The Distributed Energy Glossary
“Knowledge of things and knowledge of the words for them grow together. If you do not know the words, you can hardly know the thing.”
― Henry Hazlitt, Thinking as a Science
Words matter. And particularly in a burgeoning industry like the energy flexibility market, they can be slippery – transitioning over time to mean something else, or even spawning other words with related but slightly different meanings. At Kiwi Power, we often see the same word used interchangeably for two different things, or people talking at cross purposes without realising.
One of Kiwi Power’s core values is simplicity. We want to make things as easy to understand as possible – for everyone, new and old to the flexibility industry. We believe that as well as providing a fantastic service, it’s our duty to educate where we can to make energy flexibility as accessible as possible. By lifting the lid on this complex universe of terms, and making them easy to understand, we aim to accelerate the transition to a more sustainable energy system.
We thought it would be helpful to define what we mean when we talk about terms like ‘flexible energy assets’, ‘energy flexibility’ and even DNOs. So, see below for our official ‘Distributed Energy Glossary’, which will grow and change over time. You’ll see that in many cases, we have included more than one word to define a thing. That’s because people across geographies and industries will use different words. You’ll also see what we have coined ‘flexible energy assets’, and that we will in time transition from ‘distributed energy platform’ to using ‘energy flexibility platform’ for Kiwi Core.
ENERGY FLEXIBILITY PLATFORM
Our energy flexibility platform, Kiwi Core, allows everyone from local grid operators to owners of flexible energy assets to enjoy the benefits of energy flexibility. It utilises Virtual Power Plant technology, but goes much further.
For example, it:
- Allows you to register Flexible Energy Assets onto an easy-to-use digital platform that monitors the energy market in real-time, all the time;
- Allows asset owners to reduce their overheads and unlock untapped revenue by participating in the energy flexibility market;
- Monitors the grid and make small adjustments to Flexible Energy Assets by turning them up or down in response to changing energy demands, ensuring a more stable and efficient grid;
- Enables aggregation of smaller Flexible Energy Assets so that they can buy energy from a single developer, or multiple developers, as one larger entity – retaining the economic advantages of a high-volume purchase.
FLEXIBLE ENERGY ASSETS
Kiwi is transitioning from the use of the term Distributed Energy Resources (DERs) to Flexible Energy Assets.
Flexible Energy Assets are energy resources (potentially geographically distributed) that can be used on their own, or aggregated, to provide energy flexibility at times when the grid needs more or less power. They tend to be small-scale and are typically located within the electric distribution system at or near the end user.
Flexible Energy Assets include controllable loads (meaning that, in the simplest terms, they can be turned off or on, or turned up or down), conventional and renewable generation as well as storage. Common examples include rooftop solar PV units, battery storage, thermal energy storage, electric vehicles and chargers, building management technology, and smart meters.
Flexible Energy Assets are often referred to as “behind the meter”, because the electricity is generated or managed ‘behind’ the electricity meter at your business.
VIRTUAL POWER PLANT (VPP)
A Virtual Power Plant (VPP) is a shared ecosystem of energy generators, energy storage systems and businesses with turndown assets (such as fridges and heaters) – what many call ‘distributed energy resources and what we at Kiwi Power call ‘Flexible Energy Assets’ – all wirelessly connected, and managed through an energy flexibility platform (such as Kiwi Core).
As well as giving asset owners the opportunity to participate in energy markets, VPPs utilise energy flexibility to ensure a more stable energy supply, better energy efficiency and more opportunities for renewables to be accommodated on the grid. Ultimately, they give businesses the opportunity to make more profit, reduce their overheads and cut their carbon footprint with no disruption to their energy supply or financial risk.
DISTRIBUTED ENERGY RESOURCE MANAGEMENT SYSTEM (DERMS)
DERMS solutions share some common capabilities with platforms like Kiwi Core that enable VPP management – such as Flexible Energy Assets registration, aggregation, forecasting, real-time monitoring and control, optimisation and dispatch.
However, beyond these common capabilities, solutions like Kiwi Core uniquely provide capabilities for market participation (bidding, communication) and economic participation, whereas DERMS solutions are more about the physical operation and optimisation of Flexible Energy Assets – for example:
- Voltage management of the grid
- Optimisation of the power flow within the grid
- Local grid load management (e.g. for smart grid projects)
Kiwi Core works well in conjunction with DERMS systems – for instance, whilst our technology helps you manage a portfolio of Flexible Energy Assets, a DERMS solution will make sure we do that within the bounds of physical constraints.
Companies offering both VPP and DERMS technology almost always have come from one side (VPP or DERMS) where they are strong, and have ‘bolted on’ the other side due to customer/project demands. You end up with a strong VPP and weak DERMS or vice versa. With Kiwi Core, you get a strong VPP and you can license a strong DERMS to go with it if you need that functionality (you often do not). That way, you get the best of both worlds, and Kiwi Core will talk to the DERMS happily.
AGGREGATOR / AGGREGATION
Please note that this is an important legacy term, but is becoming increasingly a little dated as aggregation becomes less important for flexibility (there is no need to aggregate energy from smaller Flexible Energy Assets because technologies such as Kiwi Core allows them to participate directly in the energy system). It is, still however, a crucial part of the current energy mix, hence including a definition here.
