Biden’s rural electrification program may also help coops invest in DERMS

As November’s election closes in, the Biden administration is working to push Inflation Reduction Act dollars out the door. The latest installment totals $7.3 billion in grants for clean energy projects for rural electric cooperatives, in what the administration is characterizing as the biggest investment in rural electrification since Franklin D. Roosevelt’s New Deal.

• The top line: The money will be divided among 16 rural electric cooperatives in 23 states, as part of the Department of Agriculture's Empowering Rural America program, or New ERA. The funds will enable the purchase of clean energy — over 10 gigawatts, per the White House’s estimate — and the infrastructure that will get those electrons flowing. That includes physical equipment like transmission or substation upgrades, as well as distributed energy resource management systems, or DERMS.
• The market grounding: States are increasingly compelling utilities to invest in virtual power plant programs, though even major utilities are still relatively new to the DERMS required to aggregate distributed resources; Xcel in Colorado, for instance, has found that selecting a DERMS is its biggest hurdle in setting up its program. That task may be simpler for smaller electric cooperatives, but in an era where the entire electricity system is evolving fast, they can surely use all the federal help they can get.

Dairyland Power Cooperative, in Wisconsin, is the first cooperative to receive an award of $573 million. That money will be used for a slew of projects — eight clean power purchase agreements to the tune of 1,080 megawatts total, four solar installations, and four wind power installations — that total $2.1 billion.

The other 15 selected applicants in the first round of selections, which include Great River Energy and United Power, are currently in the underwriting process to receive an award. 

Rural communities have historically had higher energy costs than the rest of the United States, due largely to distribution challenges. The USDA New Era program offers utilities a grant for up to a quarter of their project costs; loans and grants are limited to $970 million per cooperative. 

The White House announcement is thin on details of the DERMS investments that it is encouraging, the systems are among the tools expected to “lower energy costs for rural Americans and enhance grid performance, resiliency, and reliability.”

That said, none of the applicants highlighted so far seem to be planning to use a significant chunk of the funding for DERMS, begging the question of how much those systems will be a priority — especially given the reticence of many utilities to integrate new digital technologies. PPAs for solar, for instance, are likely far more straight-forward for rural utilities aiming to bring down energy costs for customers and up their clean energy deployment.

Federal encouragement for DERMS

Nonetheless, the Biden administration is encouraging the use of DERMS and other distributed systems for utilities.

The Department of Energy’s April “liftoff” report on grid-enhancing technologies outlined how to bolster the existing grid without adding capacity — especially while getting new projects interconnected to the grid remains such a challenge. One highlight? Using DERMS and advanced distribution management systems (or ADMS) to improve situational awareness and system automation on the grid.

Meanwhile, in August, the White House announced its five priorities when it comes to using digital resources to “support a secure energy future,” and distributed control systems was among them. That announcement specifically highlighted the importance of cloud-enable distributed control to leverage the network connections of DERs. 

“Secure-by-design management software will enable greater operation and coordination of hundreds of thousands of distributed energy assets, virtual power plants, community microgrids, and other innovative energy systems, while integrating advanced cybersecurity control technologies,” the White House said in a statement at the time.

But those were just a statement of priorities. Now, armed with a portion of this most recent tranche of IRA funding, the administration has the money to really encourage the use of tools that will inevitably underpin a more distributed energy system. The question, though, is whether utilities are ready to make use of it.