| | MARCH 20199CIOReviewWhat are the DSO functions?Conceptually, DSO functions include the following:· Distribution Market Operator (DMO):Responsible for managing a platform for utility and third-party bids, offers, and bilateral transactions for distribution services, as well as transaction clearing and settlement.· Distributed Energy Resources Manager (DERM): Responsible for the monitoring, management, coordination and optimization of DER owned and operated by the utility, producers, or third-party aggregators. In other words, the DER Management System (DERMS) is responsible for orchestrating DER interoperability on the distribution networks with "in-front-of" and "behind-the-meter" assets.There are other DSO functions that include planning and forecasting, but the two listed above are the ones that most recognize as the profoundly transformative functions necessary to safely and reliably operate the grid in the duck curve scenario.There are other benefits to establishing DSO functions that are more subtle, but just as important:· Democratization of power supply and consumption: By creating a distribution market system, DER owners can participate in the overall balance of local power supply/demand and monetize their investments. It is important to understand that DER devices could support power generation and/or demand reduction ­ PV systems are examples of distributed generation; smart thermostats that can be managed to reduce load are examples of "demand response" batteries are assets that can consume or supply power. DSO functions incentivize investments in DER by creating opportunities for distribution network participants to monetize their investments and alsosupport greater reliability and resilience within their local network.· Green House Gas (GHG) reduction: Whether you follow the conversations on global warming or not, no one can argue that sunlight and wind are free. Harnessing these free available power generation opportunities is practical and logical. Wide penetration of PV and wind DER assets reduces the need for traditional power plants and reduces GHG emissions.· Reduction in electricity costs: Although there will obviously be costs associated with establishing the new DSO functions, over time the costs of electricity should drop. Reliance on local power resources rather than distant bulk generation plants and transmission systems will ultimately manifest in reduced construction and maintenance needs. Additionally, the costs of adding new DER to the system will be distributed across numerous actors instead of just the utility ­ and the majority of new DER systems will not require fuel or costly maintenance requirements. Finally, the distribution market functionality will drive "least cost" competition, further lowering end consumer costs of electricity.· Increased innovation: The democratization of the distribution system will create new business opportunities and clever, innovative approaches to individuals and companies that previously had no chance to operate in the monopolized markets that currently exist. A "New Energy Economy" will emerge that creates business value that transcends the power industry and becomes opportunities for academia, research, and investors. It also presents new opportunities for progressive utilities to provide new services, andgenerate more revenue and profit.Using these new DSO capabilities will lead to lower energy costs, a decarbonized power generation economy, and greater efficiencies, resilience, power quality, and reliability. This is the next evolutionary step required to create a New Energy Economy that empowers utilities, consumers, producers, third-party aggregators, technologists, and new business models to create more efficiencies, cleaner and cheaper power, better reliability and more resilience. The democratization of the distribution system will create new business opportunities and clever, innovative approaches from individuals and companies that previously had no chance to operate in the monopolized markets that currently existStuart McCafferty
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