Historically power markets have been designed for large centralised power stations and thus the minimum power (MW) thresholds for market participation have been larger than the typical Flexibility Energy Asset. Aggregation of multiple Flexible Energy Assets was required for market participation. With power markets permitting smaller and smaller assets to participate, aggregation is required less often.
As Kiwi Power was originally an aggregator itself, we know exactly what the challenges are and how to solve them to run the most efficient and profitable VPP possible. Our ten years of global experience in this emerging field has helped us build a best-in-class distributed energy platform, Kiwi Core, which means that aggregators can manage Virtual Power Plants easily and effectively.
We support a wide range of Flexible Energy Assets (both storage, generation and turndown) including those that are large enough to participate on their own without being aggregated. Therefore, aggregation is important – but not essential – for energy flexibility and Kiwi Core’s operations.
DEMAND RESPONSE / DEMAND SIDE RESPONSE / ENERGY FLEXIBILITY
Demand response, or energy flexibility, is the act of modifying the energy output or consumption of one or more Flexible Energy Assets in line with changing demands on/by the grid.
Historically, electricity grids were managed using “generation response” – meaning that the generation side of the grid was continually varied to meet the demand. When it became possible to also modify demand, the term “Demand Response” arose.
When total demand for electricity is at its highest – like when we’re all glued to the Great British Bake Off final in the UK, or the Superbowl in the US – we can use electricity more intelligently, rather than simply generating more to meet short periods of huge demand. For example, supermarkets might turn down their freezers, or large factories might delay an energy-intensive process to another time, when there’s not so much rush-hour traffic on the energy grid.
Energy flexibility is becoming increasingly critical with the growth of renewables, which fluctuate in terms of the energy they generate. This means that not only is there an intermittent need to produce more power, but also a need to mitigate over-supply by ‘turning down’ Flexible Energy Assets so that the grid remains balanced and efficient. Thus, energy flexibility is crucial in supporting the transition to lower-carbon generation.
Kiwi Core allows owners of Flexible Energy Assets to both supply and turn down energy in a way that does not disrupt their business operations but helps to balance the grid, generate revenue and reduce overheads – all whilst helping our energy system transition to its cleanest, smartest self.
LOCAL GRID OPERATORS
Depending on the market, Local Grid Operators may also be referred to as DNO or DSO.
Put simply, a grid operator is a company licensed to distribute energy.
Note we’ve used ‘smarter’ grid operators here, not ‘smart’. The idea of a ‘dumb’ grid is now very out of date, given longstanding developments in the field and the exponential growth of new energy flexibility technologies such as Kiwi Core. However, in line with recent UK government policy announcements, we have also included ‘smart systems operators’ as a term that we will continue to use in some cases.
Put simply, a grid or systems operator is a company licensed to distribute electricity.
These companies own and operate the system of cables and towers that bring electricity from the national transmission network to our homes and businesses. But increasingly, they are also a key player in managing and supporting the transition to an energy system that’s fit for the future – which is less about building more physical infrastructure to accommodate growing energy needs, and instead becoming an active manager of the grid by embracing energy flexibility to ensure we can efficiently balance power generation and consumption across the grid.
When we talk about grid operators, names and roles vary by geography. Broadly, these entities used to have a sole focus on building and managing the physical infrastructure that was designed to have electricity flow one way from a large centralised source such as a power station. Now, they are supporting the transition to an energy system where electricity flows both ways and is balanced and synchronized across hundreds, even thousands of power sources at once – what we call Flexible Energy Assets, which can range from large commercially owned developments to smaller scale generators.
In Europe, we can see this transition reflected in the terms ‘DNO’ (Distribution Network Operator) and ‘DSO’ (Distribution System Operator). By embracing energy flexibility and transitioning to DSOs, DNOs can avoid some of the costs associated with network upgrades and enable customers to connect to power quicker and at a lower overall cost. That’s not to mention the sustainability benefits of a more efficient energy grid.
In North America, the role is played by different entities (and not as strictly segregated as it is in Europe). E.g. local utilities may have both typical utility as well as local grid management responsibilities, and are therefore often in a position of acting as DSO and Aggregator at the same time. As a whole, it is true to say that the North American energy market is embracing the flexibility revolution.
‘Smart’ is becoming an old-fashioned term; there is no such thing as a ‘dumb’ grid nowadays given technological developments and also mindset shifts in the ways that the energy industry conceptualises and manages its energy system (as something to balance efficiently through energy flexibility, rather than a physical infrastructure that must keep growing).
The grid is certainly getting smarter all the time as energy flexibility becomes the norm, and the entities that manage power are also having to grow their expertise and skills in this area. For a description of how the grid and key stakeholders are evolving, see the explanation above about the translation of DNOs to DSOs.
Supporting technologies, like Kiwi Core, keep getting better and better also, opening up the market to a wider number of organisations who stand to benefit from these developments.
You could also say that ‘smart’ is synonymous with the growth in renewable energy coming online, as more and more sources appear which offer more possibilities for energy flexibility.