Distributed Energy Resources - March 3, 2021 - By NRG Energy, Inc.
Choice and Flexibility: DER Survey Insights, Part 2
As the modern grid evolves away from large central generation towards smaller on-site electricity production, the new electric paradigm has spurred the growth of an incredible array of on-site distributed energy resources. One result of this growth brought to light in the 2020 “State of Distributed Energy Resources Study,” conducted by Smart Energy Decisions and sponsored by NRG Energy Inc. (NRG), is that energy customers are often overwhelmed by this variety and need guidance to navigate these opportunities.
Among the selection of DERs available today, the most widely used is on-site solar, as three-quarters of respondents that currently deploy distributed energy currently chose this option. The finding also revealed that among those already using solar to some extent, 80% are considering expanding its use. Electric Vehicle (EV) charging infrastructure is also popular, with 66% choosing to install this option.
Several other technologies are gaining ground because of their function to either conserve energy, manage load during critical periods, modify consumption, or provide resilience, which add up to better efficiency and cost savings every time. Demand response is among the growing choices; these programs allow end-users to reduce electricity usage during periods of high power prices and earn revenue for using less energy. Energy storage is increasing in appeal – with 65% of respondents considering deployment – due to the opportunity for cost savings and increase resilience and reliability. Microgrids are currently only used by 13% of respondents, though that figure could increase in the coming years as more than twice that figure (28%) are considering deployment. CHP/cogeneration, fuel cells, gas generators, and biomass systems also dot the distributed energy landscape. Community-shared DERs deserve mention as this approach can ease issues caused by real estate and lease restrictions and help lighten cost burdens.
With so many choices offering flexibility and measurable savings, why aren’t more organizations deploying DERs? These resources are often complex and potential users will likely require expert guidance to install, integrate and maintain the asset. Additionally, some facility operators may be overestimating the cost of DERs in part because it can be complicated to calculate the cost-benefit and fully quantify the value.
The lack of awareness of how savings and efficiency can be achieved is seen throughout all industry segments. Increasing awareness among large power users about the benefits of DERs is crucial since it appears that relatively few are taking advantage of these technologies. The survey revealed an overwhelming majority of customers, 67%, reporting less than one-third of their load is offset by DERs. That is a remarkably high percentage leaving all sorts of opportunities on the table.
With economics and the lack of capital as top challenges for deployment, the next hurdle is the education gap and the need to inform internal stakeholders where value sits in on-site generation. This can be difficult to identify because it involves many indirect factors not always easily recognized such as the cost of downtime, loss of inventory, and the delta between the expense of power at peak periods compared to that of using your own. Energy executives who can quantify the business case for projects by focusing on how integrating DERs can streamline operations, strengthen resiliency, and help achieve sustainability outcomes, will be more successful in gaining buy-in from their stakeholders.
Customers can start by layering solutions beginning, for example, with a relatively simple demand response program, which requires little up-front cost and generates revenue quickly. Once a comprehensive study is done evaluating load, production requirements, resiliency, and corporate goals, a more sophisticated approach could be considered. Generation is not about having the most megawatts - it is about having the right portfolio-size, mix, and offerings to best serve customer’s needs.
In a recent webinar, Doug Sansom, Managing Director, Distributed Energy Resources, NRG, outlined five steps to consider when evaluating the selection of a DER:
- How large is the cost of energy relative to the rest of the business’ cost structure? Is it small, significant, proportional?
- Is the business flexible and does it have the ability to shift production schedules during periods of peak demand and high-cost power?
- What is the cost to the business if power outages happen during operations? What do your outages look like, how long do they last and what is the frequency?
- Does the business have resources including, software, people, and experience, dedicated to responding to the energy market and managing sustainable sources of supply?
- Consider the real cost of managing power with multiple energy providers versus dealing with one.
For customers, evaluating your energy data is the start of an education process that will lead to selecting the best DER fit for your location and goals. Once data is analyzed, your energy partner can tailor a flexible blend of products and strategies. A supplier may use DERs to target specific aspects of a facility’s operation or bundle and coordinate competitive supply and DERs. A bundled approach that takes into account each aspect of an operation, achieves benefits beyond their individual value.
Read more in the 2020 State of Distributed Energy Resources Study.
At NRG, we’re bringing the power of energy to people and organizations by putting customers at the center of everything we do. We generate electricity and provide energy solutions and natural gas to more than 3.7 million residential, small business, and commercial and industrial customers through our diverse portfolio of retail brands. A Fortune 500 company, operating in the United States and Canada, we deliver innovative solutions while advocating for competitive energy markets and customer choice, and working towards a sustainable energy future.
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