Energy IQ : Three common use cases and deployments of distributed energy resources

Energy IQ - Distributed Energy

Distributed energy resources (DERs) are electricity-producing resources connected to the local electric distribution system. As the deployment of DERs continues growing worldwide, three common use cases of DERs are being employed globally.

Effectively in all three use cases, distributed generation introduces our electricity infrastructure and interconnected ecosystem of smaller power generation systems at or close to the point of consumption. The result of this proximity to consumption allows distributed generation systems to reduce the cost, complexity and inefficiency associated with transmission and distribution. For electricity customers, their emerging needs around sustainability and economics are also making distributed generation an important component of electricity infrastructure. In terms of sustainability, distributed generation offers the benefit of reduced emissions through integration of renewable sources with existing energy assets.

Below are three common distributed generation use cases with summarized benefits of each use case for electricity customers and energy market participants. 

Use Case No. 1: Grid Firming

Grid firming is a front-of-the-meter application where the utility meter is located between the customer load and distributed energy resources (DER).

power market today in story image

Direct energy market participants leverage grid firming to monetize their on-site power assets, including gas and diesel fueled generator sets. Energy market participants decide whether to utilize these on-site power assets by monitoring electricity demand and price in wholesale markets. For customers, grid firming provides the lowest levelized cost of electricity (LCOE) to support an inadequate grid.

Read about the role of Cummins-powered generator sets in efforts to add more renewable energy to the UK grid  

Use case No. 2: Energy Management

Energy management is a behind-the-meter application where both the customer load and DERs are on the same side of, behind, the meter.

Energy management, like grid firming, offers the opportunity to monetize on-site power assets but extends this opportunity to electricity customers in addition to direct energy market participants. Customers of energy management applications can mitigate time of use charges and experience the monetization in the form of bill savings. Some customers also enjoy the self-sufficiency offered by energy management applications.

Use case No. 3: Off-Grid

Let’s focus on two benefits of off-grid use case. First, it enables the electricity customers to operate in areas where there is weak or no grid. In this case customers benefit from consistent, reliable electricity at lower operating cost. Second, customers seeking to add renewables deploy this use to build a hybrid system consisting of renewables and diesel or gas fueled generators. In this case, the key benefits for the customers are sustainability and in some cases avoidance of high electricity prices offered by the utility.

In this use case, a customer could be self-metering the electricity usage or sign a power purchase agreement with the electricity producer. 

Read how Hawaii's largest craft brewery pursues grid independence for sustainability and to build a competitive edge

These three distributed generation use cases; grid firming, energy management and off-grid, all aim to fulfill the market’s increased expectations around reliability, sustainability and economics when it comes to purchasing electricity.

To learn more about trends in electricity markets and distributed generation, follow Cummins on Facebook and LinkedIn. To learn more about how Cummins is powering a world that’s “Always On,” visit here.

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Aytek Yuksel - Cummins Inc

Aytek Yuksel

Aytek Yuksel is the Content Marketing Leader for Cummins Inc., with a focus on Power Systems markets. Aytek joined the Company in 2008. Since then, he has worked in several marketing roles and now brings you the learnings from our key markets ranging from industrial to residential markets. Aytek lives in Minneapolis, Minnesota with his wife and two kids.

Energy IQ : Five insights into the future of energy for independent power producers – Part II

Power Electric Towers

The International Energy Agency’s annual World Energy Outlook aims to deepen our understanding of the future of energy. With this blog post, you can digest the insights most relevant to independent power producers when it comes to the future of energy. Part I of this blog post was themed, “how the pace of growth in electricity use will vary from energy demand and the increasing need for power system flexibility.” Part II highlights three additional insights for energy consultants.

No. #3: Africa offers vast opportunities for power producersPace of Growth in Demand graph

Demand for electricity generation is forecasted to grow in Africa faster than any other region. A mix of factors including over half a billion people to join the continent’s urban population, increased access to electricity and expanding mineral extraction activities drive this demand. 

Africa is also well positioned to find the fuels to fulfill this need. On the renewables side, Africa is solar rich, yet only less than 1% of the world’s installed solar capacity is in Africa, offering vast opportunities for power producers. When it comes to low carbon fuels, Africa benefitted from recent discoveries of gas deposits. In fact, 40% of global gas discoveries from 2010 to 2018 were in Africa. 

