This is the seventh installment of my white paper on why electric distribution cooperatives will be required to operate smart electric distribution grids with fiber optic communications networks. This installment will discuss the emergence of distributed energy resources (DER) and their implications for electric grid operations. They represent both challenges to the current way of doing things, and substantial benefits for operating a more economical, reliable, sustainable electric grid.

The need for smart electric grid stems from:

(1) revolutionary electric utility industry restructuring

(2) New and better information, communications, and network technologies and applications, and, ultimately the emerging Industrial Internet of Things (IIoT)

Profound motivations for change in the electric utility industry include: (1) erosion of the legacy electric grid infrastructure and business model, (2) growing public concern about sustainability and climate change, (3) the economic advantages of renewable/sustainable energy resources versus conventional utility generation, and (4) rapidly proliferating distributed energy resources, both real and virtual. Many new things are developing while much of the longstanding grid planning and operations is becoming more complex and challenging.


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The legacy electric grid is changing dramatically from it’s century-old, relatively straightforward bulk electric system model to a much more decentralized and complex one. There are already millions of real and virtual energy sources on the electric distribution edges of the grid. This is happening not just on electric utilities’ distribution lines, but even beyond, on the customers’ sides of the meters. These distributed energy resources are growing exponentially even as conventional utility generation fades.

A distributed energy resource (DER) can be an actual energy source or a managed energy sink. A source produces energy. A sink consumes energy. If a sink can be controlled (i.e., turned down/up or turned off/on) it can have the same effect as turning a same sized conventional generation source up/down or on/off. For example, turning on a source of x kW puts energy into the grid. Turning off a sink of x kW appears to the grid in much the same way, perhaps more beneficially than turning on a source because it may be cheaper, closer to the end use so less line loss, or beneficial in other ways for grid scheduling and operations.


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Distributed energy resources include the following:

Electric Energy Sources

Putting energy into the grid

  • solar PV: panel / array
  • wind generator
  • solar thermal turbine generator
  • wind turbine generator
  • engine generator: gasoline, diesel, natural gas
  • geothermal turbine generator
  • biomass turbine generator
  • combined heat and power (CHP) generator
  • fuel cell
  • microgrid
  • transactive energy market purchase (yup! transactive energy markets can be DERs)

Virtual Energy Sources 

Reducing or stopping consumption of energy from the grid

  • lighting
  • heating
  • cooling
  • electronics
  • motors
  • commercial/industrial processes
  • charging energy storage

Energy Storage

Taking energy from the grid, putting energy back into the grid

  • electricity into and out of a battery
  • electricity creates stored thermal energy as heat
  • electricity creates stored thermal energy as cold
  • electricity creates stored kinetic energy
  • flywheel
  • elevated mass – water, loaded rail car
  • compressed air

Conservation & Energy Efficiency => Baseload Generation

Expanding on the concept of virtual energy sources, simply choosing to use less electricity (i.e., conservation) or a one-time replacement of electric devices with more efficient ones (i.e., energy efficiency) can affect the grid like a new energy source of comparable demand and energy consumption. For example, replacing an incandescent light bulb with an LED reduces its kW demand and kWh consumption by as much as 90%, and similarly, a fluorescent bulb by as much as 40 percent. This looks to the grid like adding comparable capacity and energy.


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This concept applies more broadly to any consumer appliances or commercial/industrial equipment. This one-time replacement looks to the grid a lot like the installation of a generating unit of the same capacity that produces during the times that the replaced appliance or equipment would have consumed energy. Since it is closer to the load, it creates fewer losses than remote conventional generation. Since it is distributed, it can improve distribution grid reliability via decentralization of resources and improve grid operations via broad dispersion and granularity. And since it reduces consumption of any fuel, it is the the ultimate in sustainability.

Think, for example, of a non-utility, lighting contractor calling on a commercial/industrial installation that operates 24/7/365 and replacing all of its incandescent and fluorescent lighting with LEDs. That has the same effect on the grid as the addition of an amount of energy production equal to what the lights were consuming, but without actually consuming any fuel or losing energy through transmission and distribution line losses. The disintermediary could proffer this “firm capacity” and virtual energy into wholesale power markets.

This virtual “capacity” (i.e., reduced demand) and “energy” (i.e., reduced energy consumption) can be sold into the wholesale power market by the controlling utility or even by a non-utility (i.e., a disintermediary). In other words, a non-utility commercial provider of demand side management could take this virtual equivalent of generation to the wholesale power market in which the appliances or equipment are connected.


