Distributed Energy Resources Management Systems: Introducing the Value Proposition

Co-Authors: Chris Sturgill, Sarah Vondracek, Alex Tylecote

Distributed Energy Resources (DERs)—such as solar panels, battery storage, and electric vehicle (EV) chargers—are changing how electricity is produced and used. Historically, utilities saw these resources as risks to grid reliability to be managed through protection controls. Today, with better technologies and growing interest in clean energy, DERs are viewed as assets that can enhance grid operations. Effectively managing these resources calls for new tools, a role Distributed Energy Resource Management Systems (DERMS) are looking to fill.

What Are DERMS?

DERMS are software that help utilities monitor and control DERs in real time. They track things like rooftop solar output, battery charge levels, and EV charging loads then coordinates them to support both the grid and customers. DERMS can also interface with different market participants, allowing DER owners or aggregators (companies that manage many small resources together) to play a more significant role in wholesale electricity markets.

Unlike traditional utility software built to manage large power plants or distribution equipment, DERMS focus on behind-the-meter resources. These smaller assets can collectively provide significant benefits—if they are orchestrated properly[CS1] . DERMS do this by collecting data from devices (sometimes through internet-based protocols) and issuing control signals that respond to real-time grid needs in concert with other control systems.

Why DERMS Are Gaining Attention

1. Two-Way Power Flow
   In many areas, the proliferation of DERs can cause power to fluctuate and flow toward both customer load or substations and utility supply. Systems built for traditional one-way flows were not designed for that. As DERs grow, utilities confront both high- and low-voltage issues on distribution feeders. DERMS can manage these fluctuations by monitoring local conditions and quickly adjusting DER output to keep the grid stable.
2. Better Technology and Rising Expectations
   Conventional utility tools (like SCADA) were built to handle a relatively small number of devices. With thousands or even millions of DERs coming online, utilities need systems that can scale to huge data volumes. Modern inverters (which convert solar DC power to AC) now meet standards that enable them to assist grid stability rather than disconnecting at the first sign of trouble. DERMS take advantage of these new standards and capabilities, using advanced computing and secure communications to manage complex, fast-changing conditions at scale.
3. Regulatory Momentum
   Recent federal rules—such as FERC Orders 841 and 2222—push for streamlined access and participation of smaller-scale batteries and aggregated DERs in wholesale markets. State regulators have also established proceedings and programs to encourage DER growth and integration. Recently, in states like New York and California, these proceedings have focused on using load flexibly to balance supply and demand. These policies create both pressure and opportunity for utilities to adopt software tools—like DERMS—that can handle technical, programmatic, and market-facing tasks.
   

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How DERMS Add Value

Real-Time Visibility and Control

At their core, DERMS provide utilities with real-time or near real-time data on DER status and performance. This allows operators to react quickly to fluctuations—especially important with intermittent resources like solar or rapid-responding resources like batteries. Real-time monitoring can detect emerging problems, such as unusual voltage swings or communication dropouts, before they affect broader grid stability.

Efficiency Gains

DERMS help reduce energy losses and improve power quality by actively managing voltage and power flows. They can also operate DERs to resolve overloads on utility equipment and relieve localized constraints. For example, battery storage can be discharged during peak demand to avoid costly infrastructure upgrades.

Regulatory Compliance

With federal and state mandates calling for broader integration of DERs, utilities need to demonstrate that their grids remain safe and reliable even as more customers install behind-the-meter resources and that a utility has the technical capability to deliver on the mandated programs. DERMS provide the data logs, control functions, and reporting tools to meet these requirements. They also support participation in emerging markets that reward resources for providing valuable grid services—whether that is ramp support, frequency control, or peak demand reduction.

Enhanced Customer Programs

Managing different DER programs in one system can improve both efficiency and customer experience. DERMS can issue coordinated signals to, say, throttle solar export or delay EV charging if the grid is under strain. Coordinating across programs can offer operators a single view of the resources available across various programs and optimize their dispatch within program rules. Additionally, it can provide customers with insights on how their solar panels or batteries are contributing to system reliability—potentially building goodwill and encouraging further adoption.

Looking Ahead

As DER adoption accelerates, utilities are exploring how best to manage these resources and what systems they need. The most effective path forward for utilities considering DERMS is to set clear goals for what problems they should solve, whether that means tackling real-time voltage issues, integrating new storage and demand-response programs, or enabling wholesale market participation. With those objectives in mind, utilities can plan for the right mix of technology investments, staff training, and customer outreach.

DERMS are not total replacements for existing systems like SCADA or advanced distribution management systems. Instead, they work alongside them, adding a specialized layer of intelligence to coordinate and optimize behind-the-meter resources. In doing so, DERMS can help utilities handle the challenges of a rapidly evolving energy landscape—and turn DERs into a valuable, flexible part of the modern electric grid.