The utility industry and related energy markets are changing significantly in response to state and federal regulations shifting away from carbon-based fuels, dramatic reductions in the cost of renewables, and the commercialization of a diverse array of behind-the-meter (BTM) energy solutions. Facility managers need to be well informed of these changes and rapidly evolving options if they hope to compete, manage cost and operational risk, and drive sustainability across their portfolios.
What are Distributed Energy Resources?
Distributed Energy Resources (DERs), often referred to as on-site or BTM energy generation, are small-scale power generation or power storage methods. These methods either generate energy or enable the buffering of that energy to provide greater flexibility to the grid and improve energy economics for the host.
DER examples include:
- Solar power
- Electrochemical Batteries
- Thermal energy storage
- Compressed air
- Fuel Cells
DERs give energy and facility managers tools to help them reduce energy demand during peak grid pricing. In many utility territories, the transmission and distribution charges can represent up to 50 percent of the energy bill. Depending on the size of the operation and shape of the operation’s demand curve, this can mean savings in the millions of dollars.
Energy Efficiency and energy conservation measures (ECMs) are a critical underpinning of any DER deployment. Energy efficiency is always the most cost effective method of reducing both consumption (kWh) and related demand (kW). Further, many DERs’ system design and economic value depend on being “sized” accurately for a specific building’s consumption. This is known as it’s load profile.
For this reason, it’s critical that facility and energy managers “right size” the building via a thoughtful deployment of EE measures including both equipment upgrades and by deploying a layer of control intelligence to continuously commission and monitor this equipment. Once the building is right sized and “loses the weight” it can then be fitted for the suit (DER deployment).
How is the energy market changing?
With market developments such as premature nuclear power plant closures, utility deregulation, the rapid growth in grid-connected solar and wind, and regulatory demands for even more green options colliding with a rise in DERs, it is easy to see that the energy market is undergoing significant change.
A host of energy resources are being taken away from the traditional utility business model. Energy plant closures and limits being placed on carbon-based fuels are leading to higher prices and complicated pricing structures. Businesses are desperate to bring down their energy costs - and, from a corporate social responsibility view, are increasingly seeking out ways to build “green” their portfolios and publish sustainability efforts.
Ryan Adelman addressed these points in an article entitled The New Energy Paradigm and the Rise of Specialized Distributed Energy Resources. Ryan is PhoenixET’s Vice President of Business Development. In his article he discusses how quickly the electricity grid is transforming in North America and how significant market adaptations are evolving to keep up.
Ryan cautions that commercial and industrial energy managers need to be aware of the changes and differences among the basket of DER offerings, so they can make informed decisions as the industry as a whole shifts.
Ryan suggests that facility managers need to:
- Understand their consumption and demand patterns
- Develop a plan that reduces both energy consumption and demand across their portfolios, leveraging regional demand management programs
- Be prepared to make more transactive energy purchases by deploying the right mix of DERs
As DER technologies emerge and mature, so do energy demand management tools that enable facility managers to optimize for customer comfort, resilience, and economic return.
To read Ryan’s article in full, please click below.
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