DERMS implementation: Driving grid value through flexible interconnections

4-minute read

Quick summary: How utilities can maximize grid efficiency and enhance grid flexibility with flexible interconnections, a DERMS use case that improves energy delivery, accelerates onboarding, and strengthens grid resilience

A strategic approach to implementing distributed energy resource management systems (DERMS) use cases is essential for ensuring measurable financial and operational benefits. U.S. distributed energy resource capacity is projected to grow by 217 GW through 2028, accounting for 70 percent of new generation additions. Careful planning enables utilities to integrate DERs efficiently, identify optimal pilot locations, and maximize both grid flexibility and financial returns.

One compelling example is the implementation of flexible interconnections, which allows utilities to assign grid capacity dynamically using real-time conditions rather than static planning limits. Below is a deeper dive into how this use case can be executed successfully, including key steps and value drivers backed by industry data.

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Flexible interconnection example: Implementation strategy

Step 1: Define business value drivers

Defining business value drivers is a crucial first step in the implementation process, as it establishes a clear understanding of the benefits and goals associated with the use case. This alignment ensures that DERMS implementation supports broader organizational objectives and delivers measurable value.

For example, a utility might prioritize improving grid stability and increasing revenue through enhanced energy delivery. By understanding these drivers, the utility can tailor the implementation strategy to achieve these specific outcomes.
The most significant value drivers for flexible interconnections include:

Incremental energy delivery

Incremental energy delivery plays a key role in maximizing grid flexibility. By utilizing additional headroom, existing sites near capacity can deliver more energy without costly infrastructure upgrades. A utility in California, for instance, used flexible interconnections to increase solar farm output during peak demand, reducing the need for new infrastructure investments.

Accelerated onboarding

Accelerated onboarding allows new customer sites to be connected to the grid sooner, unlocking their total energy delivery potential. This speeds up revenue growth for utilities and allows customers to benefit from their energy resources sooner. By streamlining the integration process and reducing administrative and technical barriers, utilities can significantly reduce the time it takes to bring new sites online.

For instance, a utility in Texas implemented flexible interconnections to expedite the onboarding process for new commercial solar projects, resulting in quicker revenue generation and improved customer satisfaction.

Enhanced grid resilience

Enhanced grid resilience is another crucial value driver for flexible interconnections. By dynamically managing capacity based on real-time grid conditions, utilities can better respond to fluctuations and disruptions in the energy supply. This helps maintain grid stability and reliability, even during peak demand periods or unexpected events.

For example, a utility in Florida utilized flexible interconnections to enhance grid resilience during hurricane season, ensuring continuous energy delivery and minimizing outages. This proactive approach not only improves operational performance, but also strengthens customer trust and confidence in the utility’s ability to manage the grid effectively.

Step 2: Quantify value streams

After defining business value drivers, the next step is quantifying the value. Developing frameworks to measure financial and operational benefits enables utilities to justify investment decisions and prioritize high-value use cases.

In quantifying value streams, two specific categories of value should be considered:

• Incremental value can be calculated by determining the monetary benefit derived from serving additional capacity at existing sites without extensive upgrades. Historical data and predictive modeling can be used to estimate potential revenue gains. Developing case studies that showcase successful implementations of flexible interconnections can also highlight the incremental value achieved.
• For total value, utilities should project the revenue generated from bringing new sites online sooner and delivering full capacity earlier than traditional methods allowed.

A comprehensive evaluation that includes both incremental and total value will provide clear evidence of the utility’s return on investment and demonstrate the financial and operational benefits of flexible interconnection.

Step 3: Map strategic locations

After defining business value drivers and quantifying the value, the next step is to identify optimal locations for pilot programs and broader deployment. This step ensures that the rollout of DERMS is targeted and effective, maximizing both operational and financial benefits. By conducting a detailed mapping process, utilities can strategically choose locations that offer the highest potential for value.

Key considerations in strategic location identification include:

DER concentration analysis

This process begins with distributed energy resource (DER) concentration analysis, which involves collecting data on DER penetration across various programs. By performing geospatial analysis, utilities can pinpoint areas with high DER concentration.

Grid capacity need assessment

Next, a grid capacity need assessment is conducted to identify locations where grid deficiencies create the highest potential for value. Developing plans to enhance capacity in these critical areas is essential.

Resource-need alignment

Resource-need alignment is achieved by overlaying DER concentration data with grid constraints. This helps prioritize locations that offer the greatest operational and financial benefits. Finally, pilot program locations are selected based on this overlay analysis, ensuring targeted and scalable DERMS expansion.

Process-focused implementation drives successful outcomes

Implementing DERMS use cases requires a structured approach. By defining business value drivers, quantifying value streams, and strategically mapping locations, utilities can optimize operational efficiency and financial returns. Flexible interconnections deliver benefits like incremental energy delivery, accelerated onboarding, and enhanced grid resilience. As utilities navigate the evolving energy landscape, adopting these strategies will help build a more resilient, adaptable grid.