How Microgrids and DERs Pitch in During Heatwaves to Support the Grid–and Earn Income

From June 23 to June 26, when the Northeast and Midwest experienced record high temperatures, Scale Microgrids kept all its microgrid customers in the region powered, offset customers’ demand by 86% and reduced demand by 9.1 MW, freeing up much-needed power for the grid.

During that time period, the company’s microgrids responded to eastern U.S. grid operator PJM’s Emergency Load Response Program event, said Spencer Bernstein, senior director, client success at the company. 

For one customer, Scale Microgrids met its commitment to PJM to reduce capacity, cutting the customer’s demand by an average 4.3 MW, he said.

Over the same time period, Bloom Energy’s microgrids–which can include fuel cells, solar, wind, energy storage and combined heat and power systems–supplied over 5 GWh of electricity across the region, said Bala Naidu, vice president of energy transition at Bloom Energy.

The value of DERs during extreme weather

Unlike centralized power plants that move electricity across long distances, distributed energy resources (DER) supply power closer to where it’s used, which reduces transmission losses and provides resilience when the grid goes down. In addition, the resources are often renewables, which lowers emissions, especially during energy emergencies when many forms of generation are cranking out power–and in some cases, pollution.

“To truly fortify our electricity grid for future instances of extreme weather, we must diversify beyond large centralized plants and embrace distributed energy resources,” Naidu said.

When Scale Microgrids’ customers took part in PJM’s Emergency Load Response events, the customers earned income by scaling back power consumption, Scale Microgrids’ Bernstein said.

DERs earn income during energy emergencies

Not only do microgrid operators earn income. Companies that manage thermostats, electric vehicles (EV), solar, storage and appliances also are compensated–and pass some of the revenue to their customers.

On June 24, during the heatwave, EnergyHub, a DER management system provider, controlled over 1 million devices, providing more than 900 MW of load reduction in a 2-hour timeframe through 80 utility programs.  In this case, utility customers shifted their load to either before or after utility peak hours, said Paul Hines, vice president, power systems at EnergyHub.

EnergyHub manages batteries, smart thermostats, EV chargers, solar and other DERs.

Through a program in Massachusetts, EnergyHub’s customers are paid $50 to agree to have the utility change the setting of their thermostats when the utility system is stressed, Hines said. They have the option of opting out of specific events.

“Our programs usually have fixed incentives so there’s no uncertainty,” Hines said. “Each utility has different parameters based on the local economy.”

Another DER aggregator, CPower, has helped out the grid for years, generating revenue for its customers.  Since 2015 CPower has paid its customers about $1.2 billion in grid revenues. In one week during June, CPower customers provided about 18,500 MWh of energy to meet peak demand needs through 120 dispatches in the PJM, NYISO and ISO-New England systems. 

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Energy service company Budderfly provides a different version of DER management. It controls equipment at 7,500 locations across the country, many medium-sized commercial establishments such as restaurants and gyms. The company installs and owns thermostats, refrigeration equipment, lighting and other gear that can lower a site’s energy usage during demand response events, said Beth Crouchet, Budderfly’s director of energy markets.

The company also adds and operates solar and batteries for demand and emergency response events called by utilities and independent system operators (ISO), It offers PV into capacity markets such as the New England ISO. It also participates in PJM, California ISO and Southwest Power Pool markets, she said.

Giving to the grid while keeping utility customers comfortable

Customers generally sign up with Budderfly because they want to earn revenues, Crouchet said.

“We’re optimizing programs in a way that customers don’t notice,” she said. “People think they have to be uncomfortable in demand response events; the term is scary. But if you optimize a site and understand its load profile, you can give to the grid without taking from the client.”

As heatwaves and storms become more intense and frequent as a result of climate change, more utilities and system operators are offering compensation  through programs like California’s Emergency Load Reduction Program and PJM’s Emergency Load Response Program.

The DER industry’s hope is that utilities and system operators will offer more programs   and DERs will become even more important to stabilizing the grid—and generating income for utility customers.