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Glossary · Energy industry & energy transition

DERMS, Distributed Energy Resource Management System

DERMS Distributed Energy Resource Management System distribution grid flexibility grid operation prosumer Digitalisation

DERMS stands for Distributed Energy Resource Management System, in German roughly "Managementsystem für dezentrale Energieressourcen". It refers to a digital system used to record, monitor, forecast, coordinate and, in part, control distributed energy assets in the power system. These assets are not connected to the transmission grid as large central power plants but are connected in a distributed manner in the distribution grid. They include photovoltaic systems, battery storage, wallboxes, heat pumps, small combined heat and power units, emergency power generators, flexible commercial loads and combinations of these in buildings, neighbourhoods and businesses. The term comes mainly from the North American professional debate. In its guide IEEE 2030.11-2021, the IEEE describes the purpose of a DERMS as follows: it is meant to aggregate and deploy many distributed assets, coordinate their operation in the power system and optimise their output. The guide is not a binding product standard. It describes principles, core functions and a common terminology for grid operators, manufacturers and service providers.

A DERMS works at the level of many individual assets. For each asset it must know: Where is it connected? What technical capacity does it have? What operating state is it in at the moment? What control is permitted by contract or by law? And how would a switching action or power limitation affect the grid, the market or the customer installation? What often matters is the instantaneous power, measured in kilowatts or megawatts. Grid congestion, voltage problems and connection limits arise from feed-in or withdrawal at a particular moment. Energy quantities in kilowatt-hours also remain important, for example for billing, storage state of charge and economic optimisation. However, they do not show whether a grid section is overloaded in a particular quarter-hour. An analogy: the annual number of cars on a road says little about rush-hour traffic jams.

Distinction from energy management, virtual power plants and grid control systems

A DERMS is easily confused with other digital systems. An energy management system in a building or business usually optimises only its own customer installation. It decides, for example, when a battery is charged, when a heat pump runs or how a wallbox responds to an electricity tariff. A DERMS, by contrast, looks at many assets across several connection points, from the perspective of a grid operator, aggregator or platform.

A virtual power plant usually pools distributed assets for the electricity market. It markets flexibility, balancing energy or schedules and treats the assets like a controllable portfolio. A DERMS can support such functions. The IEEE guide also explicitly extends its approach to control systems of virtual power plants. However, a DERMS is not automatically a virtual power plant. Its task can be purely grid-serving, for example when it limits feed-in peaks in a low-voltage feeder or coordinates controllable consumption devices.

A DERMS also differs from classical grid control systems. Control systems traditionally monitor and control substations, switchgear and larger items of equipment. They are central to grid operation, switching states and operational security. An ADMS (Advanced Distribution Management System) bundles such functions for the distribution grid. A DERMS extends this view to the low-voltage level, to customer installations and to many small resources. In practice it can be standalone, be embedded as a module in an ADMS or be connected to aggregators' systems. This creates an interface between grid operation, metering, customer communication, market processes and device technology. This interface is demanding because many grid-relevant assets do not belong to the grid operator.

Why distributed assets need their own management

Photovoltaics, heat pumps, electromobility and battery storage are changing the distribution grid. In the past it mainly distributed electricity passively. Today feed-in and demand fluctuate, and part of them is controllable. In many low-voltage grids, load used to be easy to plan. Today a sunny midday can push a lot of electricity back into the grid, while in the evening many charge points draw power at the same time. The amount of electricity over a year says little about whether cables, local distribution transformers or voltage bands reach their limits in particular hours.

A DERMS is meant to make these processes visible and manageable. This requires master data of the assets, measured values, forecasts for feed-in and consumption, grid models, switching states, priority rules and control commands. The interventions can look very different. A photovoltaic system can reduce its active power. A battery storage unit can charge at a different time. A wallbox can temporarily lower its charging power. A heat pump can run later within thermal limits. These interventions differ technically, are worth different amounts economically and are not legally permissible without restriction.

The practical significance therefore does not lie in the software alone. A DERMS works only if several preconditions are met: measurement and control technology is in place, communication is reliable, the assets are correctly registered and the grid models are accurate enough. In addition, rules must define when which asset may be addressed and for what purpose. In Germany this concerns, among other things, intelligent metering systems, smart meter gateways, controllable consumption devices, grid connection rules, data protection and the responsibilities of distribution system operators, metering point operators, suppliers, aggregators and asset operators.

Legal framework in Germany: grid-oriented control under § 14a EnWG

German law does not use the term DERMS. For one important use case, however, there is a clear framework: § 14a EnWG. Under it, the Bundesnetzagentur (Federal Network Agency) can set nationwide uniform rules on how distribution system operators control controllable consumption devices in a grid-oriented manner. In return, grid charges are reduced. As controllable consumption devices, the law names in particular heat pumps, non-publicly accessible charge points, cooling systems, electricity storage and night storage heaters. Control can take place via economic incentives, via agreements on grid connection capacity or via the control of individual devices. The law also allows the Bundesnetzagentur to oblige grid operators to monitor and digitalise their grid more precisely. This is a typical DERMS task. If a metering point is equipped with an intelligent metering system, control must in principle take place via the smart meter gateway. The requirements of the Messstellenbetriebsgesetz (Metering Point Operation Act) and the BSI Technical Guidelines apply.

