Following the acquisition of Rhythmos – which enables Electron to deliver cost-effective value orchestration capabilities – Chris Broadhurst, Electron’s CCO, shares his thoughts on why this solution is needed for proving the value of flexibility, why it’s important now, and how it’s different to how things have been done before.
What’s changed in the energy industry in the last 18 months that made Rhythmos the right answer?
I’ve spent the last 18 months meeting with US utilities to understand where they’re at in terms of leveraging distributed energy resources (DERs) as flexible grid assets. I initially assumed what was missing was a market to streamline interactions between DERs and utilities – in the same way we’ve helped distribution utilities in the UK run flexibility markets on ElectronConnect.
In reality, what we’ve learned is that in the US there are already demand response and energy efficiency programs, and grid services being procured by utilities. If you zoom out, markets and utility programs are pretty similar – both are effectively long-term procurement of capacity.
What has become apparent is that the challenge utilities face isn’t just a need for better programs, they also need tools to help them build a better business case for DERs in the first place.
They have direct customer relationships, own the distribution grid, and carry wholesale market risk. This means there’s more at stake when it comes to relying on distributed flexibility, and therefore a much greater need to demonstrate cost prudence in their investments – whether that’s state regulators, co-op members, or their municipal board of directors.
They need to prove that every dollar spent is in the best interest of customers, shareholders, and the grid. That’s difficult when you’re relying on assets you don’t control and have limited visibility of.
Our key takeaway from all of this is that we think this is a buy-side problem, not a sell-side one.
Companies like Tesla and Voltus already operate gigawatt-scale virtual power plants. What’s lagging is utilities’ ability to a) value, and therefore b) rely on DERs to provide grid services at scale.
Utilities are struggling to properly identify and value DERs and the broad range of benefits they can provide back to the grid, and therefore struggle to compare them like-for-like against traditional options like reinforcement. For the same reasons, this also makes it difficult for utilities to put a compelling case to regulators that they should earn a return on that investment instead. There’s a lack of defensible data on where the DERs are, what value they provide, what impact they have, and whether they can be relied upon – making it difficult for utilities to know where and when to pay for their services.
We know from experience that local flexibility markets are great at getting recurring access to data about DERs you don’t own and control. This is a function of issuing price signals and learning who responds and how.
That feedback is valuable, but markets alone don’t tell you where to run them, how to target flexibility, or how to value it beforehand. They don’t show you what hidden DERs are already doing on the grid. This creates a chicken-and-egg problem which is particularly challenging when you need a clear cost-benefit analysis before making a decision.
That’s why the capabilities that we’ve now brought in house through the acquisition of Rhythmos is so interesting and complementary to what we do. It lets us take what the utility already owns – the meter and its data – disaggregates it, and identifies where DERs are and what impacts they’re having at lower levels of the network. And this can be done in weeks, not months.
This rapid approach gives utilities an accurate view of where DERs are and what their grid impact is.
This data can then be used to optimize existing programs and markets, as well as provide the justification for introducing new locational grid services that are provably net-beneficial to the system and complimentary to those existing programs. This holistic approach is what gives rise to truly grid aware, value-based orchestration of DERs – or value orchestration, for short – enabling utilities to prove – with defensible data – that their investment was the right one, at the right time and in the right place.
Why is that level of proof of DER value for regulators so critical right now?
This is really the story of load growth and affordability colliding. Electrification, AI and onshoring (to name a few) are the megatrends driving unprecedented demand growth. This is rubbing up against aging grid infrastructure which is struggling to keep up, ultimately leading to rising costs for consumers and a growing affordability crisis. This is the problem Electron and Rhythmos were brought together to solve – giving utilities a defensible, data-driven way to unlock the fastest, lowest cost network capacity, including 3rd party DERs.
For context, more than half of utility CapEx now goes toward distribution-level upgrades.
If we can’t use the existing grid more efficiently, the only option is to build more grid, which is costly, slow, and ultimately paid for by consumers.
At the same time, renewables provide abundant, low cost energy but are naturally intermittent and variable in nature, creating both challenges and opportunities for the grid.
This is precisely where DERs can help – by providing their flexibility, i.e their ability to adjust their generation or demand in response to grid needs so that we can create additional capacity on the existing infrastructure.
And if we do that, we can get more electrons flowing through the same system which will in turn lower costs for everyone.
What does “grid-aware” value orchestration mean specifically – and why is that different from what existed before?
What we mean by value orchestration is bringing grid awareness to markets and market awareness to the grid – effectively creating the connective tissue between planning and operations to surface and realize the full value of DERs.
We already have grid-aware systems like ADMS (Advanced Distribution Management Systems) and ANM (Active Network Management). These are powerful enterprise tools for monitoring and actively controlling the grid, but they still have blind spots when it comes to third-party DERs.
Markets and programs, meanwhile, have existed for a long time too, but they have limited visibility of the grid or the impact they are having on it.
Bringing the two together is where the magic happens. By combining grid and market data, we can create a complete view of system value and make defensible comparisons between flexibility and traditional reinforcement, and we can do that on a continuous, reinforcing basis where grid awareness drives market activity which in turn further enhances grid awareness, and so on in a virtuous cycle.
Crucially, we can do this much faster by using the data utilities already have – meter data – to identify where DERs are, where grid impacts occur, and where value lies. It accelerates time to value for grid software like DERMS and makes it easier for a wider range of virtual power plants and aggregators to participate through a neutral market layer.
How does this shift what Electron can do for utilities compared to before the acquisition?
The combination of Electron’s market operations platform and Rhythmos’s grid analytics solves the chicken-and-egg problem many utilities face. They know they need to do more with DERs, and that markets are an effective tool to access them through incentives and price signals. But they often don’t know where the DERs are, what price to start with, or where to target flexibility.
That leads to analysis paralysis, knowing you need markets but being unable to justify the cost of launching them without data to back it up. With affordability concerns as the backdrop, it’s even harder to make those bets.
Now, we can help customers identify unknown DERs, understand their grid impacts, and quantify their value within weeks. That informs how they can optimise across existing programs immediately.
There’s latent value sitting in DERs.
For example, EVs that could absorb excess solar and avoid curtailment, but aren’t yet incentivised to do so. A coordination layer using grid-aware data can unlock that potential and get the flywheel turning.
It also enables locational markets, because you now know where DERs are, where value exists, and where the grid needs flexibility. That’s a big step forward. You no longer need to start a market just to discover those insights. You can use your own data to target, value, and justify new programs with confidence.
