How to Evaluate Which Distributed Energy Resource Management System (DERMS) Vendor is Right For You

Distributed energy generation is expected to hit a value of $580.8b by 2027, which reflects the broader adoptions of distributed energy resources (DERs) like photovoltaic solar, battery storage, and electric vehicles (EVs). These devices challenge grid operators to meet evolving consumer demands. Fortunately, through a distributed energy resource management system (DERMS) utilities have an opportunity to employ these otherwise disparate devices in demand flexibility initiatives like demand response, managed charging, BYOD programs, virtual power plants, and so much more. These programs can help utilities lower high energy costs, while increasing grid resiliency. So what should utility operators look for in a distributed energy resource management system (DERMS)?

What is a DERMS?

Put simply, a distributed energy resource management system (DERMS) is a control mechanism designed to manage various distributed energy resources. That includes aggregating solar, stored battery assets, wind, EV chargers, thermostats, water heaters, and so much more. A robust DERMS is necessary to develop any of the demand flexibility initiatives necessary to meet decarbonization goals, which in turn creates opportunities for utilities to defray high energy costs during periods of peak demand while enhancing energy security.

The Value of DERMS

Already, the distributed energy resource management system market is expected to reach $750m by 2026, illustrating a larger scale investment in managing distributed energy and with good reason. Distributed energy resources are an increasing market presence, encouraged through legislation like the Inflation Reduction Act or public grants provided by places like the DOE. These DER assets add value through aggregation in a variety of demand flexibility programs. For example, a 2015 report from RMI found that demand flexibility initiatives could help mitigate up to $9b per year in forecasted U.S. grid investments.

For a more modern example of how demand flexibility initiatives can decrease peak demand energy costs while increasing grid resiliency, let’s turn to the National Association of Regulatory Utility Commissioners. According to a NARUC study published in January 2023, “New DF programs can leverage existing technologies to allow customers to modify their behavior in the 129 million buildings that consume 75 percent of U.S. electricity and contribute to 35 percent of annual U.S. carbon emissions.”

What To Look For in a DERMS Vendor

In order to realize any of the demand flexibility strategies we’ve mentioned, a distributed energy resource management system (DERMS) is needed. Beyond the technical specific unique to any distributed energy resource management system (DERMS), there are three basic models that define how they work:

1. Purpose-built DERMS – This style of DERMS platform is a custom built solution for utilities that often requires a large amount of time and resources during development. Because of the potential cost and length of development time, purpose-built DERMS can slow program enrollment and deployment.
2. Vendor-Led Solution – Vendor-led DERMS are third-party solutions that rely on outside parties to manage. Participation in a vendor-led DERMS decreases the potential for the customer engagement between utilities and customers necessary to encourage enrollment and participation. Furthermore, utility program managers lose valuable real-time data, missing out on crucial insights that can drive future demand flexibility strategies. Finally, relying on vendor-led solutions managed by outside parties to conduct demand events can and has led to challenging customer relations, hurting the potential of future engagement.
3. Flexible Self-Service SaaS – A subscription based model, this DERMS platform offers an alternative to both purpose-built and vendor-led solutions. A flexible self-service SaaS is developed by a third-party, but managed by the utility, keeping data and customer relations in-house.

With so many options, how do you choose? To answer that, let’s look at the most common functionalities that utilities request.

Program Stacking

Unfortunately, there is no one-size-fits-all demand flexibility strategy that encompasses the breadth of available options. For example, you might start with a demand response pilot, before scaling later. More importantly, you may need solutions that include managed EV charging, V2G reciprocal charging, BYOD battery or water heater programs, or even a virtual power plant program. Can your distributed energy resource management system (DERMS) work with a variety of program types?

Developing a flexible load solution is necessary to meet the impending demand caused by increased electrification efforts. Given the breadth of available program options, diversifying your energy portfolio helps decarbonization goals, while lowering energy costs and enhancing energy security. Fortunately, as more behind-the-meter assets like DERs are adopted, utilities will have a variety of options to choose from. By employing a DERMS solution that affords the ability to scale and stack existing program types, utilities can future-proof their grid against the influx of DER asset adoptions to come.

Scalability

As mentioned, once a pilot is complete, scaling your program to include more potential is the next objective. Fortunately, with the right distributed energy resource management system (DERMS), scalability becomes a matter of when, not if. Consider a DERMS solution that can grow with your utility operation unique to your specific program objectives, as well as by pairing and developing parallel programs.

Integrations

The success of any program is predicated on device integrations. Developing a device partnership is an involved process, which can limit demand programs to specific device types: the more specific the device type, the narrower your potential audience for program enrollment. A great distributed energy resource management system (DERMS) will feature a robust array of potential device partnerships, and, hopefully, a rich bank of APIs to maximize the value of any program by expediting program deployment and broadening the audience to enrollment.

Evaluating the Right Distributed Energy Resource Management System (DERMS) Conclusion

Investing in demand flexibility is an existential necessity, both to meet the rising demand challenging grid operators worldwide and to maximize decarbonization efforts. With the right distributed energy resource management system (DERMS), utilities can maximize the potential of DERs through proven demand flexibility strategies. Finding a DERMS that is flexible to your needs now, scalable to meet future demands, and managed internally by your team can not only help your operation today, but tomorrow as well.