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The Benefits of Distributed Generation for Commercial & Industrial Facilities

We’ve recently explored the many advantages offered by the solar-plus-storage model for commercial and industrial facilities. These include reduced utility bills, greater energy independence, and sustainable growth. However, there is an even greater possibility currently emerging from the solar-plus-storage model, which is gaining media attention due to the disruption of power infrastructure by recent major storms.

Many of today’s solar-plus-storage systems are highly efficient, yet they often rely on a connection to the grid and require an increasingly complicated relationship with utility companies. While the combination of solar generation and reliance on the grid has both advantages and disadvantages, many commercial and industrial solar adopters are looking towards a more innovative solution: the energy independence and resiliency offered by distributed generation.

Distributed Generation: A New Model for Power

Distributed generation decentralizes power production, creating the possibility of eliminating the need for elaborate energy distribution infrastructure by generating and storing power near the point-of-use, rather than miles away at a centralized location such as a power plant. The Environmental and Energy Study Institute (EESI) explains that “By generating electricity in smaller amounts closer to end-users, we can dramatically increase energy efficiency, reduce carbon pollution, improve grid resiliency, and curtail the need for new transmission investments.” Solar and wind power are popular methods of power generation when paired with energy storage installations.

This localized system of power production reduces the many systemic issues that result from grid dependence, such as inefficiency through power loss, emissions, and infrastructure vulnerability. As the U.S. Energy Information Administration notes, “electricity transmission and distribution losses average about 5% of the electricity that is transmitted and distributed annually in the United States.” Creating and storing energy at the point of use mitigates these losses, creating savings for facilities that embrace distributed generation through solar-plus-storage systems.

In practice, distributed generation works like this: solar photovoltaic panels or wind turbines on or near the facility collect solar energy and deliver it through an intelligent hybrid inverter to a battery storage system. The inverter manages energy production and consumption and connects to the building’s electric panel, supplying its energy needs through generated and stored power.

While small-scale residential distributed generation systems can allow homeowners independence from utility companies and infrastructure fees, especially in rural or hard to reach areas, the possibilities offered by larger systems have caught the attention of business owners as well. With applications for office buildings, warehouses, retail spaces, industrial facilities, and even agricultural operations, distributed generation provides new opportunities for commercial and industrial solar adopters.

How Commercial & Industrial Solar Adopters Benefit

The Financial Case for Distributed Generation

From a financial perspective, distributed generation systems for commercial facilities can produce major savings on utility costs. Commercial and industrial buildings use more energy than residential buildings and also suffer from a fee structure that penalizes them for high-use periods. In addition to charging for kilowatt-hours of energy consumed, utility companies leverage additional fees on commercial and industrial buildings. These are often called “demand charges” or “facilities charges.”

Demand charges are assessed by monitoring kW usage to identify the highest demand “peak” over each billing period. The rate for that month is then calculated based on that peak figure, which can result in charges of up to $25 or $30 per kilowatt-hour. For commercial facilities that use a lot of power, the demand charge (also called a “peak usage charge”) can become an enormous monthly expense.

When commercial or industrial buildings invest in distributed generation systems they can eliminate the demand charge entirely, creating savings that, over time, greatly offset the initial cost of their investment. Instead of closely monitoring energy usage and storing power to “trim the peak” at times of increased demand, these facilities can depend on their own localized power generation and storage to provide for their energy needs with no additional fees or charges.

Building Resiliency & Sustainability

Building resiliency, or the long-term sustainability of the investments they make in their facilities, is another major motivating factor for commercial and industrial solar adopters. Energy storage and backup power, along with water conservation, are frequently cited as important investments in the resiliency of corporate offices, warehouses, and other facilities, data collected by Shelton Group reveals. Distributed generation systems offer even greater resilience and energy independence than grid-connected solar-plus-storage installations.

Sustainability as Brand Enhancement

The benefits of investment in distributed generation systems aren’t purely internal, however. Shelton’s research also reveals that consumers are increasingly including sustainability in their purchasing decisions, with Millennials leading the trend. Only 26 percent said that “buying and using eco-friendly products” was “an important part” of their purchasing decisions in 2013, but that number has since grown to 51 percent, indicating greater environmental awareness among purchasers. Today’s consumers want to know that they’re supporting a company that cares about sustainability and the environment.

Investing in Innovation

At Solar Design Studio, our expertise in both residential and commercial solar-plus-storage and distributed generation systems allows us to provide a wide variety of consulting, design, and engineering services to our customers. We’re passionate about the financial and environmental impacts of solar power and work to maximize each client’s savings through their investment in innovative solar technologies.

Are you ready to invest in the innovative future of distributed generation? Contact us today to learn how we can enhance your solar-plus-storage or distributed generation project.

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