January 29, 2024

Distributed Energy Resources (DERs)

Distributed energy resources, in short DERs, are small-scale energy assets that generate, store or consume energy. The most common examples are photovoltaic (PV) systems, electric vehicles (EVs) and charge points, batteries and heat pumps. Distributed energy resources can either be individual physical assets or aggregated virtually. Usually, DERs have a maximum capacity of less than 10 megawatts (MW). Most often, DERs consume electricity near where it is generated, as the sources are smaller, more decentralized and localized. This makes them a fundamental part of advanced power grids, or smart grids. 

How DERs work

DERs can be found in private households, businesses or utilities. As they are commonly installed close to where their electricity is consumed, they are typically located “behind the meter”, meaning that they are installed on the consumer side of electricity meters. Despite their localized consumption, DERs are most often still connected to the public grid. 

Having an increasing number of small-scale assets can heighten imbalances between supply and demand. However, when they are intelligently integrated into wider energy systems, monitored and controlled, they can actually improve the reliability and resilience of power systems. At the same time, DERs can reduce transmission losses, and lower carbon emissions. 

Physical DERs 

Physical DERs are locally operating, small-scale assets that generate, store or consume energy. Physical DERs that generate energy can be classified into five categories, depending on their installed capacity: 

Source: Australian Energy Market Commission

Virtual DERs

Virtual DERs are a collection of aggregated physical assets that are made available to a utility. A special form of virtual DERs, wherein several megawatts of power is bundled and made available to electricity markets is called a Virtual Power Plant (VPP). VPPs can combine several different types of physical assets, regardless of how they generate electricity. The VPP sector is currently growing rapidly. In the near future, Vehicle-to-Grid (V2G) technology will also burst onto the EV scene, once regulatory and technical hurdles are overcome. Then, the enormous potential of EVs and their batteries can be leveraged by enriching the grid with their valuable capacity.

Additional features

Equipping DERs with a communication and/or control system connects and synchronizes devices so that generated electricity is in phase with the power grid and all devices can be directly and automatically managed, for example by grid operators or private individuals. On top of this, metering devices measure the feed-in and demand from DERs. Upgrading to meters with two-way metering and time-of-day metering (aka. smart meters) enables more sophisticated tracking of generation and consumption, more accurate billing of electricity costs, and better detection of power quality issues, such as drops in voltage. Lastly, aggregation software is often necessary to manage and operate virtual DERs, as it allows operators to take the various constraints and characteristics of each aggregated asset into account.

Common protocols

As heating and mobility electrify, the number of DERs generating and consuming electricity is increasing. To maintain balance in power grids, the first step is to allow devices to communicate with each other. This is why we need communication protocols. 

  • Open charge point protocol (OCPP): OCPP is a universal application protocol that standardizes the communication between EV charging stations and a central management system. The goal of OCPP is to enable manufacturer-independent communication between EV charging stations and their backend billing and management systems via an open application protocol. It was created by the E-Laad Foundation in the Netherlands.
  • EEBUS: EEBUS is a common and manufacturer-independent language for energy management in the Internet of Things. More specifically, EEBUS is a communication interface based on standards and norms that can be used freely by any device or platform, regardless of the manufacturer or technical specifications. EEBUS allows energy suppliers and households to exchange information to increase energy efficiency. Only through this exchange can the full potential of smart homes be realized. For companies, cross-sector communication simplifies the development of new products, services and business models. EEBUS was developed by the German association EEBus Initiative e.V.
  • Modbus: The Modbus protocol is an open communication protocol that enables data exchange between electronic devices. The client device (usually a computer) issues commands to server devices, which supply information in return. There are a number of different modbus types of modes, which each serve a different purpose. The most common are RTU (serial communication media), TCP (Ethernet) and ASCII (serial lines). Modbus is the most commonly available means of connecting industrial electronic devices. Modbus was created in 1979 by Gould-Modicon, originally intended for communication with its programmable logic controllers.

Contribution to a renewable power system

Integrating DERs into the grid provides many benefits. Our XENON platform not only ensures seamless communication between all assets, but also optimizes the energy flows between them to minimize costs and emissions and maximize user comfort. Private individuals or businesses with DER units not only reduce their electricity bills by producing their own electricity, but can also create new revenue streams by selling power back to the grid. Producing electricity closer to where it is consumed also alleviates issues of transmission and enables consumers to gain transparency and control over their energy consumption (with the right technological tools). By avoiding grid extensions and using existing systems more intelligently, smart and connected decentralized energy systems allow us to more quickly increase the share of renewables in the power mix and lower the carbon emissions of the energy sector. 


DERs are the key to enabling the energy transition, meaning the number of solar panels, heat pumps, batteries and electric vehicles will surge dramatically in the coming years. However, this will place increased pressure on power grids, which were designed with centralized generation from large coal, gas or nuclear power plants in mind. By leveraging digital technology to better match supply and demand in decentralized energy systems, we can unlock the full potential of devices, such as using electric vehicles as batteries. Only then can we leverage the true value of renewable energy by making it smart, reliable and scalable.