Distributed Energy Resources
One of the most significant changes to electricity systems around the world has been the rapid expansion of distributed energy resources (DERs).
DERs are electricity-producing resources or controllable loads that are connected to a local distribution system or connected to a host facility within the local distribution system.
DERs can include solar panels, combined heat and power plants, electricity storage, small natural gas-fuelled generators, electric vehicles and controllable loads, such as HVAC systems and electric water heaters. These resources are typically smaller in scale than the traditional generation facilities that serve most of Ontario demand.
Growing Impact Leads to New Challenges and Opportunities
In Ontario, more than 4,000 megawatts (MW) of DERs have been contracted or installed over the past 10 years. DER deployment is expected to grow in the coming years.
Distribution-Connected Contracted Electricity Generation
Source: Progress Report on Contracted Electricity Supply, Fourth Quarter 2019.
Output from DERs offsets the need for supply from the province-wide system. This is creating new opportunities and challenges for the electricity sector.
DERs can offer greater customer choice – the IESO has heard from some communities, through the regional planning process, a preference for DERs to address regional demand growth or to replace aging assets. DERs may also present opportunities to optimize overall system investments and provide a range of grid services.
However, increasing DERs creates a more decentralized electricity system and changes the traditional dynamic between local distribution systems and the province-wide transmission system. This creates a need to understand the impact on the transmission-distribution interface, which the IESO, local distribution companies, and other stakeholders are exploring through the Grid-LDC Interoperability Standing Committee. Collaboration is required to ensure the IESO can effectively forecast and have visibility of DER activity, benefit from the provision of reliability services, and explore opportunities to incorporate them into electricity markets.
The most recent report of the Energy Transformation Network (ETNO) explores many of the questions arising from the increased penetration of DERs. It provides an overview of drivers for DER development and the roles and responsibilities required to integrate DERS into Ontario's electricity system in a way that maintains system reliability and customer affordability.
Gaining Experiences with DERs
The IESO has initiated innovative pilot programs and procurements that are fostering innovation and leading to lessons learned regarding DERs, including:
- A local Demand Response (DR) Pilot in the Brant area aimed at better understanding the capabilities of DR to provide services as alternatives to transmission line solutions for meeting local-area capacity needs.
- The potential to aggregate residents who use solar and storage was explored through PowerStream's POWER.HOUSE project in the York region, which was funded, in part, by the IESO's Conservation Fund.
- Two phases of an energy storage procurement that is exploring how batteries, flywheels and other storage technologies can offer ancillary services to support increased reliability and efficiency of the grid, and provide capacity value and price arbitrage through responding to market signals.
- A number of DER-related projects that are being supported through the IESO’s Grid Innovation Fund.
- The IESO, together with its stakeholders, is developing a series of white papers that are intended to support the creation of a shared fact-based understanding of emerging economic, technical, environmental, and social issues, as well as opportunities and trends with the potential for significant future impact on Ontario’s electricity system. A number of these white papers will focus on DERs. See Innovation and Sector Evolution White Paper Series.
- The York Non-Wires Alternative and Interoperability pilot project has been initiated to explore opportunities to address potential barriers to implementing non-wires solutions that mitigate capacity needs in the York region.