Hydrogen might be the most abundant element in the universe, but it doesn’t exist on its own. Instead, it is produced through a number of processes that each yield different types of energy, which come with their own sets of benefits, byproducts and uses. The production method is what gives each kind of hydrogen its colorful moniker — though there is no universal naming convention, so definitions can change over time and vary between countries.

Let’s break down the current hydrogen color code and take a look at how one hue of hydrogen, in particular, is leading scientists and manufacturers to the pot of gold — a zero-emission future — at the end of the hydrogen rainbow.

Grey hydrogen

Grey hydrogen is created from natural gas, most commonly methane, through a process called steam methane reformation. While it is currently the most common form of hydrogen production, the greenhouse gases made in the process aren’t captured. 

Blue hydrogen

Blue hydrogen relies on the conventional process of steam methane reforming, but the carbon dioxide produced as a byproduct is captured and sequestered underground.  It is a source of clean hydrogen with a low carbon content. 

Turquoise hydrogen

One of the newer colors to join the hydrogen spectrum, turquoise hydrogen is produced via a process called methane pyrolysis. Its primary outputs are hydrogen and solid carbon. While turquoise hydrogen has no proven impact at scale yet, it has potential as a low-emission solution if scientists can find ways to power the thermal process with renewable energy and properly use or store the carbon byproduct. 

Pink hydrogen

Pink hydrogen taps into nuclear energy to fuel the electrolysis required to produce it. The high temperatures of the nuclear reactors provide an additional benefit — the extreme heat produces steam that can be used for electrolysis or fossil gas-based steam methane reforming in other forms of hydrogen production.

Brown/black hydrogen

If green and blue hydrogen hold the key to cleaner hydrogen production, brown or black hydrogen are the exact opposite and the most environmentally damaging. Relying on gasification of coal to produce hydrogen, this process releases harmful carbon emissions that can have a long-lasting impact on our climate. 

Green hydrogen

Amidst the hydrogen rainbow, green hydrogen is the only variety produced with zero harmful greenhouse gas emissions. It is created using renewable energy sources like solar, wind and hydropower to electrolyze water. The resulting reaction produces only hydrogen and oxygen, meaning zero carbon dioxide is emitted in the process.

While the benefits of green hydrogen are significant, its production is more expensive today. Consequently, green hydrogen makes up just a small percentage of current hydrogen production. But as new advances and innovations in green hydrogen are made, the price will come down, and it will hopefully become common across the globe.

The future of hydrogen is green

Hydrogen has been used as fuel for more than two centuries. Today, thousands of vehicles and machines around the world are powered by hydrogen fuel cells. The emphasis on reducing carbon emissions and working towards a greener, sustainable future has shifted the focus of many power leaders, including Cummins, to investment and innovation in green hydrogen production. It could prove to be the gold at the end of the hydrogen rainbow.

The cost of production has slowed the wide-scale adoption of hydrogen power. Many leaders in the power industry are now putting an emphasis on making hydrogen fuel cells more readily available to consumers. Cummins is building on our industry-leading electrolyzer technology to reduce the cost of hydrogen fuel cells and make it easier to get green power solutions into our customers’ hands. 

Green hydrogen isn’t just taking center stage in the private sector, either. Governments around the world are putting forth hydrogen strategies and passing legislation to encourage the production and use of these green technologies. 

The exciting possibilities of green hydrogen are guiding innovation for Cummins and other power leaders, but the idea of a zero-emission future can’t rest solely on green hydrogen. We’re leveraging all of our alternative power technologies to further global decarbonization and provide the right solutions at the right time to our customers seeking sustainability.

Distributed energy resources, or DERs, have rapidly expanded over the past decade. Their expansion is one of the most significant changes that the power generation sector has experienced in that period. 

If DERs are new to you, don’t forget to check out what are distributed energy resources and how they work before going ahead.

Homeowners and businesses install DERs to reduce their energy bills and to have backup power in the event of a service outage. 

Utilities and independent power producers (IPPs) install DERs as standalone assets on the grid to supply a variety of grid services. Increasingly, the industry is focusing on aggregating residential and commercial DERs to provide services to the electricity grid. There are several benefits of distributed energy resources in these use cases, including transmission deferral and generation balancing. 

DERs include several categories of small and modular electricity generation technologies. Here are the main ones:

Small hydro as a distributed energy resource

Hydroelectricity remains one of the most widely used forms of renewable energy. 

Hydroelectric plants of all scales exist, from the Tennessee Valley Authority’s enormous dams, to small run-of-the-river turbines which provide a few kilowatts of power. Small hydro consists of units smaller than 5 MW, though definitions vary. Small hydro units usually involve no dam, so they have less environmental impact than large projects, and can be built with less red tape. 

Small hydro units are built wherever streams, rivers and other water resources are available, which naturally results in a highly distributed development model.

