Distributed energy resources, or DERs, will help solve the global energy shortage in coming years. Defined as small-scale units of local generation connected to the grid at the distribution level, DERs have the potential to reduce the harmful effects of climate change and pollution from fossil fuels. These resources can also help businesses and households shave dollars off their energy bills, and even profit from a decentralized energy market.

But harnessing and distributing DERs present challenges the energy grid wasn’t designed to handle. Can massive cloud compute resources and artificial intelligence redesign a DERs-capable grid for the future? One company addressing this issue is AutoGrid Systems Inc.

“You can think of us as an autopilot for the grid, and our technology is called Virtual Power Plant, which allows us to harness the power from all these distributed energy resources,” said Amit Narayan (pictured, left), founder and chief executive officer of AutoGrid.

Narayan and Rajeev Singh (pictured, right), chief technology officer of AutoGrid, spoke with Dave Vellante (@dvellante), host of theCUBE, SiliconANGLE Media’s livestreaming studio, during the AWS Startup Showcase Event: Innovators in Cloud Data. They discussed the growth of DERs, its potential to solve energy challenges, and AutoGrid’s reliance on cloud for its key features. (* Disclosure below.)

The future of the DERs market

The complexity involved in transacting with small generators is very high, according to Narayan. The energy industry is designed for transactions between very large generators and utilities. DERs introduce millions of transactions between very small entities — perhaps even homeowners — and utilities. 

“Neither the utilities have the capability today to have these transactions, nor the asset owners and operators,” Narayan explained. 

A number of reports predict huge growth for DERs over the next several years. A report from Wood Mackenzie Ltd. predicts cumulative  DERs capacity  in the U.S. will reach 387 gigawatts by 2025, while an Australian report forecasts that 40% of energy customers will use DERs by 2027. Sources are diversifying with smart home thermostats, appliances and electric cars joining solar panels, batteries and windmills.

Many people think the grid is a sort of battery and may assume this is great since it can absorb this extra energy for everyone’s benefit. In fact, the grid is more like a shallow pool, and when sources offload surplus energy into it, problems can result for utilities, requiring expensive new technology solutions.

Ideally, an electricity grid keeps supply and demand in constant balance. This isn’t always easy for traditional grids, which run one way from a large generator to consumers. It is even more difficult to achieve for a grid bombarded by countless DERs units. 

Virtual power plants keep supply-demand score

Going from a gigawatt-scale power plant to, say, Tesla Powerwalls means replacing one generator with more than 200,000 mini generators for the same amount of power. And the complexity of energy optimization grows exponentially with the number of assets, according to Narayan.

“It’s far beyond what the current algorithms can handle,” he said. 

AutoGrid has set out to enable the grid of the future through “virtual power plants.” These are built from a virtualization layer around all kinds of energy assets, homes, batteries, solar panels, etc. Then, it applies AI and machine learning to harness, coordinate and orchestrate all of them, making that massive complexity manageable. 

“In a way, we are now rebuilding the grid outside-in, where if you have a battery in your home, not only can it power your own home when the power’s out, it can actually provide power back to the grid — or to your neighbors,” Narayan said. 

Greater intelligence about capacity helps utilities balance supply and demand. This makes it possible for a smart thermostat in your home to store energy when grid draw and prices are low and discharge when prices are high, saving users money.

Cloud high/low spigot makes DERs management feasible

When AutoGrid initially surveyed the quantity of data DERs generated, it knew it would require advanced computing power. It founded the company in the Amazon Web Services Inc. cloud and continues to rely on AWS’ highly elastic compute resources and managed services to make its solutions work. Aggregating capacity from a huge number DERs requires elastic services in order to be cost-effective, according to Singh.

“This is where AWS helps us with running elastically at the service level,” he said. All the microservices can scale independently, so we don’t have to have this massive monolith across the globe. We are able to scale just the portions of the infrastructure just in time when we need it,” he said.

AutoGrid is in over a dozen countries across four continents, an operational spread made possible by AWS’s geographically dispersed cloud regions. It continues to roll new AWS managed services — including security services — into its platform to boost its capabilities. For example, its managed databases and data stores relieved it of work that might have overburdened a small startup.

“You’re always running lean, so that helped us with a small team of system engineers and … platform engineers to be able to put together and run these systems around the globe,” Singh said. 

AutoGrid helps its customers solve both technical and business challenges that arise from the complexities of DERs. Its solutions include electric-vehicle fleet management with tools to lower charge costs and a BYOT (bring your own things) program to support and manage the full range of customer-owned assets, like smart thermostats and EV chargers. The company can act as an intermediary between fleet owners and operators, helping them monetize their assets by interfacing with utilities and energy markets.

“I think we are really at a great inflection point right now, where if we can harness this newly developed consciousness and awareness to accelerate our transition to new energy, away from fossil fuel, we can really solve what I think is the biggest challenge that we face as a society going forward,” Narayan concluded. 

Watch the complete video interview below, and be sure to check out more of SiliconANGLE’s and theCUBE’s coverage of the AWS Startup Showcase Event: Innovators in Cloud Data. (* Disclosure: AutoGrid Systems Inc. sponsored this segment of theCUBE. Neither AutoGrid nor other sponsors have editorial control over content on theCUBE or SiliconANGLE.)

Photo: SiliconANGLE