Regulatory Focus: What Grid Services Can DERs Provide?

DERs provide many grid services in power systems around the world, including deferring costly distribution and transmission investments, and providing flexibility services like peak demand reduction and backup power. These services help to maintain safe and reliable power system operation under normal conditions and during extreme events. (See Increase Power System Flexibility for more details on how flexibility contributes to grid operations.)

What You Need To Know

DERs can provide a wide range of services to the distribution and transmission system.
Energy storage is exceptionally suited to provide services to many different stakeholders at different times, known as “value-stacking.”
DERs can also be used to reduce peak demand, flatten net load, and offset costly grid infrastructure upgrades.

First, Look at This Table

There are a number of essential services used to help ensure the safe and reliable operation of the power system as generation and load fluctuate and during emergency (contingency) events. Many of these services can be provided both by utility-scale renewable energy and by DERs, particularly if storage is included.

See: Table ES1 on page vi of An Introduction to Grid Services: Concepts, Technical Requirements, and Provision from Wind by NREL.

Next, Look at This

Energy storage can provide a wide array of power system services to customers, distribution system operators, and transmission system operators. These services can help customers save money, help maintain the reliable operation of the power system, or help the power system recover following a contingency event. Where the energy storage system is interconnected (behind-the-meter [BTM], at the distribution system [Dx], or at the transmission system [Tx]) influences what services it can provide. Although additional infrastructure may be needed, BTM energy storage systems can feasibly provide the most services to the greatest number of power system stakeholders.

Figure 3 from page 7 of An Overview of Behind-The-Meter Solar-Plus-Storage Regulatory Design by NREL and USAID for Greening the Grid.

Now, Read This

The many different services offered by batteries may be needed at different times, so a multi-use approach called 'value-stacking' can be employed to maximize benefits to the battery system owner and other power system stakeholders. Value-stacking is important to enable, as more revenue streams for a system owner can more quickly offset the upfront costs of batteries.

Importantly, battery storage systems can have enhanced value to the power system and system owners by providing one and sometimes multiple distinct system services. As some services are often only needed infrequently throughout the year (such as black start and backup power) or only briefly throughout the day (such as frequency response), battery system operators can increase the utilization of their systems by providing distinct system services valued in the market for distinct durations at different times of day. This multi-use approach is known as “value stacking” and is increasingly being explored and implemented for grid-interconnected batteries, particularly in markets that offer more than one way to be paid for those system benefits. Value stacking can be an essential strategy for battery storage system owners, as monetizing multiple system services can improve battery economics.

Text excerpt from page 7 of NREL and USAID for Greening the Grid: An Overview of Behind-the-Meter Solar-Plus-Storage Regulatory Design

And This

Employing a range of DERs can help to offset costly grid infrastructure upgrades.

See: Figure 5 on page 12 of The Role of Distributed Energy Resources in New Jersey’s Clean Energy Transition by GridLabs.

Finally, Read This

Today some utilities are beginning to use DER as a solution to these grid needs, calling for new recognition of DER value. We believe that DER contribution to system flexibility has been undervalued, and new technologies and rate structures will increase the value of DER on the system and improve grid flexibility. These technologies are led by storage, but include solar with smart inverters, targeted energy efficiency, sophisticated demand response, and flexible loads like smart charging of electric vehicles.

For example, Rocky Mountain Institute recently completed a study on how flexibility provided by DER not only better matches demand to variable supply, but can lead to a system with lower overall costs and carbon emissions. This overall system is better, and increasingly cheaper, than the traditional approach of using only gas-fired generation to balance renewables and meet peak load. As the table below details, the adjusted net load is considerably smoother with the utilization of flexible resources. Flexibility in this case reduces ramps, reduces curtailment (lost excess generation), and increases the value of renewable energy on the system. Flexible resources can be used to reduce system peaks and flatten net load.

Text excerpt from page 8 of Gridlab and Gridworks: The Role of Distributed Energy Resources in Today's Grid Transition

See: Figure 3 on page 8 of The Role of Distributed Energy Resources in Today's Grid Transition by Gridabs and Gridworks.

Suggested Actions & Next Steps

Review the many different services DERs can provide to the power system.
Identify which system services are most critical for your power system.
Consider where there might be opportunities to use DERs to flatten load or offset system upgrades.