Why Utilities Are Turning to DERs as Power Demand Surges

Todd Jackson (0:00)

The debate really is, what are the types of energy resources that can be used in programs?

Matt Chester (0:07)

Well, as DERs grow, how do you see utilities and communities alike adopting them in the next several years?

Todd Jackson (0:12)

Let's look at it from the customer's perspective first.

Matt Chester (0:15)

There's more ups and downs on the grid zone than there ever were before.

Todd Jackson (0:17)

It doesn't matter who actually owns the asset, but they do have to be firm assets. Serving peak demand is expensive for some utilities. There's more utilities than I've ever seen in the last 10 years that are in various stages of launching a DER further.

Matt Chester (0:37)

Electricity demand is growing faster than the grid can keep up. From data centers and large industrial loads to new economic development, utilities are constantly being asked to add capacity, maintain reliability and support their communities. And customers are demanding that happens while their rates are kept in check. This is all no small feat and utilities need all the tools available to make that happen. Distributed energy resources are increasingly being tapped as one of the most important parts of that toolbox, but it requires utilities to rethink how they approach DERs. So in this episode, we're going to talk about why DERs are becoming an increasingly valuable part of that utility toolbox. We explore how they can provide flexible capacity, help manage peak demand and system constraints, strengthen customer and community resilience, and complement traditional grid investments. We're also going to discuss what successful utility led DER programs look like, how utilities can create value for both the grid and participating customers, and where microgrids and other distributed resources fit as electricity demand continues to accelerate. Stay tuned. You don't want to miss this one because we really dive into giving utilities more options to respond to growth. If you're listening on YouTube, make sure to subscribe and like this episode. So I want to welcome our guest today, Todd Jackson from PowerSecure. How are you doing today?

Todd Jackson (1:44)

Good, Matt. Thanks for having me.

Matt Chester (1:45)

Wonderful. Let's just get right into the meat of the matter, which is you've observed that utilities are utilizing DERs to a greater degree than they ever have before. Can you give us some context behind that, some numbers on what the scale of this trend is and what are the main drivers behind it?

Todd Jackson (1:59)

Sure. Let's talk about the main drivers first, if that's okay. So enhanced resiliency, whether that's at one of their customer's facilities behind the meter or then the utility being able to install DERs at a substation level and provide increased resiliency or supplemental resiliency for a complete feeder circuit. That's one of the main drivers for the utilities adopting DERs today. Addressing localized capacity needs. I'm pretty sure you are going to want to dive into large load customers and all that stuff. So it's very localized. It's not across the entire grid. So the use of DERs to support those new large load customers is another one of the main drivers. And then just optionality for grid investment. So a lot of people talk about that as deferring grid investment, but what DERs provide the ability to do is you can prioritize those projects and put some of the ones that you may want to do later by installing a DER to support whatever that need is while you work on more important projects on the grid.

So more than ever before, the utility has more optionality for making those capital investments. There's probably over the last 10 years that I've worked at PowerSecure, there's probably more utilities now that are in some various stage of a DER program, whether it's consulting with us right now over creation of that program to actually filing with the commissions or actually launching the program after they get approval from the commission. It's the activity here is just greater than it's ever been. So like today, there's probably in the range of 35 to 40 gigawatts worth of installed capacity to via DERs.

Virtual power plants are new again, they're back in vogue. So a lot of the data on DERs is in context with utilization in virtual power plants for utilities.

The installed capacity is in the neighborhood of 33 percent greater than what it was last year. So growing at a pretty rapid rate. And there's a lot of data out there that by 2030, that DERs may cover as much as 15 to 20 percent of the peak demand on the grid. So DERs rolling faster.

Matt Chester (4:51)

Yeah, it's definitely more than just a drop in the bucket.