Coordinating Distributed Energy Resources for Reliability can Significantly Reduce Future Distribution Grid Upgrades and Peak Load

Current DER coordination schemes, such as demand-response and VPPs, aim to reduce electricity costs during peak demand events with no consideration of distribution grid reliability. We show that coordinating DERs for grid reliability can significantly reduce both the infrastructure upgrades needed to support future increases in DER and electrification penetrations and peak load. Specifically, using a power flow driven simulation-optimization methodology, we compare the potential reliability improvements with a perfect-foresight centralized DER controller that minimizes reliability violations to a local controller that minimizes consumer electricity cost. We find, for example, that by 2050 with local control, on average 81% of the transformers in a distribution grid experience violations, compared to 28% with centralized control, which simultaneously reduces peak load by 17%. These reductions are achieved with only 5.1% increase in electricity cost. These findings suggest that future incentives for DER adoption should include reliability coordination.