David Latona: Welcome to Co-op Conversations with DEMCO, where we dive into topics that impact your power,
your co-op, and your community. I'm David Latona, your host.
Today we're discussing distributed energy resource management systems.
It is such a mouthful. They created a word for it or an acronym.
It's DERMS, D-E-R-M-S . We're going to talk about what they are, why they matter,
and how they can help keep your electricity affordable and reliable.
Joining us today is Jeff Andry, chief strategy and regulatory officer at DEMCO.
Jeff, it's so great to have you here because I definitely do not want to try to describe all of the nuances of
this particular system. Good to have you.
Jeff Andry: Yeah, it's great to be here, especially for our inaugural podcast.
David Latona: Hey, it is the first one, the first episode.
We're excited to be here. Our title or our podcast name is Cooperative Conversations with
DEMCO. So, Jeff, when we talk about DERMS, I know it's this acronym that
it sounds plural, but that's actually singular, right?
It's one system that that describes that distributed energy resource management system.
I think I have it down. I've looked at this so much and studied.
I think I have it down, but not as much as you do about DERMS.
Jeff Andry: Yeah. No, you definitely have it down. It's distributed energy resource management system. That is definitely a mouthful.
But if you break that down, it's really talking about two things. It's talking about DERs,
which are distributed energy resources, and then it's talking about the management system.
So just kind of breaking that down even further.
If we take a history lesson, you think about how electricity was delivered historically and how it's still delivered today in many
instances. You have these large centralized generating plants that produce vast amounts of power,
hundreds of megawatts at a time, in some cases thousands of megawatts at a time.
That power is generated. It's put onto the transmission system.
It's transmitted down to the distribution level, and then eventually it makes its way into people's homes and
businesses. And because electricity can't be stored, you kind of have that constant,
delicate balancing act trying to make sure supply and demand are perfectly in balance at all times.
David Latona: Okay. You can't have a giant battery or something that would provide power to an entire system.
Is that right?
Jeff Andry: That's right. Yeah. So our peak load is 695MW.
Battery storage is certainly an emerging technology in the industry,
but to store that amount of power and then to store it for long periods of time would be cost prohibitive.
David Latona: That's interesting too, because.
So that number 600, what was it?
Six? 695. 695. And we at DEMCO, we're considered a larger electric
co-op in the country. That is about how many homes or how many businesses does that number
represent?
Jeff Andry: Yeah, so we have 117,000 members on the district, on the DEMCO system.
About 92% of those by meter count are residences.
David Latona: Oh, wow.
Jeff Andry: So 92% of 117,000. It's a lot of homes.
David Latona: And as I understand, that's a larger ratio than is normal for an electric utility,
right? We have more residential consumers than we have commercial.
Is that right?
Jeff Andry: That's right. Yeah. It depends on where you are in the country. We serve those rural areas,
the areas that the investor owned utilities didn't view as profitable enough to serve.
And much of DEMCO's footprint is in that suburban Baton Rouge area where the homes and the small businesses are.
We don't have as much in the traditional industrial corridors in Louisiana,
which historically has been along the Mississippi River.
And then in some, you know, in some cases southwest Louisiana near Lake Charles,
a few other pockets, but most of our footprint is very suburban in nature.
David Latona: With a system that has so many residential consumers.
Is that better for a DERMS program?
Is our system more conducive for the success with a DERMS program?
Jeff Andry: Yeah, I think our system is very conducive.
So going back to our history lesson from a moment ago, you know,
historically you had these large central generating plants.
And as mentioned, you're constantly trying to balance supply and demand.
David Latona: Okay.
Jeff Andry: Most of that balance historically has taken place on that supply side of the equation.
So if your demand was increasing, if your load on your system was increasing,
you would either go build new plants in the case of a utility that owns generation.
Or in DEMCO's case as a non-generation owning utility, you'd go buy more wholesale power.
David Latona: Okay.
Jeff Andry: What has changed recently is that a lot of utilities have realized you can probably match that supply and demand more
cheaply if you can do more on the demand side of that equation.
David Latona: Okay.
Jeff Andry: And recently, more tools have become available to utilities to help them manage that demand side of the equation.
So you're still having to balance the two.
David Latona: Yeah.