Solar as distributed energy resource

Solar panels are one of the fastest growing power generation technologies. 

In the residential, commercial and industrial sectors, the growth of solar power has been promoted by feed-in tariff and net metering policies, as well as rapidly falling prices for solar arrays. Under feed-in tariffs, utilities are required to purchase solar electricity from homeowners and businesses, usually at an attractive rate. 

Net-metering policies, meanwhile, allow solar producers to credit the electricity they produced, against their consumption, on their utility bill. Where such policies are in place, significant quantities of solar DERs have thus become integrated into the broader electric grid.

Demand response as distributed energy resource

Demand response schemes have also existed for a long time. 

Traditionally, they consisted of agreements between utilities and industrial sites with large electric loads. When the utility called, the factory would shut down a set of large machines or heaters, thus alleviating the load on the grid. 

Lately, demand response schemes have trended towards an even more distributed form. 

Changes in the regulatory environment have enabled homeowners and small businesses to become participants in demand response aggregates. The load from a single home is not significant in terms of balancing the grid. When aggregated, however, the load from several thousand homes constitutes a DER which utilities have come to value highly.

Battery energy storage as distributed energy resource

Battery energy storage has been growing at a rapid pace since its appearance in the power sector as a mainstream technology in 2016. 

Most stationary battery systems in service or in construction today use lithium-ion batteries—the same kind that power phones and electric vehicles, but other types of stationary energy storage technologies are sometimes used in power applications. Flow batteries, for example, are an emerging category of energy storage batteries which use a liquid electrolyte, and can be made to last a very long time, overcoming many of the technological challenges of lithium ion batteries.

Battery energy storage systems of all scales exist, from large centralized systems with several hundred megawatt-hours of capacity to home battery packs rated for a few kilowatt-hours. The latter can be included in virtual power plant aggregations along with demand response contracts. Residential energy storage aggregations are actually an innovation that has only recently been deployed at scale.

Power generators as distributed energy resources

Standalone power generators are a popular choice for many businesses and homeowners. Residential and commercial generators are typically used to provide backup power. 

For data centers, hospitals , air traffic control centers and many other types of activities, a power outage can lead to significant negative consequences, so backup generators are kept on-site in case of a grid outage. 

Some facilities also use on-site generators during normal times to optimize their energy profile. Most of the time, these generators serve the facility’s own needs and are not interconnected to the grid in a way that allows them to export power. 

Increasingly, however, facility managers are able to enter into power purchase agreements (PPAs) with the utility, or with private off-takers to whom they supply power via the grid. From an economic standpoint, this makes a lot of sense. Why leave backup generators doing nothing more than 99% of the time when they could be used to make money instead? 

It’s not just large industrial generators that can be used to export power to the grid. Small-scale commercial and residential generators can also potentially be aggregated into virtual power plants in the same way that demand response schemes and battery systems are.

Upcoming technologies of distributed energy resources

Distributed energy resources belong to a field which is rapidly evolving.  

Several upcoming technologies are likely to achieve broad appeal in the next decade or two. Fuel cells, for example, rely on technologies that are well understood. Though their cost remains prohibitively high for mainstream applications, many companies and research institutions are developing more affordable fuel cells. In a home, a fuel cell could run on either natural gas or hydrogen and could provide electricity, heat and hot water, all in the same package. Fuel cells could, like generators, also be interconnected to the grid and serve as DERs.

Some see the utilization of electric vehicles to provide energy storage on the grid as a sort of Holy Grail of DER technology. Electric vehicles contain lithium-ion battery cells that are very similar to the battery cells used in home battery packs and in large-scale energy-storage applications. When they are plugged in, their batteries have the potential to serve as distributed energy storage assets for the grid. There are various technical and practical obstacles to overcome before this can be the case, but this is an area of active research and development. 

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Distributed energy resources, or DERs, are increasingly popular among utilities and wholesale electricity market participants. 

DERs are a category of power generation resources defined by their size and their location. Definitions vary, but few physical DERs would be larger than a couple of megawatts. Diesel or natural gas generators, microturbines, run-of-the-river hydro units, solar arrays, wind turbines, and battery energy storage units are common sub-megawatt DERs. For more on this, check out what are Distributed Energy Resources and how do they work.

DERs, being smaller in size than traditional power plants, have lower permitting requirements, use less land, and don’t involve extensive infrastructure upgrades. 

Crucially, many DERs are already there. DERs can be found within microgrids, central generation networks, and beyond. Numerous homes and businesses are now equipped with battery energy storage units or backup power generators designed for their own use. Increasingly, utilities and DER aggregators incorporate these assets in virtual power plants that support the wider electric grid. From a utility’s perspective, installing the communications upgrades and software platform needed to effectively control these existing assets as a virtual power plant is easier, less expensive and faster than building an equivalent generating resource from scratch.

