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DER Technology Providers Optimize Business Model Offerings

Pritil Gunjan
Nov 03, 2020

Guidehouse Insight solar panel

Wisconsin-based Generac, a manufacturer of backup generators, recently announced its acquisition of Enbala, a virtual power plant (VPP) company. Enbala’s distributed energy resource (DER) optimization platforms can facilitate DER aggregation, unlocking potential revenue streams for asset owners while ensuring operational stability of the grid. Integration and aggregation across DER is an exciting opportunity area for most technology manufacturers, so this acquisition did not come as a surprise to many, especially since Generac has been on a shopping spree. In 2019, the company entered the energy storage and monitoring markets by buying Pika Energy and Neurio for $49.1 million and $59.1 million, respectively.

Energy providers continue to strive to offer resilient power and peak electricity supply to consumers, and digital technologies such as DER management systems and VPPs are needed to manage the flexibility of disparate energy sources. Aggregation of DER relies upon software and a smart grid to remotely and automatically dispatch flexibility services to a distribution or wholesale market via an aggregation and optimization platform. By integrating multiple assets and asset types into their portfolios, technology providers such as Generac can improve project economics and broaden their service offerings across DER technologies and accompanying software. Technology providers have been participating in this strategic trend to optimize their business models by extending into the hybrid energy solutions market across genset manufacturers over the last couple of years. Some examples include when Wärtsilä acquired Greensmith Energy and Caterpillar took equity stake in Fluidic Energy.

DER Deployments Are Anticipated to Increase

With the ongoing energy transition, customer needs are evolving to accommodate the demand for implementing efficient DER solutions. This trend is motivating producers and consumers of distributed power to look beyond traditional generation technologies into new and innovative integrated solutions.

Despite the economic challenges posed by the current public health crisis, DER deployments are expected to increase steadily. The distributed energy ecosystem revolves around the changing consumption patterns of residential, commercial, and industrial consumers. According to Guidehouse Insights, major trends across the Energy Cloud should bolster global DER deployments growing at a CAGR of 10.7% over the next decade. Cumulative DER capacity is estimated to exceed 4 TW by 2030. The role of technology accelerators will continue to increase exponentially. OEMs should leverage software platforms and solutions to optimize business model offerings and support the end-to-end proposition, including control and optimization capabilities.