Jeff Andry: But with distributed energy resources, you're utilizing our members own resources as a tool on the
demand side of that equation to help you achieve a balance more cheaply than if you were only focused on the supply side.
David Latona: I got you. So if I'm one member, right, not the mass quantities together.
But if I'm just one member, what does that look like to me?
Where does my interest lie as one member who might participate in a utility's DERMS program?
Jeff Andry: Yeah. So there's lots of different types of what we call DERs – distributed energy resources,
right? So some of the more obvious ones are rooftop solar.
That's one form of DER. If you have residential battery storage, which we don't have a lot of in Louisiana,
but in other parts of the country, you have a lot of that. That's also a DER.
One thing we do have a lot of in Louisiana are whole home generators.
That is a DER. And then others, you know, maybe not as intuitive,
but things that could allow you to control load, right?
Things that cause load to happen, such as smart thermostats and things of that nature.
All of those are DERs.
David Latona: Okay. And as I understand, in the south, in south Louisiana, a large part
of one members load is air conditioning and heat.
Jeff Andry: That's right.
David Latona: Heat specifically. And even here, when heaters, when furnaces are electric and not gas,
that falls on us at DEMCO, right?
Not the gas company, but it comes to us, right?
How does that impact that load that we're talking about?
Jeff Andry: Yeah. So it is somewhat counterintuitive.
I f you look at some of the utilities in north Louisiana, they actually tend to have the highest load in the summertime.
So north Louisiana, where it's colder than here, they have the highest load in the summer. In south Louisiana,
many utilities, especially utilities with a lot of residential members like DEMCO,
actually peak in the wintertime.
And that's because of that the strip heating that we have that's very prevalent in south Louisiana and also places like Texas.
It's a very inefficient device, about five times less efficient than HVAC units that run in the
summertime.
David Latona: Oh, wow. Yeah. Okay. And then a particular DERMS, right.
It's a system. That "s" stands for system.
So there's many, many pieces that will put that together for a utility.
Right. So what role does that DERMS, that individual DERMS, program play in managing these
resources that members own, right?
The members own their own DERs. But how does the DERMS actually control or manage that system?
Jeff Andry: Yeah. That's right. So when you are focused on that demand side of the equation, as we talked about,
you're talking about aggregating a lot of different types of devices.
The average HVAC unit is about two kilowatts, right?
So compare that to hundreds or even thousands of megawatts of generation on the supply side.
You have to aggregate a lot of devices in order to have an impact.
And to do that requires a lot of intelligence.
And that's what the "M-S" of that acronym is.
David Latona: Okay.
Jeff Andry: That's the management system that allows you to control and really orchestrate all of those DERs on your system.
David Latona: Yeah. So it takes software, and it takes servers, and it takes a brain behind that system that
when members choose to participate, right, they allow that system to do what to that
thermostat or even that water heater.
How does that work?
Jeff Andry: Yeah. So, you know, controlling one thermostat or having one member with rooftop solar is not really going to move the needle.
It's really the magic comes when you can aggregate those resources and get them to operate in a way that is consistent
with a larger goal.
David Latona: Okay.
Jeff Andry: And so that's where the, that's where the DERM system comes into play.
It allows you to aggregate those resources and almost view them as if they were one large resource,
like a traditional generating plant.
David Latona: Okay. So if we have that whatever that magic number of aggregate,
right, whatever we would shoot for that percentage of our 117,000m.
When that happens, how could a system like DERMS help co-op members save money?
So when we have our goal met of so many participating members, how does that move the needle
for them, like on their bill itself?
Jeff Andry: Right. So most hours of the year DEMCO's load is not any higher than 5 or 550MW.
For less than 50 hours out of the year, and it usually coincides with winter storm type events,
our load spikes from 500 or 550 all the way up to near 700.
I mentioned the peak earlier of 695.
David Latona: Yeah.
Jeff Andry: So those are just a few hours of the year that you're paying for that high amount of load is exorbitantly expensive.
David Latona: Okay.
Jeff Andry: It's expensive in terms of the energy price, and then you also have to go procure enough capacity.
David Latona: Okay.
Jeff Andry: To serve that amount of load. So anything you can do to be more efficient to minimize that peak,
we call it peak shaving in the industry.
