Distributed energy resources, such as solar, wind and battery storage, are among the largest sources of new electricity capacity in the United States today. As almost 90% of consumers think organizations should do more to reduce their carbon impact, traditional energy generation and distribution methods are being replaced by technologies that decentralize the power grid — known as distributed energy resources (DERs).
These technologies allow consumers and utilities to generate and manage power at the place of consumption, allowing for a built-in alternative to relying on a single energy source. A distributed energy resource is a reliable and cost-effective alternative to traditional power generation, providing significant benefits such as reduced carbon impact, enhanced reliability and empowered communities across the country.
Distributed Energy Resources Overview
A distributed energy resource is a small, modular energy generation and storage technology designed to provide energy where needed. These devices interface with the power grid at the distribution level. As such, they’re often located near substations or power infrastructure. Depending on the application, DERs can serve a single structure or form part of a microgrid at a larger facility such as a military base.
In the modern energy landscape, DERs are essential to meet renewable and zero-carbon objectives. They represent the shift to a clean energy economy and reduce the grid’s reliance on a single energy source. Instead, they allow for multiple energy generation sources close to the area’s intended use, safeguarding the grid from weather disruption and other unforeseen challenges.
DER systems can be used in several ways, from managing energy bills and boosting power reliability to operating independently of the grid and providing power in remote locations.
Examples of Distributed Energy Resources
Distributed generation generates electricity near or at the premises where it will be used. DER examples are already commonplace in many applications, including:
- Renewable energy sources: Solar panels are the most important, but wind-generating units, hydropower and biomass are excellent examples of distributed energy resources, provided they generate and store a minimum of 1 kW of power and no more than 10,000 kW.
- Energy storage systems: Battery storage is a distributed energy resource. Examples include electric vehicle batteries and charging stations.
- Demand response technologies: A demand response technology balances the demand on power grids by using incentives to encourage power usage when demand is lower. These devices have sensors for peak load issues and automatic switching to reduce or divert power. DERs allow utilities to reduce energy consumption.
The Benefits of Distributed Energy Resources Integration
Integrated distributed energy resources provide a range of benefits, including:
Enhancing Energy Efficiency and Reliability
Distributed energy resources can reduce overall energy costs, enabling users to decrease their consumption without impacting the quality of their energy services. DERs generating power on-site eliminate the expense of transmission and distribution infrastructure. Employing DERS in high-load areas can defer or remove the need for additional fossil fuel-based substations, reducing costs for every stakeholder in the system.
One of the principal benefits of a DER system is that it allows for multiple energy generation sources, boosting grid reliability and resilience. The next can kick in if one source fails, minimizing power interruptions. DERs can be used to build microgrids, generating and storing their energy and isolating them from the central grid during an outage. These microgrid systems are crucial in the aftermath of significant weather events, providing power to critical infrastructure like hospitals.
Reducing Carbon Footprint and Supporting Sustainability Goals
Shifting to a decentralized energy system allows utilities and consumers to benefit from reduced energy waste and CO2 emissions. As renewable energy resources could provide 90% of the reductions in CO2 emissions, advanced energy systems like DERs are becoming an increasingly popular solution.
Decentralizing power generation with DERs has considerable sustainability benefits. Incorporating renewables reduces carbon footprint and eliminates the need for long-distance power lines, which disrupt habitats and landscapes.
DERs can be designed to integrate with multiple storage technologies, allowing excess renewable energy to be stored during peak production. Users can access it during high-demand periods or in the absence of renewables, further reducing reliance on fossil fuels.
Existing DER technologies are cost-effective and can harness energy that would otherwise be wasted through combined heat and power systems. The world’s energy demand is likely to grow by 2026, and reducing dependence on fossil fuels is essential to meeting sustainability goals. DERs are a critical asset for enhancing grid flexibility, streamlining the international of renewables, and responding effectively to supply and demand fluctuations.
Empowering Consumers and Businesses
In addition to providing reliable and cost-effective energy solutions for consumers and businesses, DERs are more financially viable than ever. Energy disruptions can be costly and dangerous, and resilient power is a priority for every community, particularly vulnerable populations. They provide consumers with a better quality of life, keeping critical systems available when needed.
DERs also facilitate energy independence. Consumers and businesses can generate their own electricity, reducing dependence on traditional utilities and enjoying more control over energy production. Generating independent electricity or participating in incentivized programs lowers energy bills and, in some cases, even generates income by selling electricity back to the grid.
