Distributed energy resources

Distributed energy resources (DER) refers to often smaller generation units that are located on the consumer’s side of
the meter.

Examples of distributed energy resources that can be installed include:

•roof top solar photovoltaic units

•wind generating units
•battery storage
•batteries in electric vehicles used to export power back to the grid
•combined heat and power units, or tri-generation units that also utilise waste heat to provide cooling
•biomass generators, which are fuelled with waste gas or industrial and agricultural by-products.
•open and closed cycle gas turbines
•reciprocating engines (diesel, oil)
•hydro and mini-hydro schemes
•fuel cells.

Many of these technologies are not exclusively found "behind the meter".

Distributed generation (also known as embedded or local generation) is the term used when electricity is generated
from sources, often renewable energy sources, near the point of use instead of centralised generation sources from
power plants.

See infographic: What is embedded generation?

Benefits of distributed energy resources

Distributed energy resources have the potential to provide consumers with a range of benefits:

•Consumers who install DER units may be able to reduce the price they pay for electricity or may obtain
improved reliability outcomes.
•DER may also help reduce the cost of power system augmentation, helping to reduce the overall cost of supply
faced by consumers.
•Increased penetration of DER may also help reduce the overall emissions intensity of the NEM, by displacing
other more emissions-intensive generation.

While DER provides a range of benefits, it also includes a range of relatively new and developing technologies. Power
systems and networks need to adjust to the effects of these new technologies. It is important that these initial issues are
recognised and addressed, in order to ensure that the benefits of DER can be fully realised.

The AEMC is addressing these issues through a number of processes. Generally, our approach seeks to promote the
development of DER where it represents the most efficient and lowest cost solution to meeting community demand for
electricity services. We are also seeking to identify how the full value of distributed generation can be recognised and
captured across the market supply chain.

DER units are classified according to their size (installed capacity).

CLASSIFICATION TECHNICAL DEFINITION TYPICAL INSTALLATION

Less than 2kW and connected to low
MICRO Rooftop solar PV
voltage network
Greater than 2kW and up to 10kW Fuel cells, combined heat and power
MINI
single phase or 30kW three phase systems
Greater than 10kW single phase or
SMALL 30kw three phase but no more than Biomass, small hydro
1MW
Greater than 1MW but no more than Biomass, hydro, local wind generating
MEDIUM
5MW units
Co-generation, hydro, solar thermal.
LARGE Greater than 5MW Many wind farms are distribution
connected

WHAT ARE DISTRIBUTED ENERGY RESOURCES

AND HOW DO THEY WORK ?
Nov 04, 2021 by Cummins Inc., Global Power Technology Leader

Distributed energy resources, or DERs, are small-scale electricity supply or demand resources that are
interconnected to the electric grid. They are power generation resources and are usually located close
to load centers, and can be used individually or in aggregate to provide value to the grid.
DERs include a variety of physical and virtual assets. Physical DERs are typically under 10 MW in
capacity and can consist of diesel or natural gas generators, microturbines, solar arrays, small wind
farms, battery energy storage systems, and more. They can be owned and operated by the electric
utility, by independent power producers or by local businesses. The utility directs their operation in the
same way that it controls the operation of large central power plants, requesting starts and stops as
needed.
You can read more about the types of distributed energy resources ranging from solar to power
generators.

WHAT ARE VIRTUAL DISTRIBUTED ENERGY

RESOURCES (DERS)?
Understanding virtual DERs requires a moderate amount of abstraction. Virtual DERs are made up of a
collection of physical assets which are aggregated together and made available to the utility. From the
utility’s perspective, they appear as a single resource, like a power plant. After all, what is the
difference between one-hundred solar arrays of 10 kW each and a single solar farm with 1000 kW of
solar capacity?
Virtual DERs can be made up of assets of a single or mixed type. For example, behind-the-meter diesel
generators, solar panels and batteries can be aggregated, forming a virtual DER. The resulting virtual
DER thus possesses its own specific operational profile. When virtual DERs aggregate several
megawatts of capacity, they are sometimes called virtual power plants (VPPs).
You can read more about the benefits of distributed energy resources ranging from transmission
deferral to generation balancing.