The details are governed by the Bundesnetzagentur determination BK6-22-300 of 27 November 2023. It applies to devices in the low-voltage grid (grid levels 6 and 7) with a grid connection capacity of more than 4.2 kW. For a storage system, only charging counts, that is, electricity drawn from the grid. Even during control, a minimum power of 4.2 kW must remain available for each directly controlled device. A heat pump can thus keep running and an electric car can keep charging, only more slowly. If control takes place via an energy management system, the minimum power for several devices is calculated using a formula with a simultaneity factor. Until the necessary grid state determination is possible, the grid operator may, as a transitional measure, control preventively. This is permitted for 24 months at most and for at most two hours per day. Electricity from the customer's own installation is not counted towards the 4.2 kW threshold. For a DERMS this means: grid-oriented interventions in Germany are not free disconnection. They are bound to minimum power levels, grid state data and documentation obligations. § 14a EnWG does not regulate the limitation of feed-in from PV systems. Other provisions apply to that.

Control is not an end in itself

A common misunderstanding is that a DERMS is mainly a tool for switching off distributed assets. This view underestimates what a DERMS can do. First, it creates transparency: Which assets exist? At which grid point are they connected? What power is available? Where do bottlenecks threaten? Which forecasts are reliable? Without this information, grid problems are detected too late or the grid is expanded across the board as a precaution.

Control is a possible next stage. It can be hard or soft. With hard control, an asset receives a specific setpoint, for example a limit on its active power. Soft control works with price signals, recommendations or optimisation targets that local energy management in the customer installation implements. In between there are many variants, such as time-limited grid restrictions, contractually agreed flexibility calls or automatic specifications under statutory rules. § 14a EnWG even explicitly allows the Bundesnetzagentur to give economic incentives and agreements on connection capacity priority over the control of individual devices.

A second misunderstanding equates technical controllability with available flexibility. An asset can be technically reachable and yet have hardly any shiftable potential. A heat pump can be shifted only as far as comfort limits and the thermal inertia of the building allow. An electric car is not always at the charge point and must be sufficiently charged by a certain time. A battery storage unit may already be full or empty. Photovoltaics can be curtailed when there is a lot of sun, but missing sun cannot be brought about by control. A DERMS must take such states into account. Otherwise the control appears more precise than it actually is.

Grid, market and responsibilities

A DERMS is needed where the physical effect of distributed assets no longer fits the division of tasks in the power system. The grid operator is responsible for safe grid operation but does not own most flexible assets. Suppliers or aggregators can market flexibility but do not always know the local grid limits. Asset operators want to optimise self-consumption, comfort, mobility or revenues. A DERMS does not resolve these conflicts of objectives, but it makes them visible in operation.

It is particularly delicate to coordinate use for the market and use for the grid. If many wallboxes charge at the same time because of low exchange prices, this can cause a local grid problem even though the price signal makes sense from the electricity market's perspective. Conversely, a grid-serving limitation can prevent a battery from responding to a high price. A DERMS can implement priorities technically. It does not, however, replace the decision on which use takes precedence and how interventions are remunerated or justified. These questions are settled by legislators, regulators and contracts.

Where costs are concerned, too, a DERMS makes the trade-off more precise. Grid expansion cannot be fully replaced by digitalisation. Cables, transformers and switchgear remain necessary if more power is to be transported permanently. A DERMS can, however, limit peaks, make better use of existing grid capacity, identify bottlenecks more precisely and plan investments more accurately in time and space. Instead of building reserves across the board, one then weighs grid expansion, control, metering, contractual flexibility and operational risk against each other.

Requirements for data, standards and trust

A DERMS is only as reliable as its data. Wrong connection locations, outdated master data or inaccurate grid models lead to wrong decisions. In low voltage in particular, grid topology, phase connections and actual load flows are often less well known than at higher voltage levels. Measured values, models and forecasts must therefore be brought together. This is not just about real-time data but also about probabilities: How reliable is a forecast for PV feed-in, charging behaviour or heat demand?

Standards play both a technical and an organisational role. Devices must understand commands, communication paths must be secured, and the interfaces between grid operator, metering point operator, aggregator and customer installation must be clearly described. Internationally, the guide IEEE 2030.11 provides orientation for the functions of a DERMS. It belongs to a series of IEEE work on the management of distributed assets, which also includes the IEEE 1547 series. In Germany, the framework for grid-oriented control is set above all by the Messstellenbetriebsgesetz, the BSI requirements for the smart meter gateway and the determinations of the Bundesnetzagentur. Without common protocols and clear responsibilities, manufacturer-specific isolated solutions emerge. They make individual projects possible but make scaling, competition and later integration harder.

Data protection and cybersecurity are not side issues. A DERMS processes data on consumption behaviour and asset states, in part also on presence or operating procedures. At the same time, a compromised control system can have physical consequences in the grid. Access, authentication, logging and purpose limitation must therefore be properly regulated. Trust arises less from general promises of digitalisation than from traceable rights, limited options for intervention and verifiable technical procedures.

DERMS thus does not denote a single application that automatically optimises the distribution grid. The term stands for a coordination layer between distributed assets, grid operation, market processes and customer installations. It becomes precise when the specific task is named: establishing visibility, using forecasts, calling on flexibility, observing grid limits or coordinating market portfolios. Its significance grows with the number of assets. Each one contributes little, but together they change connection capacities, load profiles, voltage maintenance and operational management in the distribution grid.

Sources

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Edited by eCMS on 11.11.2026 18:57

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