Looking at Microgrids a New Way with DERMS

May 10, 2019
Who benefits from a microgrid? The host or the broader grid? And therefore who pays for it? This is a daunting question for policymakers, and its answer may lie in technology, specifically DERMS.

In an interview leading up to Microgrid 2019, Siemens’ Sacha Fontaine describes how microgrids and DERMS will shape the grid of tomorrow.

If microgrids were purely backup power, it would be easy to determine who benefits from them: clearly the customers who are spared from power outages.

Sacha Fontaine, Energy Solutions Director, Siemens

But grid-connected microgrids do more than keep the lights on for their hosts. They also can foster health for the broader grid in a range of ways, such as supplying energy, ancillary services and demand response, reducing carbon or integrating renewable energy.

So who exactly benefits from all of this? It’s an important question because who benefits determines who pays. If the microgrid host — maybe a business park, community center, or fueling station — solely benefits  than it’s unfair to ask all utility ratepayers to cover the costs. On the other hand, if ratepayers benefit through grid strengthening, it’s unfair to ask the host to shoulder the entire financial burden.

State regulators grappled with the problem and come up with different answers. In Arizona and Illinois, public utility commissions approved recovery of costs from all ratepayers for certain microgrids; in Maryland regulators rejected the idea.

But the answer may lie not in policy debate but more in technology, as Sacha Fontaine, energy solutions director at Siemens Digital Grid, pointed out in a recent interview. Siemens‘ Distributed Energy Resource Management Systems (DERMS) offers a new way of thinking about microgrids and other forms of distributed energy.

Defining DERMS

First, what are DERMS? Definitions vary, but for Siemens it is integrated software and hardware that allows utilities to visualize, automate and manage distributed energy assets on a system, including those located on customer sites. With such a wide view and control, utilities ensure system safety as new distributed assets attach to their grids. DERMS allow utilities to manage distributed energy and other assets so that they work together for maximum benefit to the grid, whether to lower costs, reduce emissions, improve efficiency, add resiliency or achieve another goal.

“This is beyond the traditional enclosed kind of microgrid where it’s owned by an industrial and commercial customer, and there’s no communication back and forth, therefore no visibility,” said Fontaine.

Watch Sacha Fontaine discuss DERMS in an interview at Microgrid 2019 with Elisa Wood

DERMS creates a “symbiotic relationship” between utility and customer, Fontaine said. The host or customer has microgrid backup power and accrues other benefits. When the microgrid is not in use by the customer, it serves the grid through utility management. “Really what you’re doing is you’re letting them use their asset to play in a much larger market,” Fontaine said.

Since the utility is able to manage the microgrid with DERMS to serve not only the host, but the entire system, the question disappears about who benefits. Everyone does.

Scope of DERMS. Courtesy of Siemens

“That’s what DERMS allows that a traditional a microgrid wasn’t able to do. That’s the progression we’re seeing going forward in the industry,” he said.

The utility also views the microgrid differently from a business perspective. The microgrid becomes an asset as opposed to “load lost,” Fontaine said.

But why would a microgrid host want to participate in this kind of program? As Fontaine sees it, the customer must be incentivized, possibly via direct cost relief from the utility for participation or a special utility rate that would offer the customer a degree of price stability. Fontaine noted that such a rate would have to offer more cost savings than what the microgrid host could garner from managing the microgrid solo. For example, if the microgrid host intended to use the asset to reduce its demand charges, the tariff would have to beat those savings.

DERMS and microgrid clusters

DERMS visualization and management grows in importance as microgrids move from single entities into clusters — more than one microgrid connected and interacting to share services. 

The microgrid cluster idea is cutting edge and one that Siemens is pursuing in partnership with Commonwealth Edison. The Chicago utility is integrating a microgrid in the Bronzeville neighborhood with another that is operated on the nearby campus of the Illinois Institute of Technology. ComEd selected Siemens software for the project, what it expects to be the first utility microgrid cluster in the world.

Adding microgrid clusters to the grid promises to multiply the benefits. At the same time, it heightens complexity, making all the more important the kind of visualization and management afforded by DERMS.

Illinois isn’t alone in considering the clustering concept. As Puerto Rico attempts to rebuild its grid with an eye toward the future, its utility is looking at dividing the island into eight minigrids. Designed by Siemens, the plan calls for clustering the minigrids to act alone or in concert, depending on what’s most needed at the time.

“We really are seeing a progression where we’re moving beyond the traditional microgrid story to that of a cluster and then DERMs,” Fontaine said.

DERMS and blockchain

The DERMS story has another twist, as well, which involves the use of blockchain in microgrids. Siemens is working with LO3 Energy on a blockchain pilot project for the Brooklyn Microgrid. In this case, DERMS takes on a slightly different job. Rather than just broadly visualizing the assets on a utility system, it would dive deeply into visualzing customer energy transactions, the peer-to-peer trading that characterizes a blockchain microgrid.

Of course, microgrids aren’t the only distributed resources that benefit from DERMS. For example, Fontaine pointed out that the platform can be used for solar, demand response, energy efficiency, aggregations and virtual power plants.

In the end, it’s just a matter of giving the utility better visibility into its new and changing system — even assets on customer premises — and the tools to manage them for the betterment of the system.

Learn more from Sacha Fontaine at Microgrid 2019 in San Diego, where he will participate in a featured panel, “Beyond Islanding: The Well-Connected Microgrid,” May 15. 

About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is an award-winning writer and editor who specializes in the energy industry. She is chief editor and co-founder of Microgrid Knowledge and serves as co-host of the publication’s popular conference series. She also co-founded RealEnergyWriters.com, where she continues to lead a team of energy writers who produce content for energy companies and advocacy organizations.

She has been writing about energy for more than two decades and is published widely. Her work can be found in prominent energy business journals as well as mainstream publications. She has been quoted by NPR, the Wall Street Journal and other notable media outlets.

“For an especially readable voice in the industry, the most consistent interpreter across these years has been the energy journalist Elisa Wood, whose Microgrid Knowledge (and conference) has aggregated more stories better than any other feed of its time,” wrote Malcolm McCullough, in the book, Downtime on the Microgrid, published by MIT Press in 2020.

Twitter: @ElisaWood

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