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The following article is excerpted from our webinar “Harnessing the power of DERMS: Enhancing the grid’s flexibility and reliability,” now available on demand. Click here to access the webinar replay and learn more about how DERMS contributes to a more resilient, sustainable electricity grid.
As distributed energy resources (DERs) continue to expand across the grid, utilities are managing growing complexity at both system and customer levels. From utility-scale solar farms to behind-the-meter assets like home batteries and smart thermostats, DERs are reshaping how energy flows—and how grid operations must adapt.
Distributed energy resource management systems (DERMS) offer a path forward. These platforms enable utilities to monitor, control, and optimize a diverse range of DERs. But not all DERMS are created equal. Depending on a utility’s operational needs and infrastructure, the right approach may lie in a grid-centric system, a grid-edge system, or a combination of the two.
In a recent Logic20/20 webinar, our team explored the evolving roles of grid-centric and grid-edge DERMS, along with the implications for utility strategy, system integration, and vendor selection. Below, we highlight key takeaways from that conversation, offering utility leaders a clearer view of how to align their DERMS approach with long-term business goals.
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Harnessing the power of DERMS: enhancing the grid’s flexibility and reliability
Why the DERMS architecture conversation matters
As utilities navigate the accelerating shift toward distributed energy, decisions around DERMS architecture have taken on new urgency. The rapid expansion of DERs—across both utility-scale and customer-owned assets—is creating operational challenges that exceed the capabilities of traditional grid management tools.
Much of that complexity stems from where and how these resources connect to the grid. Some DERs are utility-owned and sit in front of the meter; others are customer-owned, dispersed behind the meter and outside the utility’s direct control. Managing this range of assets effectively—while maintaining grid reliability, stability, and efficiency—requires a DERMS solution aligned with the utility’s operational model.
This is where the distinction between grid-centric and grid-edge DERMS becomes critical. Each approach is designed to address different segments of the DER landscape. Selecting the wrong fit—or expecting a single system to do it all—can result in misaligned capabilities, unnecessary integration costs, and reduced value from DER investments.
For utility decision-makers, understanding the strengths, limitations, and interoperability of each DERMS architecture is key to building a scalable, future-ready grid. In the sections that follow, we’ll explore how grid-centric and grid-edge systems work, where each excels, and how they can be deployed together to support a more flexible and resilient energy ecosystem.
What is grid-centric DERMS?
A grid-centric DERMS is built around centralized control. These systems are designed to manage distributed energy resources that are utility-owned, front-of-the-meter (FTM), or large enough to play a direct role in broader grid operations. Typical examples include utility-scale solar and wind installations, large batteries, and aggregated DERs capable of participating in wholesale energy markets.
What sets a grid-centric DERMS apart is its tight integration with the utility’s existing operational technology stack. That includes platforms like advanced distribution management systems (ADMS), energy management systems (EMS), and supervisory control and data acquisition (SCADA). This level of integration allows utilities to factor real-time network topology into decision-making, supporting grid-wide objectives like voltage regulation, load balancing, frequency control, and system reliability.
Because grid-centric DERMS operates from the utility’s control center, it offers full visibility into the transmission and distribution network. It enables dispatch of DERs based on current system conditions, market pricing signals, and operational constraints. In this way, it supports both operational goals and regulatory mandates, such as participation in organized markets under FERC Order 2222.
For utilities with a high concentration of FTM assets or those focused on system-level optimization, a grid-centric DERMS provides the functionality needed to manage DERs as integral grid resources. However, its effectiveness depends on the availability of accurate network models and seamless integration across systems—factors that must be considered during planning and implementation.
What is grid-edge DERMS?
While grid-centric DERMS focuses on centralized control of large, utility-owned resources, grid-edge DERMS is designed to manage the growing array of customer-owned, behind-the-meter (BTM) assets. These include rooftop solar, home batteries, EVs, smart thermostats, and other demand-side technologies that increasingly influence grid operations.
Grid-edge systems operate at the periphery of the grid, where energy is generated and consumed by end users. Their primary role is to provide localized control and optimization of smaller-scale DERs—resources that, on their own, may not significantly impact the grid, but when aggregated, can play a meaningful role in balancing supply and demand.
