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Taking demand response to the next level through DERMS

As the energy and IOT landscapes mature, there is an opportunity for utilities to expand existing demand response (DR) programs by forming third-party partnerships with distributed energy resource management systems (DERMS) providers. These companies are capable of managing a wide range of connected and distributed energy resources (DERs) for a more flexible grid and can deliver the resources that utilities need to more effectively engage with customers.

Even during times of great uncertainty, partnerships between utilities and DERMS providers can build on the success of existing utility DR programs to create better utility and customer outcomes for a healthier grid. 

DR programs today

Many smart thermostat models are available on the market today at various price points, and users are interested in using these devices to participate in DR programs. According to a recent Parks Associates report, 42 percent of current smart thermostat owners would allow a utility to adjust their thermostat in order to save energy. 

Utilities have successfully deployed DR programs alongside smart thermostat rebates for years, but these programs still only tap into a fraction of the program’s full potential. That said, it is clear that existing DR programs are making an impact and have saved a significant amount of energy for customers and the grid.

Utilities reported an enrolled DR capacity of 20.8 GW and a dispatched capacity of 12.3 GW per SEPA’s 2019 Utility Demand Response Market Snapshot. The report indicates that DR could deliver 200 GW of economically-feasible load potential in the U.S. by 2030, and new tools and technologies can help advance both mass market (residential and small business) and C&I programs. 

Challenges of large-scale deployment

Most utility DR programs target a single customer class or grid asset, so despite proven customer interest and significant savings so far, utilities are still struggling to increase the scale of their DR programs and effectively boost customer participation.

There is precedent for broader, nationwide engagement. In 2017, 750,000 Nest thermostat owners participated in a nationwide DR event during the solar eclipse, which reduced demand on the energy grid by 700 MW, helping to offset the 5 percent of the solar energy lost nationwide during the eclipse—offering yet another proof point of customers’ appetite for participating in DR. Initiatives at this scale are nearly impossible for a single utility to deploy given the wholesale market structure, however, this is where DERMS partners really shine!

DERMS providers open new opportunities for next-level DR programs

Electric and gas utility partnerships with DERMS providers to leverage multiple asset types opens up and engages more customers to enroll—especially as the energy landscape continues its evolution. 

The energy landscape now includes assets like energy storage, solar, EVs and smart thermostat-enabled DR. DERMS companies can help utilities effectively manage and leverage all of these assets to optimize grid performance by streamlining DR program enrollment and using a wide range of assets to deliver dispatchable DR to many different customer groups.

New software, which DERMS can help to deploy, enables utilities to leverage these various resources to create a portfolio of integrated DR programs. According to the same SEPA market report cited earlier, these programs provide more savings, appeal to more customers and offer more grid resources that can be called on more frequently, due to their flexibility, when compared to traditional DR programs.

In the age of online marketplaces, DERMS providers can also facilitate a modern shopping experience for customers to purchase hardware-based DERs. They can deliver personalized offerings by targeting groups like the low-income market, increasing the ability of these groups to obtain smart devices that ultimately save money and energy.

Resources like sophisticated online marketplaces help streamline product purchases, DR program enrollment and rebates within the checkout process to increase enrollment and deliver cost savings. 

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DERMS framework supports the utility industry

If utility leaders are open to partnering with DERMS providers, they will have the resources they need to integrate additional, maturing DERs onto the grid, which leads to more diverse portfolios that are better suited to meet our future energy needs. On the customer engagement side, DERMS can help utilities better connect with new and existing users who are drawn to the streamlined DR enrollment process, cost savings and upgraded online purchasing experiences.

DERMS providers have the ability to unlock the full potential of DR programs and tap into technologies that are already in place with existing utility programs. Through these partnerships, utilities will be able to manage demand with more flexibility and efficiency than ever before, while improving resilience and avoiding expensive infrastructure investments.