Platform
Grid-Edge DERMS
Customer Engagement
Demand Forecasting
BYOD
Customer Engagement
Demand Response
EV Charging
Incentive Processing
Program Design
Program Management Automation
Flexible Dispatch
Virtual Power Plants
API Integrations
C&I
To meet rapidly increasing demand, utilities rely upon demand flexibility programs like virtual power plants (VPPs), demand response, and EV charging to conserve and redistribute energy to where and when it’s needed most. Demand flexibility programs leverage distributed energy resources (DERs) like solar, battery energy storage systems (BESS), electric vehicles, EVSE chargers, and smart home devices like thermostats or water heaters. These programs are realized through a distributed energy resource management system (DERMS), which uses APIs and device integrations to aggregate and control otherwise disparate DERs. So, with such a complicated ecosystem of interconnected and potentially cross-functional devices, is it difficult to change DERMS vendors?
The State of the Energy Industry
According to the U.S. Energy Information Administration (EIA), U.S. electric consumption is forecast to grow by 1% this year and 3% next year. This increase is attributable to the increased load demand from AI and data centers, supply chain and tariff challenges that decrease opportunities for already expensive infrastructure upgrades, and the erratic weather patterns and temperature extremes driven by climate change. In the Energy Transition Outlook for North America 2025, the DNV projects that retail electricity prices are likely to increase by 22% before inflation over the next decade.
Types of DERMS Vendor
There are numerous measures of evaluating the correct DERMS for a utility operation, including potential use case, program size and scalability, and device specifics. Likewise, DERMS models may be broken out by type, including:
- Purpose-built DERMS – A DERMS solution uniquely tailored to a utility’s potential needs.
- Vendor-Led Solutions – A third-party solution wherein vendors—not utilities—manage customer programs, which can lead to trouble and/or damage customer engagement opportunities.
- Flexible Self-Service SaaS – This model is intentionally modular to allow utilities to select the types of DERMS tools they need, while managing their end-user relationships and controlling all customer data to better inform demand flexibility initiatives and demonstrate ROI.
Beyond use-case or model, just as there are many types of DER assets, not all DERMS are the same. Grid DERMS manage utility-owned assets like solar or battery installations. Grid-Edge DERMS manage behind-the-meter DER assets found in places like residential, commercial, and industrial properties. When deployed in unison, Grid and Grid-Edge DERMS can create a holistic load shifting ecosystem that manages all enrolled DERs.
– Syd Bishop, Sr. Content Specialist, Virtual Peaker
Irrespective of type, selecting the right DERMS for your utility operation requires significant buy-in from stakeholders that can include internal teams, utility leadership, member boards, regulatory acceptance, and more. Put simply: these aren’t small choices to make.
Don’t Get Trapped By The Sunk Cost Fallacy
One significant concern in considering a transition between DERMS is the sunk cost fallacy. The sunk cost fallacy is an economic concept wherein potential customers are apprehensive about purchasing or transitioning to something new due to previous investments. Put differently, the sunk cost fallacy describes the phenomenon wherein a buyer is anxious to make a new purchase because they’ve already spent significantly on a different product.
Selecting the Right DERMS Vendor
As noted, selecting the right DERMS vendor for a utility operation involves finding the optimal solution to meet strategic goals while securing stakeholder approval. There are many reasons why a utility may have in selecting a DERMS or new DERMS vendor. For example, utilities may want broader opportunities for OEM relationships and integrations, specialized integrations like the NISC integration, the ability to group programs across parent/subordinate utility relationships, such as distribution to generation and transmission cooperatives, and, obviously, cost effectiveness. In considering a transfer between DERMS vendors, utilities may consider:
- Program design – Ensure that your program is firmly established, from selecting devices and dispatch strategies to incentives.
- Collecting data – Will your utility lose valuable customer data during the change? Will they be able to seamlessly deliver incoming data with the old?
- OEM Setup – Will the organization set up your OEMs for you, transferring between platforms?
Now, let’s look at some more practical concerns that may challenge transitioning between vendors.
Will This Impact Current Customers/Members That Are Already Part of the Program?
Generally speaking, utilities have used the same type of DERMS to manage their demand flexibility initiatives for years. Customer impact is always a vital concern for any demand flexibility program. For example, customers were angered when one utility locked them out of their thermostats, which in turn influences future customer behavior: how likely are they to want to stick with a program that works against them?
– Syd Bishop, Sr. Content Specialist, Virtual Peaker
Utilities should consider a DERMS option that minimizes customer impact through re-enrolling customers on the back-end, and communicating updated terms and conditions. The main takeaway: make sure everything happens behind the scenes.
How Long Will It Take To Onboard New Staff
Onboarding is the process of training your staff on how a solution functions. Because DERMS manages many devices and customer relationships, that may mean ensuring that staff know how to run events, enroll customers, and more. That onboarding process is subjective in length based on the scope and scale of the project. For example, if a DERMS platform features additional resources like forecasting or customer engagement software, staff will need education on how those features function.
Furthermore, it’s worth considering a DERMS provider that may provide client or customer support and that can provide training materials. According to a 2024 study, the electric utility employee turnover rate (including retirements) is roughly 20%, and 7-9% higher among cooperatives: the likelihood of employee turnover is omnipresent in the industry, so preparing accordingly during the planning stage with a DERMS provider is instrumental in securing seamless transitions, whether between DERMS or in staff turnover.
How Long Will The Transition Take?
An operational concern, determining the duration of any potential transition is critical to ensuring that your demand flexibility programs are primed to run during periods of peak demand. As such, when selecting a DERMS vendor, utilities should consider the number of supported OEM devices and API integrations library, which directly informs any potential time frame. Furthermore, consider training, both now and in the future, as part of any transition, and seek DERMS vendors that can deliver timely transitions.
Changing DERMS Vendors Isn’t As Hard As You Think: Conclusion
DERMS have moved beyond a might-have to a must-have for any utility during the energy transition. Demand flexibility programs like virtual power plants (VPPs) aren’t just 40-60% of the cost to build a new power plant, but if scaled, can supply 20% of U.S. peak demand by 2030. Is it time for a new DERMS vendor? Remember to consider both the short and long-term potential impacts to customers, the duration of the transition and training, and the long-term benefits of any transfer. Keeping customers first and the process simple can lead to a better DERMS solution to shift load to off-peak periods of usage to minimize demand, while enhancing grid resiliency and lowering operational costs.
Do you have the right Grid-Edge DERMS for your needs?
