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Working at the Edge of the Grid

How to find value in distributed energy resources.

Fortnightly Magazine - May 2014
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The technologies that make up the class of distributed energy resources (DERs) are beginning to proliferate on the grid. Market forces, technology advancements, communications, and controls are making distributed technologies more accessible, economically viable, and controllable assets. The resulting changes will make the grid more efficient and reliable, as well as provide end-users with the opportunity to make more proactive use of energy and to reduce the cost of services.

What challenges will those changes pose to current providers of electricity? Will the changes lead to new business models to deliver electricity? Understanding what changes will take place, and what opportunities they will create, is fundamental to the growth of the companies that operate the grid today.

Multi-Directional Electricity

As advanced technologies for the electricity grid approach commercialization and shifting market forces create new choices and opportunities, operators of our grid realize that the future grid will differ greatly from today's environment. That difference isn't simply an issue of the grid incorporating technologies to become smart. Rather, the adjustments are more fundamental - they concern how electricity is generated, where it's generated, how it moves, and how it's delivered.

Figure 1 - Dynamic Microgrids and Outages

The mono-directional flow of electricity from centralized generation assets to end-users is becoming multi-directional. The technologies affecting that flow are evolving rapidly. In particular, the technologies that make up the class of DERs are reaching levels of cost and ease-of-installation that soon will put them into the stage of mass deployment. Market forces, such as the introduction of low-cost shale gas, have made it easier to overcome economic hurdles, further accelerating the process.

Also, communications and controls are turning distributed technologies into easily accessible and controllable assets for the grid. Ultimately, these changes will make the grid more efficient and more reliable. They will open up opportunities for even more DER technology and services - for example, cost-effective microturbines and fuel cells, sophisticated data analytics, and customized demand response. End users will see a less expensive service.

For more than 15 years, utility executives, regulators, and other stakeholders have heard similar arguments about the imminent potential of DERs being deployed across the grid. Today, however, this scenario is beginning to be realized based on a number of factors that propel each of the categories of DER:

Fossil-based DG: Comprised of microturbines, fuel cells, gas turbines, reciprocating engines, and combined heat and power (CHP) applications. Each of these devices is being propelled by the recent reductions in the cost of natural gas, though microturbines and fuel cells are still being held back by their higher operating cost.

 Renewable-based distributed generation (DG): Comprised of wind turbines, solar photovoltaic, and biogas-digester systems. Increased deployments are due, in part, to rapid decreases in installation costs and increases in government incentives. The amount of distributed storage installations has been doubling every two years, with even higher

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