Combining some or all of the above, there will be “mini utilities” (small local power grids with sources, wires, and sinks) on the distribution grid, often on the customer’s side of the meter. Some will operate synchronously (i.e. connected to the utility grid) while some will operate asynchronously (i.e., not connected to the utility grid) and others may swap back and forth depending upon their financial and operations goals. A growing number of commercial and industrial, even residential facilities implement these on site for various reasons: reliability, sustainability, economy, security, control. These microgrids are in turn a form of distributed energy resource because they occur on the distribution system or often on the customer’s side of the meter.


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Free Energy

So, let’s get wild! Throughout his life, Nikola Tesla envisioned an entirely revolutionary concept. He not only demonstrated that electricity could be transmitted wirelessly, he believed that “free energy” could be extracted anywhere from the universe. The quantum physicists describe a way that this might be possible. They call it “zero point energy”, the idea being that the sum total of the energy in the universe is balanced at zero at any point. If this balance could be disturbed in the right way, “free energy” might be freed from the imbalance. Imagine how would this distributed energy resource could revolutionize the electric energy industry!!


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DERs have significant economic and operational advantages for utilities compared to upgrading or adding conventional generation, transmission, and distribution infrastructure:

Proximity: located closer to the end use load, reducing transmission and distribution line losses, enhancing voltage support, reducing the need for transmission and distribution line upgrades or additions.

Dispersion: spread throughout the grid, not just at the usual bulk electric system generation facilities.

Granularity: can be deployed and controlled in smaller increments with greater precision.

Deployment: often faster, simpler than upgrading or constructing conventional grid generation, transmission, distribution infrastructure

Economy: lower capital and O&M costs compared to upgrading or adding traditional utility generation, transmission, distribution infrastructure.

Dispatchability: can be more rapidly ramped up and down or turned off and on, even instantaneously, than conventional utility generation.

Reliability: dispersed in large numbers throughout the grid can reduce the concentration of risk of an outage of a large central station power plant or backbone transmission line or local distribution line.


In a similar context, DERs are sometimes referred to as non-wires alternatives (NWA). Their deployment, monitoring and control can delay, reduce, or eliminate the capital costs, subsequent O&M costs and environmental impacts of upgrading or constructing conventional utility generation, transmission, distribution infrastructure.

For more on DER and NWA see this three-part IEEE Smart Grid webinar series:

The Growing Virtual Grid – Non-Wires Alternatives Emerge


DERs pose significant challenges for electric utilities. They will ultimately be deployed by the hundreds of millions, even billions across distribution networks nationwide. A utility will have orders of magnitude more points on their distribution grids to monitor, analyze, and either accommodate or control. This will require comparable numbers of sensors and controllers  as well as real time analytics and operations technologies for remote control. An entirely new approach to operations will be required in a convergence of communications, information and operations technologies.

Today the 3,300 U.S. electric utilities remotely monitor fewer than 500 million points of interest and control even fewer. The majority are the meters for 150 million electric customers which are generally monitored via automated meter reading and automated metering communications infrastructure (AMR/AMI). Utilities have some control capabilities with demand side management devices like smart HVAC thermostats and interruptible electric devices, followed by the utilities’ generation, transmission and substation equipment. Electric utilities currently monitor, analyze and control in real time only a relatively small fraction of these points of interest. In the limit, consider the possibility of many or most home and business looking like this:


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In addition, there will be, in the not too distant future, twice as many electric vehicles on the roads as there are metered electric utility customers. Also, there are now more than 4 times as many smart, electric powered devices as there are people in the world. There could easily be more than a billion DERs for utilities to deal with in the not too distant future. This new Grid Edge will make what has often thought to be the largest and most complex machine ever built by man look like a child’s tinker toy project!

Just think, an individual electric cooperative of average size (20,000 meters) could soon be faced with monitoring, analyzing, accommodating, even controlling more endpoints than there are generators and substations in the U.S. bulk electric system today!

To make things even more challenging for incumbent distribution utilities, there are likely to be as many or more disintermediaries providing some form of DER services to electricity consumers as there are incumbent electric utilities today. Can you say “Amazon”? “Apple”? “Microsoft”? “Google”? “Adobe”? Just think, smart thermostats are already Internet connected. And, who owns NEST? What if (more likely when) Google decides to control these DERs?

How can these challenges (and opportunities!) be met? Advanced energy, communications, information, and operations technologies will be required.

Guess what? There is already an electric grid in the U.S. that is handling more than a billion distributed devices in real time. It is the Internet of Things (IoT). As Robert Metcalfe, inventor of the ethernet and Professor of Innovation at the University of Texas has predicted, the electric grid will inevitably converge with the Internet of Things, becoming an Enernet.