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The power grid explained — plus demand response, virtual power plants and more

Canary Media defines the concepts that are key to a clean, distributed electricity system, from “behind the meter” to “balancing the grid.”

By Alison F. Takemura

2 June 2022

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A split graphic showing transmission lines and birds on a distribution line. — (Binh Nguyen/Canary Media)

Ready to immerse yourself in grid lingo? Let’s dive in!

⚡ the grid

How does electric power reach our homes and workplaces? Via the grid — a vast network of electrical lines, transmission towers, transformers, and control and sensing equipment that carries electricity from power plants to where it’s used. The U.S. grid has been called the biggest machine ever built. And it has a pulse: an electric alternating current of 60 hertz (cycles per second) in the U.S.

The grid moves power around at different scales: Transmission networks carry large amounts of power over longer distances, while distribution networks carry power the final miles to our electrical outlets. Almost all electric power starts its journey from a large-scale generator like a solar array, wind farm, hydroelectric dam, nuclear reactor or coal- or gas-fired power plant.

The power then goes to substations where devices called transformers increase or “step up” the voltage — the force pushing electric current through the system. That boost enables the power to travel over long distances more efficiently.

Closer to where the electricity will be used, transformers then reduce or “step down” the voltage so power can more safely flow into the local distribution network, which includes underground cables as well as the power lines you see along neighborhood streets, bedecked in pigeons.

The changing energy mix is presenting major challenges to today’s grid. For example, the distribution system was designed to push electricity out to customers. But as more people install rooftop solar and batteries, an increasing amount of electricity is flowing in the other direction: from customers to the distribution network. This two-way system is more complicated for utilities to manage.

Customer electricity demand is also changing. As people shift to electric vehicles and switch from fossil fuels to electricity for home heating and appliances, the amount of power they can draw from the grid at any one moment increases dramatically. To keep up, the aging grid will need some serious upgrades.

🏡 behind the meter

Utilities use electricity meters to measure power going into customers’ homes and businesses. Devices that produce or store power inside those customer buildings are on the customer’s side of the meter, or from the utility’s perspective, behind the meter.

The term is most commonly used to describe things like rooftop solar arrays and home batteries. It’s also applied to smart appliances and smart thermostats, which can alter how much power a customer is using and when.

Conversely, front of the meter is used to describe technologies that are connected to the grid on the utility side of the meter, such as large-scale batteries.

More on behind-the-meter technologies from Canary Media:

🔋 distributed energy resource (DER)

The grid currently gets most of its power from central power plants. But electric power sources that are sprinkled throughout communities — such as solar panels, batteries, backup generators and, increasingly, electric vehicles — can also feed power to the grid. These distributed energy resources, or DERs, are found everywhere from households to commercial sites.

You may also hear the term DER applied to devices that don’t generate power but instead can be controlled so their electricity consumption ramps down when needed, such as water heaters and appliances. That’s because when they’re turned down or off, they free up energy on the grid. So — if you squint — they could be seen as energy resources.

Utilities and grid operators are usually unaware of exactly how much energy DERs are generating. But in some cases, they can control DERs through a combination of technologies that come together in what are called DER management systems, or DERMS.

🏭 virtual power plant (VPP)

Like a real power plant, a virtual power plant, or VPP, provides electricity to the grid. But instead of being sited in one place, a VPP harnesses distributed energy resources, or DERs (see above!) that are spread across an entire community. Private companies or utilities “operate” VPPs using software and digital communication networks to conduct a symphony of DERs.

By coordinating tens to thousands of these devices, VPPs can inject power into the grid or curtail demand, potentially as quickly as central power plants — or sometimes even faster. Depending on where you live, your household might be able to sign up to participate in a VPP and maybe even get compensated in return. Because VPPs take advantage of privately owned resources (such as homeowners’ solar panels and batteries), they can save a utility money, and the utility in turn could pass those savings on to customers in the form of reduced rates.

Bonus activity: Play this game to see how long you can manage power sources on a grid to prevent a blackout. Then switch the game into VPP mode and watch it crush your record.

📞 demand response

Say there’s a spike in electricity demand on a sweltering summer afternoon as people blast their air conditioners. Utilities could ramp up power generation to meet demand. But utilities could also pay customers to respond to the spike by voluntarily cutting back their electricity use. That’s the activity and business of demand response.

For decades, utilities have made demand-response agreements with big industrial customers to pay them to dial down their power consumption during grid emergencies. For example, a utility would call a manufacturer and ask it to temporarily shut down a factory line.

The next phase in the evolution of demand response came in the residential sector, with programs that paid customers who agreed to let the utility remotely turn off their air conditioners, electric water heaters, pool pumps or other energy hogs during demand spikes.

In the last 15 years or so, demand response has become more automated. Utilities and independent companies called demand-response providers use two-way wireless communications to link devices, like smart thermostats, to demand-response management systems (DRMS), which can more actively monitor and change the “shape” of a device’s electricity demand.

⚖️ balancing the grid

On the grid, the supply of electric power must perfectly match demand. Think of the grid as a massive, interconnected web of energy, constantly humming at a perfectly tuned frequency. For power to flow from any node in the web to any other node, that frequency must be maintained at all times — an activity known as balancing the grid. Any imbalance between the power energizing that web and the energy being consumed at the web’s millions of endpoints can cause that frequency to go out of whack — and if it goes too far, dangerous things can happen.

When demand outstrips supply, utilities and grid operators can either allow the imbalance to overwhelm the grid, which can cause extensive damage to the electromechanical parts of the system, or they can start to force customers off the grid with rolling blackouts. If the grid goes out of balance faster than grid operators can react, the safety equipment on the grid takes over, shutting off major swaths of the network and causing massive blackouts that can take days, weeks or longer to recover from.

To balance supply and demand, utilities have traditionally relied on central power stations, and when demand peaks, they have turned to so-called peaker plants that often run on fossil gas. But renewable energy and batteries offer cleaner ways to balance the grid. Also, equipment and appliances that can adjust their energy demand, such as air conditioners and freezers, can help if a number of them are coordinated together (see distributed energy resource and virtual power plant above).

More on balancing the grid from Canary Media:

🛎️ grid services

Grid services are functions that keep the power grid humming, provided by a wide variety of power sources, equipment and coordinating systems. These services are a wonky, motley crew, but they’re vital, which is why utilities and grid operators are willing to pay for them. Here are a few examples:

On longer timescales of hours to days, a primary concern for grid operators is the grid service of power capacity: They must ensure power generators, such as gas-fired power plants, wind farms and solar arrays, are providing enough electricity to meet ever-changing demand.
On the timescale of seconds to minutes, the grid might need ancillary services to balance the grid (see above). When a power plant goes out or a line goes down, grid operators rely on one such service: reserves. A battery, for example, can fill this role by instantly discharging power to the grid.
On the timescale of seconds, frequency regulation is a critical grid service — helping to maintain the grid’s frequency, which in the U.S. is 60 hertz (cycles per second). When too much electricity is being drawn from the grid, the frequency drops. If it falls too low, the lights go out (and the same thing happens if it rises too high). Power plants have traditionally provided frequency-regulation services, but those can also be provided by batteries, massive electric pumps or thousands of household electric water heaters being operated in concert as a virtual power plant (see above).

The power grid explained — plus demand response, virtual power plants and more

⚡ the grid

🏡 behind the meter

🔋 distributed energy resource (DER)

🏭 virtual power plant (VPP)

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📞 demand response

⚖️ balancing the grid

🛎️ grid services

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