No. #4: There are two sides of the scalability story for renewables

The installed base of solar photovoltaic (PV) has grown over the recent years and forecasted to account for more installed capacity than any other energy source by 2040. Meanwhile, scaling up solar PV results in more electricity produced around the same time of the day in a given region. This could be interpreted as decreasing the value of additional electricity production as the solar PV installed capacity increases (according to Hirth), unless there is enough installed base of energy storage batteries to re-deploy electricity produced for another time of the day.

On the other hand, offshore wind becomes the star performer when it comes to scalability, thanks to its high average annual capacity factor. Offshore wind’s annual average capacity factor is already comparable to gas-fired power plants in many regions and better than other variable renewables. This means the growth in installed base in offshore wind wouldn’t result in diminishing value of electricity output.

No. #5: Battery storage technologies will become an integral part of energy infrastructure Forecasted solar PV and Batterie tech chart

Energy storage batteries are projected to be the rising star in building our energy infrastructure, thanks to advancements in battery technologies and decreasing costs. It is estimated there will be a 40-fold increase in battery storage capacity by 2040, an increase faster than almost every other mainstream technology.

Increased use of energy storage batteries will also impact how we manage the intermittent nature of solar and wind. As mentioned above, scaling up solar PV results in producing more electricity around the same time of the day in a given region, and could reduce the value of additional electricity production. Meanwhile, a combination of solar PV and batteries could address this challenge. While the addition of batteries increases the levelized cost of electricity (LCOE), LCOE for solar PV and batteries is forecasted to be competitive with fossil fuels. 

With the rapid changes in energy markets, new insights emerge continuously. Independent power producers that stay current with the latest insights could outperform others in bringing the ideal solutions to address our increasing need for energy and electricity to life. This article aimed to provide you a few of these key insights.

Sign up below for Energy IQ to periodically receive relevant insights and trends about energy and electricity sectors. To learn more about distributed generation solutions Cummins Inc. offers, visit our webpage. 

Think your friends and colleagues would like this content? Share on LinkedIn and Facebook.

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Raise Your Energy IQ

Grow professionally with energy trends and insights delivered to your inbox.

Aytek Yuksel - Cummins Inc

Aytek Yuksel

Aytek Yuksel is the Content Marketing Leader for Cummins Inc., with a focus on Power Systems markets. Aytek joined the Company in 2008. Since then, he has worked in several marketing roles and now brings you the learnings from our key markets ranging from industrial to residential markets. Aytek lives in Minneapolis, Minnesota with his wife and two kids.

Energy IQ: Five insights into the future of energy for facility professionals – Part II

Office Building

The International Energy Agency’s (IEA) annual World Energy Outlook aims to deepen our understanding of the future of energy. With this two-part series blog post, you can digest the insights most relevant to facility professionals when it comes to the future of energy. Part I of this blog post was themed “the growing role of electricity in our energy infrastructure, and the new challenges this brings to facility professionals.” Part II highlights three additional insights for facility professionals.

No. #3: Demand for power infrastructure flexibility grows faster than the demand for electricityBatteries to play key role chart

Renewable technologies bring astonishing benefits in terms of zero carbon emissions, but also introduce the challenge of flexibility. The continually increasing share of renewables in our energy infrastructure translates into an increasing share of variable electricity generation. Meanwhile, consumers are increasingly using electricity for cooling buildings and residences and to fuel their cars, changing the electricity demand profile. A combination of these two results in an increased need for power system flexibility. 

While traditional power plants and interconnections will continue to be key levers to deliver flexibility, energy storage batteries are projected to be the rising star in solving this flexibility challenge, thanks to advancements in battery technologies and decreasing costs. It is estimated that there will be a 40-fold increase in in battery storage capacity by 2040, increasing faster than almost every other mainstream technology.

No. #4: Changing weather patterns is a key driver of increasing energy demand

IEA estimates that almost one-fifth of the growth in global energy demand in 2018 was due to changing weather patterns. This included warmer than usual summers creating an increasing need for cooling and colder winters requiring greater heating needs. As the economic activity continues to increase and expands the consumers’ wealth, more people will need cooling in the summers and heating in the winters. For businesses, these changing weather patterns create the need for increased resiliency in their energy infrastructure and an increase in their energy related costs.