DERs can also be located close to load centers. Most people don’t want to live next to a power plant, so historically, power plants have been built away from cities. In most parts of the world, this has led to a power grid development model where large remote power plants are connected to customers via long-distance transmission lines. These transmission lines are limited in capacity, creating a variety of constraints which utilities and grid operators must carefully manage. It’s not enough to generate electricity—the electricity also needs to be delivered to consumers. 

DERs, in contrast, can be deployed and located in densely populated areas. Residential energy storage units, for example, are found in population centers. Likewise, demand-response DERs are usually provided by factories located in industrial areas and, increasingly, by homes located in residential neighborhoods.

Different types of distributed energy resources are available for these various application scenarios.

Their unique attributes mean strategically placed DERs can deliver attractive benefits in return for a relatively small investment. These benefits can be categorized as follows:

Benefits of DERs: Transmission and distribution deferral

DERs located within or close to cities are not subject to transmission constraints in the same way remote power plants are. 

On the contrary, alleviating transmission and distribution constraints is one of the top reasons why utilities deploy DERs. This is known as transmission deferral, or distribution deferral. When, for example, a small city grows, there comes a time when existing transmission lines are no longer sufficient to carry all the electricity needed. Traditionally, a new transmission line would be built. 

Deploying DERs within city limits provides an alternative. A comparatively small investment in DERs can result in enough locally available capacity to sustain the incremental growth of the city for a few years. 

The additional capacity allows the utility to defer the construction of new power lines for a number of years without compromising the reliability of the city’s power supply. From a financial point of view, delaying such a major investment can save the utility, and in turn the ratepayers, a lot of money.

Benefits of DERs: Generation capacity and balancing

In some cases, it may be possible to avoid building a new transmission line entirely. If enough DERs are deployed within a city, the DERs can potentially shave off the peaks in the electric demand coming from the city. Battery energy storage units, back-up generators and demand response resources, specifically, are all great ways to reduce peak demand. 

The result is the city overall has a flatter load profile, which is easier to support, reducing the level of investment needed in the regional electricity grid infrastructure. For example, this may delay or remove the need to build a new peaker power plant, upgrade a substation or build new transmission lines.

Peak-shaving assets are in especially high demand in areas where the potential for renewable energy such as solar or wind power is good. In some of those areas, the rapid growth of solar and wind power—under both distributed and centralized models—has made it very difficult to balance the electric grid. Solar and wind power resources are inherently intermittent, so other resources are needed for balancing them out. 

To simplify, for every megawatt of solar capacity on the grid, another megawatt of non-intermittent capacity needs to be available for cloudy days and for evenings—this is what peak-shaving resources do. 

Benefits of DERs: Ancillary services

Ancillary services make up the third category of DER benefits. 

Making sure consumers receive distortion-free AC current, with a frequency of exactly 50 Hz and a voltage of exactly 120V is not a simple task. The utility or the grid operator relies on a set of specialty service resources to achieve the required quality of service. 

For example, if a frequency deviation is detected on the grid, the system operator may request the intervention of frequency control resources. Frequency control resources can be power generation or demand-response resources. By adding or removing a small amount of power from the grid, they return the grid frequency to its nominal value. 

Ancillary services have been traditionally provided by large production units such as coal power plants. In recent years, however, DERs have emerged as valid alternatives for certain categories of ancillary services.

Some categories of DERs, for example, are great at providing fast response services such as fast frequency control. At best, large thermal power plants take several minutes to start up or ramp up when responding to frequency control calls. Battery energy storage units, in contrast, can respond in milliseconds. 

Likewise, residential demand-response resources can provide load reductions in seconds or less. 

In some areas, DERs have been so successful they have almost entirely displaced traditional power generation units for certain categories of ancillary services. In the United Kingdom, for example, more than 90% of ancillary service capacity contracts awarded by the grid operator in the past several years have gone to aggregated demand-response resources, energy storage units, or hydroelectric power plants. DERs may thus have contributed, in an indirect way, to the retirement of coal and gas-fired power plants, which previously subsisted by offering ancillary services to the grid.

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Distributed energy resources, or DERs, are small-scale electricity supply or demand resources that are interconnected to the electric grid. They are power generation resources and are usually located close to load centers, and can be used individually or in aggregate to provide value to the grid. 

DERs include a variety of physical and virtual assets. Physical DERs are typically under 10 MW in capacity and can consist of diesel or natural gas generators, microturbines, solar arrays, small wind farms, battery energy storage systems, and more. They can be owned and operated by the electric utility, by independent power producers or by local businesses. The utility directs their operation in the same way that it controls the operation of large central power plants, requesting starts and stops as needed. 

You can read more about the types of distributed energy resources ranging from solar to power generators.

What are virtual distributed energy resources (DERs)?

