De Martini 2014 IEEE-ISGT DER Business Models Feb 20, 2014
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DER Business Models Paul De Martini 1
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Transcript of De Martini 2014 IEEE-ISGT DER Business Models Feb 20, 2014
DER Business Models
Paul De Martini
1
DER may reach 33% of Installed US Capacity by 2020 Effectively all incremental growth in capacity will come from customers
33%
Sources: EIA, EPA, DOE, FERC, Carnegie Mellon, GlobalData
(90 GW)
& Other Gas DG (140 GW)
(40 GW)
(240 GW)
(1050 GW)
Backup Generation
• 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
“…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
November 2013
Responsive Distributed Energy Resource Values
Customer – Grid EvolutionBusiness opportunities exist on both sides of the evolution curve that require technology based platforms for success
Active & Stochastic
Passive & Deterministic
2005 2010 2015 2020+
DistributionSystem
CustomerParticipation
Self-optimization
Dynamic Market Participation
Transactive Energy DER Transaction Management
DER Hub Operations
DER Integrator(EPRI Grid 3.0)
Smart Grid
Supply/ReliabilityOnsite Gen/ZNE/Microgrid
Real-time DispatchVPP/Ancillary Services/Dist Ops
Multi-party across Distribution(see GWAC TEF)
Reliability Services
Electric Industry Competitive LandscapeElectric Landscape - 1998
NUGs
Marketers
REPs
Utilities
ESCOs
Electric Landscape - 2013
Integrated
ESPs
Non-Energy
SPs
Solar PV
ESCOs
ADT
REPs
Source: Newport Consulting
CSPs
Significant potential risk to loss of share of customer energy budget plus no participation in enhanced reliability and home energy automation
Example Customer Energy Budget Allocation
7
Grid Energy 4%
T&D 15%
Solar PV 23%
Back-up Generation 46%
EE Spending 7% Home Automation 5%
Customer Self-reliance Monthly Energy Budget - $200.00
T&D 55%
Grid Energy
36%
EE Spending
9%
Customer Typical Energy Budget $75.00
Source: Newport Consulting
Telecom Lesson: BAU is not a good strategyMarket growth in mobile, ecommerce and related services
Utility Economics Are Changing
Economies of Scope
Network Economics
Economies of Scale
Business Strategies
• 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
Sustainable competitive advantages are key to future success
“The new clean energy business is not separate and distinct from conventional grid-based 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
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Differentiated Energy Solutions
DER Market Enabler
Advanced Distribution Investments
Advanced Distribution Infrastructure (EPRI Grid 3.0)
Utility Microgrids/Premium Grid Reliability Infrastructure
Advanced Distribution Operations (Operational Systems for Hub Services)
Transaction Management(Distributed Market, Clearing &
Settlement Systems)
2010 2015 20202012 2025+
Smart Grid
In a more distributed future utility distribution will be come the operational hub