No. #5: Two technologies are forecasted to make the biggest gains in levelized cost of electricity (LCOE)offshore wind technology us v china

While building a new coal plant no longer offers the lowest LCOE in many regions, existing coal plants continue to have the lowest LCOE across most regions today. Meanwhile, there are two technologies that are making big gains to deliver lower LCOE in the next two decades: offshore wind and solar photovoltaic (PV).

Offshore wind is positioned to experience the biggest gains in lowering LCOE, and is expected to be even less than solar PV in regions such as China and the European Union. Moreover, offshore wind projects already feature annual capacity factors of 40-50%, which are well above capacity factors for solar PV and approximately the same with gas-fired power plants in several regions. 

Facility professionals shape the future of energy for their businesses. Their energy related decisions yield outcomes in many areas including the environment, economics and reliability. Insights shared in this article are aimed to keep the facility professionals’ perspective of the future of energy fresh and current.

Sign up below for Energy IQ to periodically receive relevant insights and trends about energy and electricity sectors. To learn more about distributed generation solutions Cummins Inc. offers, visit our webpage. 

Think your friends and colleagues would like this content? Share on LinkedIn and Facebook.

Raise Your Energy IQ

Grow professionally with energy trends and insights delivered to your inbox.

Aytek Yuksel - Cummins Inc

Aytek Yuksel

Aytek Yuksel is the Content Marketing Leader for Cummins Inc., with a focus on Power Systems markets. Aytek joined the Company in 2008. Since then, he has worked in several marketing roles and now brings you the learnings from our key markets ranging from industrial to residential markets. Aytek lives in Minneapolis, Minnesota with his wife and two kids.

Energy IQ: Five insights into the future of energy for energy consultants – Part II

Field With Wind Turbines

The International Energy Agency’s annual World Energy Outlook aims to deepen our understanding of the future of energy. With this two-part series blog post, you can digest the insights most relevant to energy consultants when it comes to the future of energy. Part I of this blog post was themed how the pace of growth in electricity use will vary from energy demand, and the two technologies that are forecasted to make the biggest gains in levelized cost of electricity. Part II highlights three additional insights for energy consultants.

No. #3: There are two sides of the scalability story for renewables

The installed base of solar photovoltaic (PV) has grown over the recent years, and forecasted to account for more installed capacity than any other energy source by 2040. Meanwhile, scaling up solar PV results in more electricity produced around the same time of the day in a given region. This could be interpreted as decreasing the value of additional electricity production, as the solar PV installed capacity increases (according to Hirth), unless there is enough installed base of energy storage batteries to re-deploy electricity produced for another time of the day.

On the other hand, offshore wind becomes the star performer when it comes to scalability, thanks to its high average annual capacity factor. Offshore wind’s annual average capacity factor is already comparable to gas-fired power plants in many regions and better than other variable renewables. This means the growth in installed base in offshore wind wouldn’t result in diminishing value of electricity output.

No. #4: Demand for power infrastructure flexibility grows faster than the demand for electricityBatteries to play a new key role chart

Renewable technologies bring astonishing benefits in terms of zero carbon emissions, but also introduce the  challenge of flexibility. The continually increasing share of renewables in our energy infrastructure translates into increasing share of variable electricity generation. Meanwhile, consumers are increasingly using electricity for cooling and to fuel their cars, changing the electricity demand profile. A combination of these two results in an increased need for power system flexibility. 

While traditional power plants and interconnections will continue to be key levers to deliver flexibility, energy Storage batteries are projected to be the rising star in solving this flexibility challenge, thanks to advancements in battery technologies and decreasing costs. It is estimated that there will be a 40-fold increase in in battery storage capacity by 2040, increasing faster than almost every other mainstream technology.

No. #5: Fossil fuels continue to receive higher subsidies than renewables

fossil fuel consumption graphSubsidies have been instrumental in making renewables a financially viable energy technology, and contributed to the growth in the installed base of renewables. Subsidies, whether for renewables or for fossil fuel,  make access to energy more affordable for larger portions of the world’s population when applied effectively.

