Published on February 25, 2014
1 DER Business Models Paul De Martini
DER may reach 33% of Installed US Capacity by 2020 Effectively all incremental growth in capacity will come from customers 33% (90 GW) & Other Gas DG (140 GW) (40 GW) (240 GW) (1050 GW) Sources: EIA, EPA, DOE, FERC, Carnegie Mellon, GlobalData
Backup Generation “…substantial opportunity to increase the penetration of standby generators in both the residential and light commercial markets…, along with the overall ongoing shift in the market toward natural gas generators.” Generac, Q3 2013 Analyst briefing • Carnegie Mellon’s Electricity Industry Center reported in 2008 that there were about 12 million backup generators in the United States with over 200 GW of generating capacity • US Market leader Generac reported 36% annual sales growth in 2011 and 48% growth in 2012 – 20% average growth in home sales over the past decade • Buckeye Power Sales, an Ohio distributor, reported growth of 48% in 2011, 110% in 2012 and 50% over the same period in 2012 during Q1 2013 November 2013
Responsive Distributed Energy Resource Values
Customer – Grid Evolution Business opportunities exist on both sides of the evolution curve that require technology based platforms for success Active & Stochastic Customer Participation Transactive Energy Multi-party across Distribution (see GWAC TEF) DER Hub Operations Dynamic Market Participation Real-time Dispatch VPP/Ancillary Services/Dist Ops DER Integrator (EPRI Grid 3.0) Self-optimization Supply/Reliability DER Transaction Management Reliability Services Distribution System Onsite Gen/ZNE/Microgrid Passive & Deterministic Smart Grid 2005 2010 2015 2020+
Electric Industry Competitive Landscape Electric Landscape - 1998 Electric Landscape - 2013 Non-Energy SPs NUGs Solar PV ADT Marketers Integrated ESPs ESCOs REPs REPs Utilities CSPs ESCOs Source: Newport Consulting
Example Customer Energy Budget Allocation Significant potential risk to loss of share of customer energy budget plus no participation in enhanced reliability and home energy automation Customer Typical Energy Budget $75.00 EE Spending 9% Grid Energy 36% Customer Self-reliance Monthly Energy Budget - $200.00 EE Spending 7% Home Automation Grid Energy 4% 5% T&D 15% T&D 55% Solar PV 23% Back-up Generation 46% Source: Newport Consulting 7
Telecom Lesson: BAU is not a good strategy Market growth in mobile, ecommerce and related services
Utility Economics Are Changing Economies of Scope Economies of Scale Network Economics
Business Strategies Sustainable competitive advantages are key to future success • Customer relationship is very valuable – strong position with customer is essential to compete for customers’ total energy and related spend • Distribution is becoming the hub in a future hybrid electric network – distribution grid is a natural position for enabling and participating in incremental value related to physical bi-directional energy flows Differentiated Energy Solutions DER Market Enabler “The new clean energy business is not separate and distinct from conventional gridbased power system. The best companies will build the new and clean on the foundation of the old and reliable.” David Crane, 2012 Deutsche Bank Conference 10
Advanced Distribution Investments In a more distributed future utility distribution will be come the operational hub Transaction Management (Distributed Market, Clearing & Settlement Systems) Advanced Distribution Operations (Operational Systems for Hub Services) Utility Microgrids/Premium Grid Reliability Infrastructure Smart Grid 2010 Advanced Distribution Infrastructure (EPRI Grid 3.0) 2012 2015 2020 2025+
12 contact: email@example.com www.newportcg.com
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