HOW DO DISTRIBUTED ENERGY RESOURCES (DERS)

WORK?
Demand-response resources are commonly aggregated as part of a virtual DER.
Demand response resources are electric loads which can be shaped, reduced or disconnected on
demand. In some regions, for example, homeowners have the option to participate in demand-response
programs. The utility or the program manager installs remotely controlled disconnect switches on the
air conditioning (AC) unit or electric water heater of participating homeowners, for example. Each
individual AC unit or water heater can thus be switched off as needed to reduce the load on the electric
grid. Larger virtual DERs aggregate several hundred or thousand homes. The result is a resource
comparable in size and function to a small power plant.
After all, if the objective of the utility is to ensure that electricity generation matches demand at all
times, then reducing demand has the same effect as increasing generation. During heat waves, for
example, demand-response resources can deliver hundreds of megawatts of relief to a regional grid,
averting rolling blackouts such as those ordered in California in 2020.

FEATURES OF DISTRIBUTED ENERGY RESOURCES

(DERS)
Regardless of the nature of the underlying asset—generators, solar arrays, batteries, demand-response
resources or otherwise, most DERs require the following features:
• A communications and controls infrastructure allows the grid operator to transmit start and
stop instructions to individual resources. Since DERs are typically not monitored 24/7 by a
human operator located on-premises, the controls system needs to be fully automated. Control
signals can be transferred, for example, over a wired internet connection, over a wireless
cellular network, or even by transmitting signals over the power lines.
• Synchronization and connection equipment ensures the electricity generated by the DERs is
in-phase with the grid’s electricity. Solar inverters, for example, convert DC current received
from solar panels into AC current. Their job is to provide a smooth sinusoidal AC wave form
that is perfectly synchronized with the grid. Transfer switches, in addition, ensure generation
resources are fully isolated from the grid when not needed.
• Metering equipment is needed to ensure the owners of individual DERs are adequately
compensated for their resources’ supply and demand. Smaller DER assets located in homes and
businesses, such as residential solar systems, normally rely on their main utility meter for this
functionality. In most cases, upgrading to a smart meter capable of two-way metering and time-
of-day metering is required for larger and more complex DERs. Where solar net-metering
programs exist, homes with solar panels can run their meter backwards when exporting solar
electricity to the grid, effectively earning a credit on their utility bill. In addition to measuring
the amount of power exported to the grid, smart meters can also detect power quality issues
such as inadequate synchronization or voltage dips.
• Aggregation software is critical to effectively manage and operate virtual DERs. Individually
controlling thousands of individual resources would be highly impractical for utilities and grid
operators. Aggregation software provides a streamlined front that operators can work with in an
effective way, while also managing the various constraints and features of each aggregated
asset. The software, for example, can implement the contractual limitations of demand-response
 programs ensuring no participant goes without AC for too long or too often, and then select
which homes or businesses to call upon to achieve a certain load-reduction objective.

ELECTRIC VEHICLES, SOLAR PANELS, AND MORE AS

DERS
Vast quantities of potential DERs are hiding in plain sight. Electric vehicles, residential solar
panels, commercial backup generators and more are all DERs just waiting to be “harvested” by an
aggregator. Under the appropriate regulatory framework and with the features outlined above,
aggregating one-hundred megawatts of DERs can be easier, cheaper and faster than building a power
plant of equivalent size.
In Oregon, for example, Portland General Electric (PGE) has launched a pilot program to aggregate up
to 4 megawatts of residential lithium-ion storage units across 525 homes. The utility will have direct
control over the batteries; and have the option to use them for any number of services, such as voltage
control, frequency control and peak shaving. Though PGE’s program is one of the first of its kind, other
utilities are preparing to roll out similar systems.
Virtual power plants and virtual DERs are a rapidly evolving sector. A future milestone for the sector
will be to find a way to aggregate electric vehicles into virtual power plants known as Vehicle to Grid
(V2G) technology. The majority of EVs spend most of their time parked and plugged in—in other
words, connected to the grid. Therefore, the thinking goes, EV batteries could be used as DERs. Since
the quantity of lithium-ion batteries installed into electric vehicles exceeds the quantity of batteries
used in stationary power applications by one or two orders of magnitude, the potential benefit of
harnessing EVs is massive.
There are still many challenges to overcome before DERs can be deployed to their full potential.
However, they are one of the biggest opportunities available to meet future needs in the power sector.
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