What are distributed energy resources?

Energy experts refer to sources of electricity that are connected to a distribution system as distributed energy resources, or DERs. They can either store or generate electricity, or can adjust their electricity consumption. Examples of DERs include small-scale generation such as solar on rooftops, battery storage and consumers that adjust their energy use based on electricity price and other signals.

DERs are complementary to the transmission grid, and can allow homes and businesses to self-supply and have the potential to improve their own resiliency.

Alectra Utilities launched the POWER.HOUSE residential-solar pilot program in 2015, with support from the IESO Conservation Fund. This pilot enabled the deployment of 20 POWER.HOUSE units – an integrated suite of rooftop solar panels, a lithium-ion energy storage battery, a two-way smart meter and a cloud-based energy management system. Through an intelligent software platform, these POWER.HOUSE units can be controlled to provide a number of services. This helps build the foundation to one day be able to aggregate the units to create the functional equivalent of a single larger generation source.

Building on the experience from the POWER.HOUSE pilot, in 2016, Alectra Utilities completed a feasibility study in partnership with the IESO, to examine the technical feasibility, cost, and benefits of implementing and aggregating POWER.HOUSE units on a larger scale in Markham, Vaughan and Richmond Hill.

Taking into consideration technical limitations, residential market adoption rates, electricity market accessibility and future market prices, the study found that there is a potential to expand from a small base of 20 homes to approximately 30,000 new units by 2031. A roll-out of this size has the potential to defer energy infrastructure investments by at least two years in the late 2020s, while offering customers bill savings when they generate their own energy and send the surplus back to the grid for additional credit, and could also provide a number of grid reliability services. While it is still relatively costly to implement these units today, the continuing decline of technology costs could make POWER.HOUSE units more encouraging for future customers.

This is one example of how much the traditional dynamic between local distribution grids and the provincial transmission system is changing. It also signals what lies ahead as more investment is made in new technologies designed to enable transformation of Ontario’s energy system.

Why so much interest in DERs?

For Leonard Kula, the IESO’s Vice-President, Planning, Acquisition and Operations, and Chief Operating Officer, forecasting and reliability are the main reasons why the IESO is interested in getting insights into the impacts of a large-scale implementation of this type of technology.

“Projects such as POWER.HOUSE provide a glimpse of what might happen when embedded generation increases to a more significant portion of Ontario’s installed capacity,” says Kula. “The IESO is looking to have visibility into these types of resources, be able to forecast their output over different timeframes, understand their ability to provide the reliability services we require to operate the system and ultimately be able to coordinate their operation to ensure reliability of the power system.”

According to Neetika Sathe, Alectra Energy Solutions’ Director, Advanced Planning, consumers have a lot to gain once distributed energy resources become more widespread. “Consumers are moving from being passive power users to engaged prosumers. Distributed energy resources will give them a way to make consumption and conservation decisions based on supply conditions and price, enabling them to make more informed choices.”

Alectra customer Julien C. says he’s happy to have more choice. By participating in the POWER.HOUSE trial, he’s offsetting about 53 per cent of the energy he consumes. “Although hydro prices are increasing, I’ve managed to save approximately $150 per month on my bill by using the clean energy I produce right on my roof. That’s a saving of 60 per cent.”

The big picture

Distributed energy is anything but a flash-in-the-pan phenomenon. According to David Robitaille, the IESO’s Acting Director, Operations, the penetration level of distributed energy in North America will double within the next four years, jumping from just under 20 gigawatts of installed capacity in 2017 to just over 40 in 2021.

“There’s no question that distributed energy is gaining ground,” says Robitaille. “But there are still many issues that North American system operators need to figure out in terms of its impact on the bulk electricity system. We might need to change the way we do our modeling and planning, even some conventional assumptions may need to be revisited. It’s all part of adapting to change and preparing for the future.”

In light of these and other questions, the IESO will be developing a series of distributed generation demonstration projects throughout 2018 to learn how these resources can be effectively integrated into the electricity system.