What Will It Take for C&I Energy Service Providers to Move beyond Traditional Energy Efficiency Solutions?

Commercial and industrial (C&I) customers are often challenged to secure CAPEX for the deployment of distributed energy resources (DER) solutions to meet their sustainability and operational efficiency goals. However, energy service providers and utilities have continued for forge forward. Historically, to avoid these customer challenges, energy service providers and utilities have focused only on energy efficiency-based DER solutions that can meet customer short-term payback returns. This resulted in a two-pronged market that included:

• A narrow focus on fee-for-service energy efficiency-based DER, especially lighting retrofits, with a bias toward standalone project opportunities.

 

• The emergence of energy savings performance contract (ESPC) financing in the energy services company (ESCO) sector at large installations in the municipal, university, schools, and hospital (MUSH) sector.

 

 

Are Traditional DER Solutions Enough?

However, many C&I customers have already focused on LED lighting retrofits. Further, while the ESCO MUSH sector is established and steadily growing, C&I energy users are increasingly interested in portfolio-wide opportunities for broader energy and cost reduction opportunities. Meeting these C&I customer needs will require a more sophisticated approach that transcends energy efficiency-based DER. Energy service providers and utilities are now being required to dig into new DER solutions toolboxes to include the integration of onsite supply load management solutions, as highlighted below.

New Integrated DER Solutions

(Source: Guidehouse Insights)

Acquisitions and Partnerships Can Offer Greater Potential

European-based energy suppliers have recognized the need for a broader and more sophisticated set of customer solutions and are adding technical depth to their DER solutions capabilities through acquisitions and partnerships. This trend includes DER-related acquisitions by Enel and ENGIE in North America. At the project transaction level, this challenge will become more pronounced as integrated DER solutions are increasingly considered for deployment in tandem.

Given this evolution, C&I energy users and DER solutions providers will see an increasingly complex interaction between building load, tariff-specific charges, and the operation of these integrated DER solutions. This interaction will require increasingly sophisticated intelligent building-enabled DER software platforms to support the growth of DER financing at C&I facilities. Guidehouse Insights will examine these DER software platform factors in greater detail in an upcoming Utility Customer Solutions report.