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Grid Optimization: What Does it Mean?

Grid optimization—a fairly new term that you might be unfamiliar with—includes three major components: demand response, the management of distributed energy resources, and the implementation of non-wire alternative programs. Franklin Energy is working hard to evolve with the changing needs of utilities and end-use customers by developing innovative programs and products. We are breaking down silos within the industry and integrating new technologies, focusing more than ever on providing grid optimization services for our clients. Let’s take a deeper dive into each element to get a better feel for our vision of the future of our industry.

Breaking it Down

Demand response programs provide end-use customers with financial incentives in exchange for participating in demand response events. In some situations, this is a flat incentive for enrollment and every year thereafter that they continue to participate (i.e., switch- or thermostat-based programs where the utility remotely controls the customer’s equipment), while in others it’s based on the rate the customer pays (i.e., time of use rates, or TOU), which is more voluntary with load reduction based on customer behavior. Examples of demand response programs include:

  1. Residential AC Control (cycling or setback of thermostat setpoint)
  2. Residential Water Heater Control (shutoff)
  3. C&I Automatic Demand Response (ADR) (programming of a building management system control via a communication box on equipment, etc.)
  4. C&I Manual Demand Response (agreement for personnel at the premise to manually turn off or disable equipment)

So, for example, on a hot afternoon where the grid is taxed, a utility can either remotely power down customers’ AC units, or the customers can receive a text reminding them rates are increasing for the next hour based on demand and suggesting they shift usage to later in the day to avoid the price increase. The modern versions of these programs incorporate technology both in terms of equipment and outreach to streamline the utility and customer experience.

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Management of distributed energy resources (DERs) refers to any resource on the electrical grid that produces electricity or has the ability to remove (or in some cases add) demand from the electrical grid. Elements that may be considered DERs include:

  1. Storage Devices
    1. Batteries
    2. Electric Vehicles
    3. Flywheels
    4. Gravity (e.g. pumped water)
  2. Energy Efficiency
  3. Demand Response
  4. Renewables
  5. Distributed Generation (e.g. backup generators)

DERs are really everything. In some regulatory environments, like NY, there is an increased need to integrate customer-supplied energy into the overall grid. This can come from solar panels on the roof of a home, a backup generator at a cold storage warehouse, and various other sources of energy.

Management of non-wires alternatives (NWAs) based programs involves deferring the installation or upgrade of equipment (typically transformers in a substation or transmission components) through the implementation of a combination of demand response and distributed energy resources. As such, they are typically limited to a specific geography (i.e., serviced by a single feeder off a substation). These resources can be located either behind or in front of the meter. Typically, the need for these resources is more consistent, which means event-based demand response is limited in its capabilities. This makes the control and management of distributed energy resources more desirable for NWAs. Additionally, in some areas, increasing load during specific periods (e.g. to fill the belly of the duck curve) may become just as important as reducing load, if not more so.

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Where is The Market Going?

A review of the marketplace and trends completed by the Smart Electric Power Alliance in 2017 illustrates various control options and their status. As many understand, legacy one-way switch-based DR programs are in decline and are actively being replaced with two-way switch and smart thermostat-based DR programs. As customers continue to buy smart thermostats on their own, Bring Your Own Thermostat (BYOT) programs continue to accelerate quickly, spurring utilities to move to capture the potential load reductions.

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Similarly, the study illustrates market potential for newer programs involving the management of distributed energy resources - specifically renewables – with 70% of respondents currently planning, researching or considering how to combine DR with them. For management-based DR programs, energy storage of renewables becomes a key program component. Electric vehicles (EVs) are another key area of integration with DR programs, with 79% of respondents currently planning, researching or considering how to offer an EV-managed charging DR program.

While there have been several early adopter utility-based programs, there are many additional utilities who are planning for and are interested in operating programs to manage DERs and EVs.

Grid optimization is more than a hot industry buzzword or a vague phrase. It encapsulates demand response, the management of distributed energy resources, and the implementation of non-wire alternative programs into modern, integrated programs. Our role is to provide an elegant and seamless customer experience, while helping utilities shape demand curves and reduce investment in peaked plants along with other transmission and distribution upgrades. When combined and properly leveraged, these elements can create meaningful solutions that make a difference in the lives of utility customers. It certainly isn’t showing any signs of slowing down, and it will definitely be a key player in the future of our industry.

To learn how Franklin Energy can improve and modernize your utility’s program offerings through the use of grid optimization, contact us to speak with an energy expert today.

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Greg Wassel
Written by Greg Wassel

Greg Wassel understands that grid optimization is key to our industry’s future. He is responsible for identifying new and innovative approaches to integrated demand side management programs, forging partnerships with industry-leading companies to enhance operations and developing new products and services for clients. Greg also leads our grid optimization product line and monitors demand response and other distributed resources program performance, ensuring quality every time. Greg supports our existing clients and business development teams by conducting regular best practice and innovation meetings to ensure that each client is kept up to date regarding the rapidly changing demand side management industry. He has a master’s degree in geography from the University of Georgia and is a certified energy manager (CEM).

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