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Load and Location: DER and the Grid

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Distributed energy resources (DER) are fast becoming cost competitive with traditionally generated electricity. According to Rocky Mountain Institute, grid-connected solar-plus-battery systems will reach economic parity with grid electricity within the next 10-15 years. Despite near-term technical and financial challenges, more and more business will adopt on- and off-site generation, storage, community and wholesale projects.

Larger corporations in particular have devised multi-year deployment strategies to achieve energy cost stability, and DER are a major part of the mix. In fact, in a June whitepaper, the Edison Electric Institute said that nearly half of Fortune 500 companies and 60 percent of Fortune 100 companies have climate and clean energy goals.

For utilities, the growth of these alternative resources presents a growing risk — an alarming loss of commodity revenue from traditionally generated electricity, along with difficulty in delivering return on investment from grid investments. But such disintermediation isn’t a zero-sum game. The question for utilities is not who should bear the burden of maintaining our transmission and distribution systems, but rather, where and how DER could enhance and service the grid to reduce costs for all. 

Aside from its environmental merits, DER benefits the grid in significant ways.

Distribution generation and storage can yield positive value to the transmission and distribution system depending on the location and proximity to existing congestion. For utilities, battery systems offer stability and demand response. Properly sized distributed generation enhances grid resilience by acting as a backup and relieving congestion as needed. In the most prescriptive and connected applications, DER can regulate frequency and voltage on transmission and distribution networks, and defer costly upgrades. For example, Con Edison’s Brooklyn Queens program is intended to delay a $1 billion substation investment through technologies including battery storage with software control, energy efficiency and solar power.

While deliberately sized and located DER strengthens the grid, an oversupply of energy generation can jeopardize its safety and reliability. As such, production planning is crucial for power consumers and utilities alike. Specifically, when generation exceeds the grid’s hosting capacity, the transmission system becomes overburdened, and a system operator may curtail further incoming power from DER. Such interruption of energy generation can negatively impact corporate buyers — buyers may need to acquire power from other sources if the lost output was expected to power facilities or meet sustainability targets. An interruption in power generation can result in significant financial losses. 

For these reasons, an accurate understanding of a facility’s load and consumption combined with deliberate selection of DER technology and project location can optimize DER projects for both corporations and utilities. As the centralized repository of data, utilities can leverage advanced energy analytics to solve today’s multifaceted energy challenges. Based on an individual businesses’ load profile and proximity to the grid, utilities can proactively identify ideal business customer sites where distributed generation and storage systems can yield the highest return on investment and most effective use of demand response. For corporations who are actively considering projects, utilities can predict and mitigate potential impact on the grid, while offering consulting services to help business customers size production to match load, influence project siting, and avoid foreseeable curtailments that may yield financial losses.

While DER poses a complex threat to the vitality of our grid, analytics can drive informed decisions that turn distributed disruptions into complementary resources. By actively engaging and educating business customers about various DER options, utilities can gain control in shaping the optimal mix of energy generation and minimize the negative impact on existing systems. Collectively, DER present ample opportunities for utilities to cost-effectively aggregate demand response, extend life of capital investments, and create new streams of service income.

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