by Bob Shively, Enerdynamics President and Lead Instructor

Distributed energy resources are among the biggest opportunities for utilities in coming years (see Utility Dive’s 2015 State of the Electric Utility survey).

Delivering on the opportunity requires utilities to rethink the traditional electric delivery system. Enerdynamics developed the following infographic to help explain the upcoming distributed grid (click on infographic to enlarge/download):

Unlike today’s grid in which almost all power is generated from centralized resources and delivered through a one-way grid, the grid of the future will see power generated at both ends. Sources such as fuel cells, Combined Heat and Power (CHP), solar photovoltaics (PV), price responsive loads, and distributed storage will provide supply at the distribution level in competition with traditional centralized sources.

This paradigm will likely require a new entity called a Distributed System Operator (DSO) to facilitate local power markets in the same way that today’s Independent System Operators (ISOs) facilitate organized bulk power markets. DSOs will aggregate distributed resources and offer them into wholesale markets, thus allowing markets to select the most economic resource whether it is distributed or centralized. Distributed resources will compete not only to provide energy (kWh) but also will have the opportunity to provide capacity and ancillary services.

Electric utilities must reconfigure the distribution grid to make this vision a reality. Steps to such reconfiguration include:

1. Install smart meters coupled with an advanced metering infrastructure (AMI) for all customers who wish to participate in markets. Many utilities are well into completing this step.
2. Add distribution monitoring and automation so power flows from distributed resources can be managed without harming reliability and power quality. Many utilities are in the early stages of rolling out these technologies.
3. Reconfigure or replace components as needed to provide for two-way flow. Distributed resources can put enough extra power onto the grid that electricity must sometimes flow backward through the distribution substation into the transmission system. Accommodating a two-way flow will provide the physical platform required to enable full utilization of distributed resources. Most utilities have only begun to think about how to achieve this last step, although a few have already done this for a few circuits.

Of course, none of this will be cheap. Utilities will need to focus on working with their consumers and regulators to find ways to cover costs while avoiding poor economic outcomes. That will be a topic for many future discussions.