as well as emerging energy distribution networks models such as nanogrids, microgrids, and virtual power plants. His expertise also includes wind energy, marine hydrokinetic technologies, and renewables generally. Asmus has 20 years of experience in energy and environmental markets, as an analyst, writer, and consultant. Asmus is the author of four books covering key energy market issues: Reaping the Wind, Introduction to Energy in California, Reinventing Electric Utilities, and In Search of Environmental Excellence. He is a frequent speaker at industry conferences and he is quoted regularly in major publications including The New York Times, The Washington Post, The Christian Science Monitor, and Reuters. Prior to joining Navigant Research, Asmus was president of Pathfinder Communications, and was previously editor of the Clean Power Journal, assistant editor of California Policy Choices, and has written for a number of energy trade publications including Windpower Monthly and Electric Utility Week. He holds a BA in journalism from the University of Wisconsin.

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