Understanding virtual DERs requires a moderate amount of abstraction. Virtual DERs are made up of a collection of physical assets which are aggregated together and made available to the utility. From the utility’s perspective, they appear as a single resource, like a power plant. After all, what is the difference between one-hundred solar arrays of 10 kW each and a single solar farm with 1000 kW of solar capacity? 

Virtual DERs can be made up of assets of a single or mixed type. For example, behind-the-meter diesel generators, solar panels and batteries can be aggregated, forming a virtual DER. The resulting virtual DER thus possesses its own specific operational profile. When virtual DERs aggregate several megawatts of capacity, they are sometimes called virtual power plants (VPPs).

You can read more about the benefits of distributed energy resources ranging from transmission deferral to generation balancing. 

How do distributed energy resources (DERs) work?

Demand-response resources are commonly aggregated as part of a virtual DER. 

Demand response resources are electric loads which can be shaped, reduced or disconnected on demand. In some regions, for example, homeowners have the option to participate in demand-response programs. The utility or the program manager installs remotely controlled disconnect switches on the air conditioning (AC) unit or electric water heater of participating homeowners, for example. Each individual AC unit or water heater can thus be switched off as needed to reduce the load on the electric grid. Larger virtual DERs aggregate several hundred or thousand homes. The result is a resource comparable in size and function to a small power plant. 

After all, if the objective of the utility is to ensure that electricity generation matches demand at all times, then reducing demand has the same effect as increasing generation. During heat waves, for example, demand-response resources can deliver hundreds of megawatts of relief to a regional grid, averting rolling blackouts such as those ordered in California in 2020. 

Features of distributed energy resources (DERs)

Regardless of the nature of the underlying asset—generators, solar arrays, batteries, demand-response resources or otherwise, most DERs require the following features:

• A communications and controls infrastructure allows the grid operator to transmit start and stop instructions to individual resources. Since DERs are typically not monitored 24/7 by a human operator located on-premises, the controls system needs to be fully automated. Control signals can be transferred, for example, over a wired internet connection, over a wireless cellular network, or even by transmitting signals over the power lines.

• Synchronization and connection equipment ensures the electricity generated by the DERs is in-phase with the grid’s electricity. Solar inverters, for example, convert DC current received from solar panels into AC current. Their job is to provide a smooth sinusoidal AC wave form that is perfectly synchronized with the grid. Transfer switches, in addition, ensure generation resources are fully isolated from the grid when not needed. 
• Metering equipment is needed to ensure the owners of individual DERs are adequately compensated for their resources’ supply and demand. Smaller DER assets located in homes and businesses, such as residential solar systems, normally rely on their main utility meter for this functionality. In most cases, upgrading to a smart meter capable of two-way metering and time-of-day metering is required for larger and more complex DERs. Where solar net-metering programs exist, homes with solar panels can run their meter backwards when exporting solar electricity to the grid, effectively earning a credit on their utility bill. In addition to measuring the amount of power exported to the grid, smart meters can also detect power quality issues such as inadequate synchronization or voltage dips.
• Aggregation software is critical to effectively manage and operate virtual DERs. Individually controlling thousands of individual resources would be highly impractical for utilities and grid operators. Aggregation software provides a streamlined front that operators can work with in an effective way, while also managing the various constraints and features of each aggregated asset. The software, for example, can implement the contractual limitations of demand-response programs ensuring no participant goes without AC for too long or too often, and then select which homes or businesses to call upon to achieve a certain load-reduction objective.

Electric vehicles, solar panels, and more as DERS

Vast quantities of potential DERs are hiding in plain sight. Electric vehicles, residential solar panels, commercial backup generators and more are all DERs just waiting to be “harvested” by an aggregator. Under the appropriate regulatory framework and with the features outlined above, aggregating one-hundred megawatts of DERs can be easier, cheaper and faster than building a power plant of equivalent size. 

In Oregon, for example, Portland General Electric (PGE) has launched a pilot program to aggregate up to 4 megawatts of residential lithium-ion storage units across 525 homes. The utility will have direct control over the batteries; and have the option to use them for any number of services, such as voltage control, frequency control and peak shaving. Though PGE’s program is one of the first of its kind, other utilities are preparing to roll out similar systems. 

Virtual power plants and virtual DERs are a rapidly evolving sector. A future milestone for the sector will be to find a way to aggregate electric vehicles into virtual power plants known as Vehicle to Grid (V2G) technology. The majority of EVs spend most of their time parked and plugged in—in other words, connected to the grid. Therefore, the thinking goes, EV batteries could be used as DERs. Since the quantity of lithium-ion batteries installed into electric vehicles exceeds the quantity of batteries used in stationary power applications by one or two orders of magnitude, the potential benefit of harnessing EVs is massive.

There are still many challenges to overcome before DERs can be deployed to their full potential. However, they are one of the biggest opportunities available to meet future needs in the power sector. 

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