These systems typically interface with distributed energy resource aggregators, advanced metering infrastructure (AMI), and customer energy management platforms. Rather than maintaining a full network model, grid-edge DERMS relies on performance data, status updates, and customer usage patterns to inform control decisions. It also provides real-time data back to the grid-centric DERMS, enabling coordinated operations across the system.
Grid-edge DERMS is particularly valuable in supporting demand response, forming virtual power plants (VPPs), and enabling new customer programs. It empowers utilities to tap into BTM flexibility without needing direct ownership or constant manual intervention. As DER adoption grows, this edge-layer intelligence becomes essential for maintaining grid stability.
For utilities with increasing BTM penetration—or those looking to expand customer participation in grid services—a grid-edge DERMS offers the visibility and control needed to unlock distributed flexibility at scale.
How grid-centric and grid-edge systems work together
While grid-centric and grid-edge DERMS are distinct in scope and functionality, they are most powerful when deployed in coordination. Utilities facing increasing DER complexity often find that a hybrid approach—combining centralized oversight with localized control—offers the greatest flexibility and resilience.
In this integrated model, the grid-centric DERMS serves as the system-wide coordinator, maintaining visibility into network conditions and issuing high-level control signals. The grid-edge DERMS, in turn, acts as an aggregator and local optimizer, managing groups of smaller, customer-owned DERs and enabling them to respond to grid needs in real time.
Consider a scenario involving rooftop solar. Individually, these systems are difficult for a grid operator to control. But through a grid-edge DERMS, a utility can aggregate thousands of installations into a virtual power plant. The grid-centric DERMS can then dispatch this aggregated capacity—just as it would a utility-scale resource—to manage voltage, respond to peak demand, or resolve a localized constraint.
This coordination requires a clear data exchange between systems. Grid-edge DERMS sends forecasting data, asset status, and dispatch confirmations upstream, while receiving instructions, pricing signals, and constraint information from the grid-centric platform. The result is a feedback loop that allows both systems to act on shared insights and deliver value across the grid.
As DER adoption continues to grow, the ability of grid-centric and grid-edge DERMS to work together will be essential. Utilities that plan for this interoperability from the outset will be better positioned to adapt to evolving market conditions, regulatory requirements, and customer expectations.
Key considerations for selecting a DERMS strategy
Choosing the right DERMS architecture is not just a technical decision—it’s a strategic one. For utilities, aligning platform capabilities with operational needs, regulatory context, and long-term grid strategy is critical to unlocking the full value of DER integration.
Start with your use cases. Every utility has a unique mix of grid challenges, customer programs, and DER adoption patterns. Some may need to manage front-of-the-meter solar and battery storage; others may prioritize behind-the-meter demand response and EV charging. Defining and prioritizing these use cases helps determine whether a grid-centric, grid-edge, or hybrid DERMS approach is best suited to your environment.
Evaluate vendor alignment. Not all DERMS platforms are created equal. Some vendors specialize in centralized control of utility-scale assets, while others are built to manage distributed, customer-owned resources. Few can fully deliver both. Understanding a vendor’s implementation history, system interoperability, and roadmap maturity is essential when narrowing options.
Consider your integration landscape. Grid-centric DERMS typically require deep integration with systems like ADMS, EMS, and SCADA, while grid-edge systems must connect to AMI networks, DER aggregators, and customer portals. Assessing your internal IT architecture—and your ability to support data exchange between systems—is a key part of the planning process.
Plan for scalability. DER adoption is only going to accelerate. Utilities need platforms that can scale with changing load patterns, new regulatory requirements, and evolving customer behaviors. That means looking for flexible, modular systems that can adapt without costly reconfiguration.
To support utilities through this process, Logic20/20 recommends a phased, strategy-first approach:
- Conduct a needs assessment grounded in business and operational goals
- Define and prioritize DERMS use cases based on value, feasibility, and regulatory alignment
- Develop a capability maturity model to map current and future-state requirements
- Create a clear roadmap for strategy, vendor selection, and implementation
- Support integration and rollout with a focus on near-term ROI and long-term flexibility
This approach enables utilities to move with clarity and confidence—whether launching a first DERMS initiative or scaling an existing one.