You're going to save money not just for the members who are participating, but for the system as a whole,
which by extension the entire membership as a whole.
David Latona: Just for our listeners, I know that we have, we purchase our power,
and we deliver it. We don't make our power.
We have to buy the power. Not only the power, but we have to buy the capacity.
Is that right? And that's where our DERMS program can save us.
Let's talk about that market price and how it fluctuates like it does in many other industries,
but how that fluctuation affects that member's rate later on.
Jeff Andry: That's right. Yeah. So our load is just the demand on the system.
So just I'll use Uber as an analogy.
When there's more demand for Uber, the price of that ride is higher.
Electricity works the exact same way.
Prices are the highest when there's the most demand on the system.
So if we can partner with our members in a way that allows us to utilize their devices from time to time to potentially reduce the
amount of load on the system, we can really move the needle in terms of cost savings,
not just for that individual member, but for all members.
David Latona: So like Uber, I know it fluctuates almost while you're watching it,
right? You're watching it on that app.
And and that price may go up and down, say after a big football game or the big concert.
When you walk outside with 50,000 to 60,000 other people looking for a ride,
well, that price begins to climb, right?
Jeff Andry: 100%.
David Latona: Same thing with that demand on an industry like the capacity to purchase power.
Jeff Andry: 100%. If you're trying to get an Uber at 6:30 before 7 p.m.
LSU kickoff, off, it's going to be much higher than if you go at 2:00 on the same day.
Electricity works the exact same way, right?
When demand is the highest, price is the highest.
And so anything we can do to offset some of that demand during those high price periods is going to be a big win for our
members.
David Latona: I'm going to ask this because I know that my lovely wife would be interested in this.
If there's a DERMS program with our utility that provides electricity to our home,
and I check the box for I want my thermostat to be a part of that.
What does that mean for her comfort level in the summertime and the wintertime as well?
Jeff Andry: Sure. So a properly structured program, certainly you don't want to modify the temperature in anybody's
house for a long period of time.
But if you're looking at 20MW in total, and you can cycle five megawatts at a time over 15 minute
intervals, nobody's going to notice a change in the temperature inside their house over just 15 minutes.
David Latona: I like that you said nobody's gonna notice because I know she would – I would not want her to notice.
Because if it gets uncomfortable, now you've got members that maybe I don't want to do that.
Or maybe the incentive is not enough to have me do that on behalf of the entire membership,
right? Because if I've got participants in this program, it's impacting the entire membership,
right? And that's in the future, right?
Like we said, I'm gonna do something now for an investment in the future.
So that impacts the rates. Is that how that works?
Jeff Andry: That's right. So if you can do your part and, you know, some folks are more willing or potentially more able to
do so than others. And so certainly everybody should feel free to consume what they need to maintain their comfort.
We're not advocating against that by any stretch.
But if you are able to participate, that financial incentive, it's our job to structure that in a way
that is meaningful and makes sense to you.
David Latona: Okay. So I know you do this for a living.
So you've probably looked into other utilities that provide a similar program.
Is that, if my water heater is a part of that program, and I've got,
like we said, I've got houseguests, is there a time where I can say,
"Hey, turn off the DERMS right now so I can just be comfortable for," let's just say for this billing cycle or for this
month. Would I, or the utilities that you've seen, do they have that opportunity to say,
"Hey members, you participate, but you've got these opportunities to use more when you need it,
if so." And maybe you don't get the incentive that month, or how does that work?
Jeff Andry: Right. So most utilities across the country are taking a two pronged approach to that issue.
Most offer some form of upfront incentive just to, you know, show appreciation for folks being willing to
participate to begin with. But the real value of these DERs is being able to rely on them when you need them.
So for that reason, there's often an incentive that is event driven as well.
So you get an additional incentive for each event that you participate in.
And if you don't participate, you wouldn't get the incentive for that event.
And most of these programs do have opt out features.
You would forego the incentive, but you would maintain that flexibility yourself.
David Latona: Excellent. This has been an incredible episode, a great conversation.
Jeff, thank you for being on the inaugural episode of the podcast Co-op Conversations.
To learn more about DERMS, you can visit demco.org.
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For Jeff Andry, I'm David Latona.
Let's keep the conversation going.