June 29, 2022

New software management systems help transform the distribution network

Most utilities have adopted a “fit and forget” approach to distributed generation owned by consumers.

But the last decade has seen a radical shift towards decentralization of production, spurred by lower deployment costs, increased incentives (e.g. net energy meters, investment tax credits ) and changing consumer behavior. This proliferation of CEOs is having a profound and real effect on the utility industry, threatening to disrupt existing business models, as well as network stability.

Due to factors such as reverse power flows, increased supply voltage, and harmonics, distribution networks were not originally designed to accommodate large DG penetrations. Combined with political pressure to embrace more renewables, utilities in states like California, Hawaii and New Jersey are understandably worried.

Distributed energy resource management systems could be the solution that utilities are looking for.


A distributed energy resource management system is a software solution that increases an operator’s real-time visibility into the underlying capacities of their distributed assets. Over the past few months, GTM Research has investigated the global trend in distributed resource management, categorizing DERMS deployments as DR-driven, supply-driven, or mixed-asset DERMS.

Source: DER Management Systems 2014: Technology, deployments and market size

Here is an explanation of the graph above, from bottom to top.

DERMS piloted by DR

DR-driven DERMS integrate demand-side resources such as controllable loads, electrical and thermal storage, and electric vehicles to achieve system goals. Such systems are typically deployed over distribution networks and as a response to aggregate demand to compensate for intermittences created by transmission network integrations of large-scale renewable energy production.

An excellent example is the Power Shift Atlantic project developed by Leidos in the Canadian Maritimes. The region has a wind penetration of 9%, the highest in North America, and a renewable energy production target of 40% by 2020. Leidos’ intelligent load management system is capable of delivering 15 megawatts of rise / fall load (commercial and residential) to “smooth” the variation in power created by 800 megawatts of wind power generation at the transmission level.

Source: DER Management Systems 2014: Technology, deployments and market size

A DR-driven DERMS can be compared to a demand response management system (DRMS), aggregating demand response into silos and then using it to compensate for the generation of variables. Indeed, Alstom integrates its DRMS ​​product into its DERMS solution.

Supply-driven DERMS

Although more prevalent in Europe than in North America, a supply-driven DERMS increases the visibility of the system over HQ resources, allowing greater functionality of the local and global system. It enables a utility to harness existing generation resources (e.g. smart inverters, customer’s GM) to provide enhanced services such as generation reduction, conservative voltage reduction and / or volt / VAR optimization.

Supply-side DERMS have greater potential in European countries with high GM penetration, such as Germany. The French-controlled islands of Réunion and Guadeloupe are among the first to adopt a supply-driven DERMS, deploying a system developed by Itron in 2008 to measure total intermittent production, prioritize activities and subsequently reduce photovoltaic solar production.

Mixed asset DERMAS

The mixed-asset DERMS class aggregates the capabilities of distributed generation and demand-side resources through a common interface. However, these networks are characterized by extreme disparities in functionality, the distribution networks being made up of different assets and subject, depending on the region, to different operating conditions.

As one can guess, no two utilities are the same and each faces a unique set of challenges which may require different solutions. The DERMS market is characterized by highly customizable offerings, which makes it difficult for most vendors to produce a standard product. Yet despite the challenges of integrating existing equipment and an evolving regulatory landscape, some companies see opportunities and take a big step forward.

Vendors are testing the waters with new products

Incumbent network operators such as Alstom and Siemens offer near-customizable products that promote increased internal memory and processing capacity to accommodate the potential of thousands, if not millions, of new data points. Others, like GE, have yet to launch a DERMS offering, citing the novelty of the market and lack of customer interest.

Smaller providers such as Spirae of Colorado and LocalGrid of Ontario have taken their experience in hierarchical control of microgrids and applied it to distribution networks. Such an approach pushes intelligence to the edge of the network, simultaneously enabling rapidly responding local resources, while meeting global goals.

Examining the North American Image

GTM Research found that the North American market was largely DR driven, although mixed-asset DERMS deployments are becoming increasingly popular, especially in regions that have experienced high distributed PV penetrations (e.g. California and Hawaii).

Source: DER Management Systems 2014: Technology, deployments and market size

The Pacific Northwest Transactive Energy project, supported by a $ 178 million DOE grant, is an example of the high degree of diversity in this market. Price-based incentive signals connect eleven distribution utilities and provide 60 megawatts to 70 megawatts of reactive resources throughout the system. Other notable DERMS deployments include the Duke Energy Carolinas project which uses an Alstom DERMS, as well as the recently announced SDG & E distributed network, developed with micro-grid control provider Spirae.

While this may be the start of the inevitable transformation of distribution networks, the surge in GD penetration needs to be addressed not only by utilities, but also by regulators and providers.


Grid Edge Executive Board Members have access to all Grid Edge reports from GTM Research, including the next one DER Management Systems 2014: Technology, deployments and market size. Find out more here.