Resilient Independent DERs Can Stabilize a Volatile Climate and Energy Economy
Recent years have seen a clear trend in the energy economy towards distributed energy resources, from utilities reducing their dependence on large and aging centralized fossil fuel-burning power plants so as to reduce emissions, accelerating entry of diverse renewable energy generation resources into the energy mix as their prices fall and capacities expand, and the proliferation of increasingly sophisticated energy storage technologies supporting the DER model. The ever more severe weather events such as storms and wildfires that interfere with the ability of utilities to propagate and maintain the traditional centralized energy model serve to encourage the transition to DERs. Utilities around the world have slowly but surely been increasingly adopting new distributed energy generation resources and business models.
Trends in DER
The role of the utility in the energy market is changing as the DER model takes hold; formerly passive energy consumers that now own DERs have become prosumers that both produce and consume energy services. These prosumers are increasing the share of renewables in the grid by selling surplus generation back to utilities. Energy communities are becoming significant players in the clean energy transition, allowing residential and business customers to jointly invest in the development and operation of energy-related assets. Advances in energy management and storage technologies are enabling localized electricity production that reduces dependence on a central grid. New forms of energy storage allow more interconnectivity between consumers who store energy and sell it to other consumers. Going forward, this peer-to-peer trading could bring a change in utilities’ business models, where in addition to supplying energy, utilities may also become operators of trading platforms.
The DER business model creates value for local communities looking to reduce energy costs and to maintain power independence and in parallel for utilities looking to diversify, increase energy resilience, add customer value and create new revenue streams. Many utilities have looked to incorporate a distributed model to solve a variety of challenges, including compliance with environmental legislation, relief from pressure on overworked grids and improved capacity to meet future energy demands.
Impacts of the Pandemic on DERs
However, the unprecedented events of 2020 have disrupted most market segments and the transition to distributed energy is no exception. Questions have arisen regarding supply chain disruptions and delays that are interfering with the completion of renewable projects and causing risks that these projects may lose their eligibility for government incentives that end this year. In parallel the huge fluctuations in oil prices, uncertainty regarding future electricity demand as well as ambiguity regarding availability of investment funds from uncertain public and private budgets – all of these jeopardize the progress that the energy sector has made in executing the transition to DERs.
It is primarily the role of governments to keep the deployment of this transition on track. If economic stimulus packages aimed at reigniting the global economy take into consideration the structural benefits that renewables contribute to economic development and job creation while also reducing emissions and facilitating technology innovation, progress can continue. The European Green Deal and EU plans to reach ambitious decarbonization targets alongside initiatives by the U.S. Department of Energy and mirrored by efforts by private companies, consortia and associations around the world who are contributing to a favorable investment environment in which the move to DERs can persist. With the impact of the pandemic on electricity consumption patterns and workforce logistics, utilities have been forced to make unexpected short-term changes in service provisions while they endeavored to maintain their commitments to long-term programs encouraging adoption of DERs. It remains to be seen if utilities can deliver on both short and long-term obligations.
Fuel Cells as Critical Backup Power Resources
As the world faces these new and serious threats to our energy stability, we need to be well-prepared. Uninterrupted power is key to virtually every aspect of mission-critical public operations and to maintaining civil and military services, especially in emergencies. Because the influx of variable renewable energy from multiple sources challenges grid infrastructures; a decentralized system with a high share of renewables is less predictable than a centralized one that is reliant on fossil fuels, and operators face difficulties when responding to peaks in demand and falls in supply. Alkaline fuel cells can complement other distributed energy resources by offering a highly reliable source for long-duration backup power when grids are not available, both during unplanned outages and as a means to avoid loadshedding and support peak power demands.
The benefits to be gained from incorporating fuel cells into DER models
The most important advantage that alkaline fuel cells bring to the table is power stability. For those seeking highly reliable power, incorporating fuel cells as a key component within a DER environment ensures critical auxiliary power in areas where the grid is unstable. The fuel cell provides a failsafe backup power source that contributes to the system’s reliability as well as its sustainability credentials. A DER model incorporates several sources of power generation, including renewable energies. But due to their weather dependency, wind and solar can only provide intermittent power. As more renewable energy enters the electricity market, introducing higher volatility in supply due to intermittence of these sources, there is a greater need for stored energy to compensate and provide balance. Especially when deployed in complementarity with batteries, fuel cells kick in immediately, and provide long-duration power availability and longevity. Beyond generating clean power, they also play a role in energy storage and regulating power flow, making them an effective DER component for microgrids and other distributed energy systems.
As a modular and scalable technology, additional fuel cells can be easily added to expand a system to meet growing energy demands. Unlike solar and wind farms that require large tracts of land, alkaline fuel cells require substantially less space and are significantly easier to install in urban environments. Producing zero emissions, virtually no noise and no vibrations, fuel cells are highly weather-resistant. In areas vulnerable to hurricanes or severe weather, fuel cells can maintain mission-critical equipment during grid outages caused by severe weather incidents as well as deliver power for utility reparations by teams working to repair damages wreaked by storms.
DERs introduce opportunities for efficiency and clean energy gains on the grid
DER topologies allow for increased penetration of renewable power to grids while reducing the grid instability that intermittent renewables cause utilities. Overall, the capacity of a DER network leveraging advanced energy management services to regulate power supply and avoid volatile fluctuations reduces the impact of peak demands both on the operational side as well as moderating electricity pricing. Utilities are gradually recognizing the value of integrating a DER model, taking advantage of advanced real-time monitoring capabilities often provided with DER equipment to optimize smart grids, improve efficiency and enable a variety of improved services that allow customers to better manage their power consumption.
Growing recognition of the value of the DER model leveraging the potential of hydrogen fuel cell energy for backup power and stabilization offers significant value for today’s energy market. Just as new technologies have enabled positive disruption in many other market segments such as transportation, healthcare, hospitality and countless others, similarly today’s utilities are recognizing that the technologies that DER bring to the table empower the industry to overcome tough challenges, from grid instability to peak demands to the pressing issue of climate change that is encouraging the world to accelerate our wholesale transition away from fossil fuels to adopt clean energy sources such as solar, wind, hydropower, electrolyzes and hydrogen fuel cells.
Despite the continued pressure on utilities to adjust to the logistical constraints and issues exacerbating operating conditions in 2020, nevertheless we believe that most utility decision-makers ultimately recognize the value of the long-term transition to a distributed energy model, not only for effectively integrating renewables into the grid, but in providing more choices for customers and more revenues for utilities.
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