Income-based efficiency programs, neighborhood microgrids and community programs are all opportunities for DERs to empower diverse groups with control over their energy supply. Deploying DERs also creates local job opportunities and boosts economic growth. The distributed energy sector requires installing, maintaining and manufacturing specialized components, providing opportunities that strengthen local communities and support a more resilient sustainable community.
Grid Integration and Smart Grid Technologies
DERs are often provided as stand-alone solutions, but their value is considerably higher when integrated into smart grids and other energy solutions. Integrating information technology (IT) with operational technology (OT) systems will result in a more integrated technology ecosystem, compounding the advantages for users and utilities.
The Process of Integrating DERs Into the Energy Grid
Grid integration is the next logical step, but for it to be effective, users must thoroughly understand distributed energy resource challenges and the accompanying opportunities.
Most grids must be adapted to integrate DERs and optimize their power. Once successfully integrated, DERs need control and monitoring via an advanced distribution management system (ADMS) to rapidly detect and mitigate disturbances that could lead to power outages. Every utility has a different roadmap for planning and deploying DER integration, although a phased approach often allows operations teams to adjust and familiarize themselves with the new technology.
Reconciling different data models between each system is one of the most significant challenges in successful integration. Working from the same network model is crucial — the ADMS needs to understand where the DER assets are and how they are connected to the distribution grid.
Professional grid engineers are in short supply to handle the integrated power system. As the technology evolves, the next generation of grid engineers needs extensive training to continue driving innovation. They must collect, secure and interpret massive data resources to make informed decisions.
Despite these challenges, transforming the grid from an energy supply to an integrated service platform blurs the lines between producers, consumers and distributors, opening the door for combined DER systems to revolutionize the grid modernization process. DERs fit many grid integration models as they can be tailored to meet precise requirements in various power generation contexts.
How Smart Grids Assist in Facilitating DER Integration
Smart grid technology enables the efficient management of DERs in an integrated system. These advanced electrical grids leverage digital technology to boost efficiency and effectiveness. They support the seamless integration of DERs like solar panels and wind turbines through real-time monitoring and control of energy flow.
Smart grids can communicate with DERs, optimizing their performance and enhancing grid stability by carefully balancing supply and demand. They collect and analyze data, providing utilities with relevant information to make informed decisions and respond to energy consumption or production changes. The technology enhances coordination between DERs and traditional power courses, facilitating viable load management, significantly reducing system losses and maximizing the benefits of DERs.
Another way to operate and better manage DERs is through a distributed energy management resource system (DERMS). These software platforms help coordinate multiple energy sources to ensure they work efficiently together and integrate seamlessly into the larger electrical grid. DERMS consists of a suite of subsystems and components to fit customers’ unique needs.
DERMS and smart grids serve different but complementary purposes in the energy ecosystem. DERMS have specific advantages in certain contexts:
- Targeted management: DERMS are specifically designed to optimize the operation of DERs. They provide specialized tools and algorithms that can enhance the efficiency and performance of these resources.
- Real-time adjustments: DERMS offer real-time monitoring and control of DERs, enabling rapid adjustments based on current grid conditions, demand fluctuations and resource availability.
- Consumer engagement: By managing how DERs interact with consumer energy usage patterns, DERMS can enable demand response initiatives more effectively.
- Adaptable solutions: As the number of DERs increases, DERMS can scale up to manage larger networks of distributed resources without requiring extensive changes to the existing grid infrastructure.
- Reduced infrastructure costs: Optimizing local energy generation and consumption through DERMS may help avoid costly investments in new transmission infrastructure.
The Role of Policies in Supporting the Growth of DERs
The worldwide drive toward sustainable power generation has facilitated significant policy changes. Utilities and consumers can benefit from DERs integration, leveraging several incentives to decentralize the power supply and achieve sustainability goals.
Sustainable power generation is a rapidly evolving area, and policies are changing to facilitate the integration of new and more effective technologies. Monitoring these policies and incentives is essential to ensure compliance and the associated benefits.
An Overview of the Relevant Policies and Regulations
Several U.S. states and local governments are advancing policies to encourage the use of renewable technologies.
- The Energy Policy Act: This act was passed in 2005 and covers almost all aspects of energy production in the U.S. The central goal is to provide tax incentives and loan defaults or guarantees for different types of renewable energy production. It also offers additional loan payments for innovative technologies that generate power without greenhouse gases.
- The Public Utility Regulatory Policies Act (PURPA): Although instituted in 1978, PURPA has renewed significance in today’s decentralization climate. It mandates electrical utilities to purchase renewable energy from smaller-scale producers at reasonable rates, encouraging small-scale businesses to set up renewable energy farms and promoting energy sector diversification.
