About $846.12 billion is forecasted to be invested in Distributed Energy Resources (DERs) between 2020 and 2030. In this decade, DERs will become an undeniable part of the energy mix. The change in how consumers turn into prosumers by connecting their small and medium-sized power sources to the existing distribution network has disrupted the energy markets in Australia already. Australia aims to supply 45% of its electricity needs through DERs by 2050. In the EU DERs currently account for a small portion of the market ( 100 GW), but studies by CE Delft estimate that 83% of EU households could become prosumers (probable DER participants) by 2050.
The Energy Revolution in our Homes
Rooftop solar photovoltaic (PV) systems have been one of the key enablers of distributed energy, especially in regions that get a lot of sun. Microturbines, behind-the-meter batteries, Vehicle 2 Grid through EVs are all other possibilities. DERs would all need to provide a “connect and forget” approach for widescale adoption.
In Europe, the Nordic region leads the DER participation in a wholesale market with its Nord Pool intraday market. The French with its Block Exchange Notification of Demand Response (NEBEF) has also allowed trading of demand response as well DERs participation in wholesale and ancillary service markets. New York Independent System operator (NYISO) in the US has allowed economic demand-side DER participation in Day-Ahead Demand Response Program and Demand Side Ancillary Services Program too, where you can trade energy from your DERs through NYISO to meet commercial demand.
Pricing of the energy generated is governed on whether it is:-
- Implicit demand response: Here it exposes consumers to time-of-use electricity prices or time-of-use network prices. It is also often referred as “price-based” demand-side flexibility
- Explicit demand response mechanisms: In the EU, explicit demand response gives 15GW out of a total 21GW of demand-response capacity. And DERs are exposed directly to market prices.
There are several enablers that are making DERs a bigger part of the virtual grid.
Aggregators enabling DER bundles
Some market players allow aggregation by coordinating the operation of bundled DERs through the use of ICT devices (including virtual power plant (VPP), artificial intelligence, etc.,) to improve the forecast of renewable generation and electricity demand. It also allows DERs to behave like a traditional power plant in the market.
Most DERs respond faster for some ancillary services. By aggregating DERs into a VPP with a fast response, it can extend the duration of services. Guided by a clear regulatory framework, this would in effect allow fair competition among all market participants, including aggregators, who can either be local electricity retailers or third-party aggregators.
Some EU countries such as France, United Kingdom, and Belgium have also allowed the aggregated load to participate in demand-response programs by allowing both electricity retailers and independent aggregators to work together. Countries such as Slovenia and Poland have opened their power markets to individual demand response alone.
DSO becomes market makers for DERs
Due to its fluctuating supply, DERs could be problematic for the stability and reliability of the distribution network. A decentralized platform by the DSOs can enhance coordination between DSO and TSO and in effect avoid congestion, and defer grid reinforcement investment costs.
In France, an aggregator Voltalis supports their TSO when the network is congested. A US TSO Pennsylvania-New Jersey-Maryland (PJM) has tapped into EVs and stationary batteries for frequency regulation.
Advanced metering infrastructure
The combination of smart meters, IoT, network remote control and digitalization, better broadband infrastructure, and EV charging network, has been fundamental for DERs growth in Europe.
DER Benefits and Power Transformation
With over 200 million smart meters rolled out, Europe is well on its way to support a decentralized DER network. One could see a peek into a DER-led transformation in Ireland recently when its grid operator EirGrid. It had a financially rewarding 70% of power generation coming from stored distributed generation with limited intercommunication.
Here is a quick recap of the benefits of DERs:-
For the Power System
- Manage load shifting & peak shaving
- Demand-side flexibility to operate the primary and secondary reserves
- Stabilize the grid with better voltage control
- Ability to managing network congestion
- Improved generation capacity
DER owner benefits
- Short- to mid-term revenue streams
- Lesser Carbon Footprint
- Being a Prosumer
For a DER Future
Energy Networks Australia forecasts Australians would pay 30% lower electricity bills in the coming years because of its early push for DERs. Their electricity sector too could achieve zero net emissions. The partnership with Tesla has resulted in arguably the largest VPP, with a projected cost of $64.17m.
Is Europe equipped well for a DER future? Do we have interoperable smart grids, distribution systems, and communication protocol to name a few, to increase our DER assets? How can we make way for a robust framework in place so that we don’t have regressive instances such as Spain’s Sun Tax?
We are bringing the European experts for a clear vision on DER for Europe. Join the dialogue that brings the best in the industry — experts from Vattenfall, TenneT, Scottish and Southern Electricity Networks for insights on the latest developments in DER in Europe.