What Is DERMS and How Can It Help Utilities?

A distributed energy resource management system, or DERMS, is a software platform used to manage a group of distributed energy resource (DER) assets—such as rooftop photovoltaic solar panels, behind-the-meter batteries, or a fleet of electric vehicles—to deliver vital grid services and balance demand with supply to help utilities achieve mission-critical outcomes.

As a guest on The POWER Podcast, Seth Frader-Thompson, CEO of the DERMS provider EnergyHub, said aggregating DERs can offer a number of benefits to power companies. For example, they may be used to support frequency or voltage on the grid, shift load, or provide emergency demand response. Although many utilities manage DERs through a relatively manual process today, Frader-Thompson said some companies are shifting to a more automated framework, in which computers are identifying issues in the system, proactively forecasting how DERs could be manipulated to mitigate the problem, and executing the strategy.

“The utility grid operator does not want to think about a million individual batteries, rooftop solar systems, electric vehicles, smart thermostats, industrial process controllers, etc. They essentially want a virtual power plant and sort of a virtual knob for that plant that they can operate,” Frader-Thompson said.

EnergyHub’s Mercury DERMS uses advanced machine learning-based artificial intelligence to manage resources. “We have invested many millions of dollars in a bunch of artificial intelligence that allows the system to take 100,000 resources that happen to be clustered around a certain city and stitch them together in a closed-loop way into something that allows the utility to sort of specify exactly the outcome they want,” said Frader-Thompson. “The DERMS is basically built to allow them to do either something very specific, or something very general, and kind of dial it into exactly what works for them.”

In addition to complicating grid operation, the growth in DERs would seem to pose a business challenge for utilities too. For example, if more customers are generating their own power, that means the local electric company is selling less. But Frader-Thompson suggested DERMS could provide new revenue streams for power companies to tap into.

“There are other ways to make money and the concept of a DERMS creating grid services from a big group of aggregated DERs is in and of itself another revenue opportunity for utilities,” he said. “Increasingly, you’re seeing regulators say, ‘You know what? This is really valuable to the grid. In many ways, this is preferable to ratepayers—to the community—over a traditional, capital-intensive infrastructure upgrade.’ And you're seeing those regulators say, ‘You—the utility—are able to make a regulated rate of return on that.’ ”