- Renewable portfolio standards (RPSs): These standards require utilities of all types to generate a certain percentage of their power from renewable resources. They set targets and timelines for renewable energy use, creating a demand for renewable energy systems.
Incentives for Businesses and Individuals
The Inflation Reduction Act is one of the most significant legislative changes in U.S. history, offering funding, programs and incentives to accelerate the country’s transition to a clean energy economy. In line with this legislation promoting more sustainable and decentralized energy options, businesses and individuals can leverage several tax credits and incentives for integrating DERs and other renewable energy sources.
- Investment tax credit (ITC) and production tax credit (PTC): These policies provide taxpayers with a tax credit equivalent to 30% of the cost of purchasing solar panels. An additional 10% credit is available for specific renewable energy projects, provided they meet the criteria. In line with the Inflation Reduction Act, the Clean Energy Production Tax credit will replace PTC and ITC credits after January 1, 2025.
- Environmental justice wind and solar capacity limitations: Under section 48(e) of the Inflation Reduction Act, additional access to clean energy tax credits is available, emphasizing reaching disadvantaged communities that meet specific criteria.
- Home improvements: Individuals can also benefit from various incentives, such as tax credits for energy-efficient home improvements, including appliances, heat pumps and air conditioners.
Many other tax incentives exist at the state level.
How to Choose Distributed Energy Resources for Your Needs
DER systems have much to offer in today’s sustainability-focused climate, and numerous environmental and economic factors make them a worthwhile consideration. If a facility’s energy-producing infrastructure is due for an upgrade, replacing legacy technologies with new, more efficient ones is logical.
Choosing the right DERs for a specific facility depends on several factors. The following steps can facilitate the correct selection:
1. Assess Your Energy Requirements
Businesses and individuals must start by determining their energy requirements and the benefits they will gain through DER integration. A specific problem, such as frequent power interruptions, prohibitive costs or poor energy quality, will often exist. For example, in the event of regular interruptions, the DER system could act as a standby power supply, bridging the gap until your main power supply is restored.
Consider your future energy requirements and the potential for more energy-efficient upgrades and assess the renewable resources at every specific location.
2. Consider the Financial Implications
Innovative technology involves an upfront investment, but various methods exist to suit different budgets. Integrating DERs into an existing grid is often more cost-effective than off-grid options. However, despite off-grid systems requiring a higher upfront investment, they offer more significant cost savings by reducing or eliminating reliance on the grid.
After the initial installation, regular inspections, performance evaluations, maintenance and upgrades are critical to maintain optimized system performance.
3. Navigate the Market for DER Solutions
DER systems and technology should meet the property and user’s unique needs. Depending on the facility, location and budget, users have a vast selection, including photovoltaic cells, hybrid systems, wind turbines and storage devices. Each has strengths and weaknesses, depending on the setting.
4. Work With a Reliable Provider
An experienced, reliable and trustworthy provider will pair the right technology with your unique energy needs, taking the time to understand your challenges and design a unique solution. The right distributed energy resource will align with your energy goals, financial capacity and sustainability objectives. The right provider can help achieve these objectives.
TRC: Pioneering Integrated DER Solutions
One of the hallmarks of a reliable provider is keeping up to date with each wave of power and utility technology. TRC helps you navigate these revolutionary changes while maintaining safe and reliable service delivery. We provide end-to-end solutions for the energy transition, from consulting to field services, so utilities can maintain a more reliable and resilient grid.
Whether undertaking projects to boost reliability in the wake of natural disasters or streamlining data to manage DERs connecting to the grid, we have the expertise to plan and implement system upgrades. As a trusted partner to the utility industry for over 50 years, our distributed energy resources solutions will bridge the gap between your current capabilities and future goals.
Our approach to creating a DER framework includes an assessment to set the baseline and an evaluation of the organization’s goals and requirements. Then, we conduct a gap assessment, creating a clear roadmap to achieve these goals. Our experienced team develops a business case to assess the costs and benefits of execution, determining the most effective strategy for each organization. Our integration services include the planning, program setup and post-production support, streamlining the adoption of your DERs technology strategy.
Partner With TRC for Your DER Needs
Adopting innovative energy technologies such as distributed energy resources has numerous benefits for everyone involved. However, like all innovations, the process involves some challenges. Partnering with experts who understand the rapidly evolving industry can solve these challenges.
Our multifaceted solutions deliver scalability, speed, agility and real-time control, helping you stay agile in a changing landscape. Contact us to learn more about our advanced energy solutions today!
