Distributed energy resources (or DER, in utility industry parlance) are a major headache for utilities. Rooftopsolarpanels, fuel cells, batteries and other active generators of power are now feeding electrons back into a grid designed to deliver them one way only, from major power plants to end-users.

As if that weren’t bad enough, solar and wind power also generate power intermittently, in sags and surges that can wreak havoc with local grid stability. Add it all up, and you’ve got a recipe for a whole new set of problems that the smart grid industry is trying to solve.

Enter the next generation of virtual power plants, microgrids and other forms of distributed energy controls. Major grid players like General Electric, Siemens, ABB, Alstom, Schneider Electric/Telvent and others are working on the DER challenge, as are defense contractors-turned-smart-grid vendors like Boeing, SAIC and Lockheed Martin.

At the same time, a host of startups like Viridity Energy, Integral Analytics, Power Analytics (formerly EDSA) and others are providing technological and system expertise to the mix, creating virtual or actual islands of power stability and balancing resource amidst the larger grid system.

Spirae is another player in the DER technology space. Founded in 2002, it has grown to a cash-flow-positive, profitable status via a host of contracts aimed at controlling distributed energy resources at a grid operations scale, CEO Sunil Cherian said in an interview last week. The company has taken no outside investors: “We eat what we kill” is how he put it.

Spirae has landed some interesting projects to feed its coffers, including FortZED, a Department of Energy-funded project in its hometown of Fort Collins, Colo., which wants to achieve zero net-energy status by generating more renewable power over the course of a year than it uses. On a grid-wide scale, it’s one of many partners on the $178 million Pacific Northwest Smart Grid Demonstration project, meant to link the region’s wind power, hydropower and distributed energy resources into a more integrated, balanced system.

In Denmark, Spirae’s projects also range in scale from its “smart city” project with the municipality of Kalundborg, aimed at achieving energy balance via efficiency and distributed power, to the grid-scale “cell controller” research project with Energinet.dk, the Danish transmission system operator.

Another Spirae partner is Boeing, which has enlisted Spirae’s help on a $6 million DOE grant-funded project with Chicago utility Commonwealth Edison. Spirae is working with Philadelphia-based Viridity Energy and San Diego-based Power Analytics (formerly named EDSA) on the Boeing project, a team it’s also involved in at the University of California at San Diego’s microgrid project involving solar power, batteries and smart building controls.

“We’re looking at a portfolio of resources, and our assumption is that this portfolio comes and goes; you don’t have the certainty of a power plant in this case,” he said. That rule applies to intermittent generation sources, of course -- but it also applies to power users, who can change their consumption in ways that are hard to predict.

But smart grid technology -- two-way digital communications between utility control rooms and endpoints on the grid -- is changing that equation. Distribution automation can help utilities fine-tune grid control systems to balance intermittent solar or wind, and demand response can call on lots of customers to lower their power consumption to help smooth out instabilities at a local level, to name two examples.

Spirae’s expertise is in the complex control algorithms used to balance the grid-side systems with the building-side energy resources, Cherian said. For example, in Fort Collins, Spirae has implemented a system that helps balance reactive power, using technology similar to that deployed for volt/VAR optimization projects, to keep the city’s power mix in balance with the grid, Cherian said.

Spirae’s system includes a hardened control box or server, called the BlueFin, that plugs into utility SCADA systems and other networks, but it can also deploy its underlying technology via similar gear from partners, he said. BlueFin can also plug into end-user systems like generation plant controls or building management systems, which allows it to call demand-side resources into play, he said.

That could give the utility, or a demand response aggregator, the tools to use often-idle building power controls to help balance what’s happening on the grid at that moment, he said. While Spirae’s technology wouldn’t turn down the thermostats itself, it could tell a thermostat control platform how many homes it needed to tap to balance what’s happening on the grid at that moment, he said.

Spirae tests its technology in the InteGrid Test and Development Lab in Fort Collins, which it co-owns and operates with Colorado State University. It’s all part and parcel of the R&D nature of its work. After all, most utilities don’t yet face the challenge of managing a significant share of customer-generated power, or keeping double-digit penetration of wind and solar power in balance.

Over the next three years, however, Cherian sees utilities shifting from exploring their options for managing the DER challenge to actually implementing it on a broad scale, with Europe ahead of the U.S. in terms of growth. Making the transition from pilot project to commercial-scale product would be the next step in that transformation.