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Distributed Energy Resources as a strategic approach

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Rafael Herzberg's picture
Consultant energy affairs Self employed

Rafael Herzberg- is an independent energy consultant, self-employed (since 2018) based in São Paulo, Brazil* Focus on C level, VPs and upper managers associated to energy related info, analysis...

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  • Oct 26, 2020

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Tradition indicates that industrial/commercial/institutional energy users go for the “lowest cost solution”, considering the methodology used by each one to define costs and, accordingly,  the associated “boundary conditions”

The preference is going for a “single shot”. It may be going for a generation/cogeneration “inside the fence” power plant, a major retrofit aiming at energy efficiency, a load control so as to reduce the maximum demand and therefore the billing demand, locking power deals in connection with renewable power traders, using other energy sources such as natural gas, developing new behavioral actions to reduce power consumption, participating in demand response programs and list goes on and on.

But, real life situations indicate that commodity prices (power, gas, etc.) are changing almost on a daily basis. So reaching and maintaining competitive costs in the long run is a very tough call. What can drive solutions to a competitive overall cost is developing a portfolio arrangement. And being able to manage cost by selecting which energy source be “dispatched”.

The portfolio management approach is a great strategy because it associates cost arbitrage (among energy sources) and reliability/resiliency given the fact that – for example – on site power projects are an excellent tool to deal with unplanned power interruptions (by the public grid).

All this is easier said than done! It is only but vital to 1) diagnose the “technical” opportunities, 2) calculate their internal rates of return, 3) discover the best way to make these opportunities happen from having third parties to offer “structured” contracts or going for “in-house” solutions, 4) identify who should lead this initiative all the way,  5) metrics that will be used to monitor results and 6) making the necessary adjustments constantly to optimize results.

A huge challenge but usually offers great rewards. Welcome to this “new normal”.

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