DERMS, VPPs and DERs: What’s the difference – and why should you care?

DERMS, VPPs and DERs: What’s the difference – and why should you care?

By Enbala

There are a lot of acronyms floating around the energy world these days. It’s a veritable alphabet soup of evolving terms that are often hard to distinguish from one another.  This is especially true when it comes to distributed energy – it’s a relatively new concept in and of itself, and when the terms that define this evolving move to the grid edge aren’t inherently self-defining, the ensuing confusion complicates the equation. What’s the difference between DERs and a DERMS?  And what’s the definition of a DERMS versus a VPP?  Just as important what difference does it make?

A utility that needs a Virtual Power Plant (VPP) but is creating an RFP for a Distributed Energy Resource Management System (DERMS) may find itself taking a lot more risk than necessary, and one that needs a DERMS but is looking at a VPP may find itself coming up short when it comes to distribution-level grid control.  Both control and manage distributed energy resources – or DERs – but there are fundamental and important differences that impact the ROI and evolution of these systems. At a fundamental level, VPPs provide flexible grid services that ARE NOT highly dependent on the specific locations of DER asset. DERMS, on the other hand, provide active and reactive power control for grid services that ARE highly dependent on the specific location of each asset.

Virtual Power Plants – Power Without the Plant

Virtual power plants perform active power control across a fleet of assets to provide grid services that are not highly depending on the specific location of individual assets like feeders or circuits. In general, they provide system-wide benefits associated with increased or decreased generation or load and focus more on larger territories such as cities, counties, states or ISO/RTO areas. The grid services for which VPPs are optimally used include:

  • Demand response/capacity
  • Frequency regulation
  • Operational reserves
  • Energy arbitrage
  • Peak demand management

DERMS – Location, Location, Location

A DERMS, in contrast, provides grid services that are highly depending on the specific location (grid connection) of each asset. The DERMS-controlled grid services are delivered by manipulating power flows along individual feeders and include:

  • Voltage management
  • Optimal power flow
  • Locational capacity relief

A DERMS can manage both real power (watts) and reactive power (VARs), and can increase load on one part of a feeder while decreasing load–and increasing generation–at another part of the same feeder. A DERMS typically requires more back end system integrations than a VPP due to the requirement of locational grid and asset state information. For DERMS applications, integration with the utility, typically through a DMS, ADMS, OMS or SCADA system, is required.

Why Does this Matter?

Whether or not a VPP or a DERMS is the optimal choice for a utility depends upon how the DERs will be used – and when. For utilities with an initial vision of controlling edge devices for applications demand response, energy arbitrage and peak demand management, a VPP is probably the best choice. A VPP can deliver significant benefits and meet near-term goals, while avoiding the larger up-front investment of integrated with DMS, ADMS, OMS or SCADA systems.

For a utility with location-specific and distribution-focused applications aimed at orchestrating at a distribution feeder level to regulate grid conditions and better prevent system excursions, blackouts and power outages, a DERMS is needed.

It’s important to note that a logical, phased approach that begins with a VPP and transitions to a DERMS over time is entirely feasible and provides logical path to follow as utilities gain more familiarity with real-time control and optimization of DERs and start to experience greater urgency for distribution-level grid balancing support. The foundation for a reliable, sustainable energy future rests on more distributed and intelligent networks of power. VPPs and DERMS are the means to this end, enabling both the producers and consumers of energy to harness the power of distributed energy.

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