In 2018, renewables received just under 200 billion dollars of subsidies, while fossil fuel consumption received over 400 billion dollars of subsidies. It is also important to highlight that subsidies for renewables have been in a continued increase while the subsidies for fossil fuels remained the same compared to a decade ago.

With the rapid changes in the energy markets, new insights emerge continuously. Energy consultants are best positioned to process these insights and help their customers and partners build energy management strategies to best fit their business. This article aimed to provide you with a few of these key insights.

Sign up below for Energy IQ to periodically receive relevant insights and trends about energy and electricity sectors. To learn more about distributed generation solutions Cummins Inc. offers, visit our webpage

Think your friends and colleagues would like this content? Share on LinkedIn and Facebook.

Raise Your Energy IQ

Grow professionally with energy trends and insights delivered to your inbox.

Aytek Yuksel - Cummins Inc

Aytek Yuksel

Aytek Yuksel is the Content Marketing Leader for Cummins Inc., with a focus on Power Systems markets. Aytek joined the Company in 2008. Since then, he has worked in several marketing roles and now brings you the learnings from our key markets ranging from industrial to residential markets. Aytek lives in Minneapolis, Minnesota with his wife and two kids.

Energy IQ: Six insights into the future of energy and sustainability every consumer needs to know – Part II

Wind Turbines

The International Energy Agency’s annual World Energy Outlook aims to deepen our understanding of the future of energy. With this blog post, you can digest the insights most relevant to every consumer when it comes to the future of energy. Part I of this blog post focused on  sustainability and affordability, and Part II builds upon that focus  with three additional insights. fossil fuel consumption

No. #4: Fossil fuels continue to receive higher subsidies than renewables

Subsidies have been instrumental in making renewables a financially viable energy technology and contributed to the growth in the installed base of renewables. Subsidies, whether for renewables or for fossil fuel, also make access to energy more affordable for larger portions of the world’s population when applied effectively.
In 2018, renewables received  just under 200 billion dollars of subsidies while fossil fuel consumption received  over 400 billion dollars of subsidies. It is also important to highlight that subsidies for renewables have been in a continued increase while the subsidies for fossil fuels remained the same compared to a decade ago. 

No. #5: Consumers can contribute to sustainability through energy efficiency

Energy efficiency is considered  the most important lever to reduce carbon emissions, and over 240 billion dollars (approximately the same as the country of  Portugal’s annual gross domestic product), was spent on energy efficiency improvements in 2018. While a large portion of energy efficiency improvements are more relevant to industrial and commercial energy users, consumers also have several venues to improve their energy efficiency. 

Consumers can simply program some of their appliances such as dryers and washers to run around the middle of the day when electricity generation from solar photovoltaic  peaks and avoid using selected appliances when renewable sources generate less of our electricity. Today’s connected appliances and electric vehicles make it easier than ever for consumers to adapt these energy efficiency habits.

No. #6: Large disparity in electricity consumption between advanced economies and developing economiesdisparity in electricity

From now to 2040, nearly 90% of the increase in electricity demand will come from developing economies; more interesting is after such a large increase in electricity demand, a person living in a developing economy will still consume significantly less electricity than a person living in an advanced economy.
In advanced economies, improvements in energy efficiency offset the increased electricity demand generated by electrification and digitalization. Meanwhile, in developing economies increased industrial production, rising consumer wealth and growing commercial activity drive up the demand for electricity. 

Well informed consumers make better choices when it comes to shaping the future of energy. These insights are summarized for you to have a well-rounded understanding of energy markets and what the future holds. You can leverage these insights as you evaluate your next appliance purchase or as you evaluate your expectations from your local policy makers.

Sign up below for Energy IQ to periodically receive relevant insights and trends about energy and electricity sectors. To learn more about distributed generation solutions Cummins Inc. offers, visit our webpage. 

Think your friends and colleagues would like this content? Share on LinkedIn and Facebook.

Raise Your Energy IQ

Grow professionally with energy trends and insights delivered to your inbox.

Aytek Yuksel - Cummins Inc

Aytek Yuksel

Aytek Yuksel is the Content Marketing Leader for Cummins Inc., with a focus on Power Systems markets. Aytek joined the Company in 2008. Since then, he has worked in several marketing roles and now brings you the learnings from our key markets ranging from industrial to residential markets. Aytek lives in Minneapolis, Minnesota with his wife and two kids.

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