BTM and FTM DER: What Is The Difference?
The disruption of distributed energy resources (DER) to the electrical grid is no less than that created by transformers and high voltage AC transmission. DER can provide multiple services on different grid levels either sequentially or simultaneously, including customer services (e.g., self-consumption and back-up power), distribution grid services (e.g.,substation upgrade deferral and load leveling), and wholesale market services (e.g., energy, capacity, and ancillary services). Frequently, “DER” is preceded by an acronym describing if the DER is front-of-the-meter (FTM) or behind-the-meter (BTM). Ultimately, all distributed generation and energy storage systems have to be downstream of a meter somehow, so why some DER are categorized as FTM anyways? More importantly, how to distinguish if a DER is FTM or BTM? It may seem like such questions are uncomplicated to answer, but you will be surprised by the amount of conflicting use-cases and parlance surrounding this concept, which motivated writing this post. After all, why do we vastly keep using undefined or, at best, loosely defined acronyms?!
‘The key test for an acronym is to ask whether it helps or hurts communication.’ — Elon Musk
I, unfortunately, do not have THE definition, but I thought of four potential definitions that reflect some use-cases I observed from a deeper dive in literature. Although, I advocate for Def.1 (below), hopefully, the wisdom of the crowd will eventually help in prevailing one, a combination, or maybe none of the provided definitions.
Below, I list the four potential definitions that distinguish between FTM and BTM DER.
How to differentiate between a FTM and BTM DER?
- Jurisdiction-Based Definition (preferred)
This definition straightforwardly classifies the DER arrangement based on which jurisdiction the DER abides by. If a DER is under a retail tariff, it is considered as BTM. On the other hand, if a DER is under a wholesale market tariff, it is considered FTM. Therefore, a BTM DER is always under the DSO’s (e.g., public utility commission) jurisdiction, whereas a FTM DER is under FERC or ISO jurisdiction.
Consequently, this definition classifies DER under net metering and feed-in tariff (a.k.a. buy-all, sell-all), shown in the figure below, as BTM, since both are retail programs. Utility-scale solar, power plants, and aggregate DER via DER aggregators (DERA), on the contrary, are considered FTM.
This definition is simple, yet it gives sense to the acronyms, as FTM DER are upstream of DSO’s meters, whereas BTM are downstream of them.
2. Flow-Based Definition
This definition uses the DER metering arrangement to determine if the DER is FTM or BTM. If a DER can provide a customer service, other than monetary compensation due to export, before passing through a DSO revenue meter, it is considered as BTM. Accordingly, a FTM DER must go through the revenue meter before providing a service to the end-user.
To illustrate this with an example, consider again the two metering arrangements above. Under net metering, because the prosumer is able to self-consume (a customer service) the DER output before it reaches the revenue meter, that DER is considered BTM. On the other hand, under feed-in tariff, the DER is separately metered and billed, hence considered FTM, even though it exists within customer premises. The same goes for utility-scale solar and even conventional power plants.
Note: A DER that is being sub-metered under net metering for any purpose, including, for example, load unmasking, is still considered BTM under this definition, since sub-metering still does not affect the ability to self-consume downstream of the main revenue meter.
3. Location-Based Definition
One of the widely adopted definitions is to distinguish FTM from BTM DER simply based on the DER location with respect to the DSO and regardless of the tariff or metering arrangement. If the DER is located within the end-user premises, then it is considered as a BTM DER. If the DER exists in standalone settings (not co-located with end-user loads), then that DER is considered as FTM. Therefore, utility-scale solar and storage projects, power plants, and even community solar farms that autonomously face the utility are considered FTM. On the other hand, DER under either NEM or FiT are considered BTM.
Although, this definition is perhaps the most widely adopted one, it has several caveats. First, under FiT, although the DER is co-located with end-user loads, it autonomously faces the DSO who can price the gross output at rate that is different than the load rate. Hence, characteristically, a DER under FiT is equivalent to utility-scale solar. Also, the location-based definition gets tricky when we a utility-scale solar company decides to couple its solar farm with a battery pack (a load when charging), which co-locates the solar with “loads”. Not to mention that the solar farm may legally install any loads that can be directly supplied from the solar farm.
4. Capacity-Based Definition
Under this definition, a DER capacity-threshold is specified below (above) which the DER is considered BTM (FTM). A more nuanced version of this is to consider the voltage level as a classifier for BTM and FTM DER.
The capacity-based definition seems to be a special case of Def.1, since usually a DER facing the wholesale tariff has a higher capacity than a DER under the retail tariff. This definition becomes more reasonable when thinking about the eligibility of DER to participate in the wholesale market under FERC order 2222, which specifies a cap (100kW), below which the DERA is ineligible to participate.
Lastly, there seems to be even more definitions implied by several use-cases. For example, some may define BTM DER, as those that the DSO can not separately price due to load masking (net metering arrangement as an example). Moreover, the Wood Mackenzie solar forecasts data tool loosely defines BTM solar as “installed capacity in the residential, commercial, government, nonprofit, and community solar segments”.
I believe that definition 1 makes the most sense. I hope to see this acronym dilemma sorted out, before we find ourselves with acronyms that build on the already unagreed-upon acronyms.
Suggested citation: Alahmed, Ahmed S. “ BTM and FTM DER: What is the difference” Medium, August 08, 2023, https://medium.com/@ahmedsa1/btm-and-ftm-der-what-is-the-difference-b1919f402eb7
