What is distributed energy and why does it matter now more than ever?

John Behan, CEO of AMPYR Distributed Energy (ADE), discusses the numerous benefits of distributed energy, the opportunities it presents and the pivotal role that it will play in the energy system of the future.

The energy landscape is changing at a rapid pace and, for businesses, the need to decarbonise is driven by both commercial and compliance considerations. It’s not just a cost concern, but also about mitigating supply risks and creating long-term certainty in a disrupted market. Add into this growing sustainability pressure from stakeholders and the conversation moves from embracing best practice to ‘do it or be left behind’.

So, how is distributed energy addressing these concerns?

Distributed energy is the name given to energy generated onsite, or close to where it will be used. It includes rooftop and ground mounted solar panels, as well as wind turbines and battery storage. Such resources have an important role to play in the energy landscape of the future and can be used to improve system reliability and reduce overall energy costs.

As distributed energy enables generation assets to be sited close to where the energy will be used, it can play a pivotal role in supporting future energy systems. Specifically, it can reduce energy losses from transmission, mitigate the need for future grid upgrades and enable the rapid deployment of renewables.

Decarbonising operations and accelerating towards net zero is fast becoming a board-level business priority. Amid energy price volatility, rent hikes, supply chain disruptions and rising inflation, businesses are looking for sustainable solutions to streamline the balance sheet.

To accelerate progress, earlier this year policymakers removed planning permissions surrounding flat roofs, as well as scrapping the 1MW restriction for industrial rooftop solar and relaxing planning around solar canopies on car parks. The new government has already pledged to work with the private sector to triple solar power by 2030, a commitment that is likely to enable distributed energy and the advantages it offer to end users.

Beyond public policy, there is a strong commercial imperative to consider onsite generation. Distributed energy offers several business-critical advantages. It not only helps to reduce energy costs (in some cases by up to 50%) and lower carbon emissions, but also supports business resilience by reducing reliance on centralised energy supply. Thanks to the availability of Power Purchase Agreements (PPAs), an agreement that sees renewable energy generation technology installed by a provider and sold to a customer at a cost-effective fixed price, distributed energy is affordable and easy to implement. What’s more, it delivers these benefits almost immediately.

Any business that boasts available rooftop space can take advantage of rooftop solar, the fastest growing and most accessible form of onsite generation. There are several sectors, however, where energy use is higher than others (such as industrial centres and warehousing), which increases the value of onsite generation significantly. Energy generated onsite can also be stored through battery technology, which enables businesses to maximise self-consumption and prevent grid export for power that is needed, but not immediately.

Energy storage can also provide backup power, which improves energy security and reduces energy bills by enabling ‘peak shaving’ – where businesses can avoid demand charges for short-term peaks in consumption.

We are engaged with a wide range of businesses, from sports stadia and conference centres to distribution hubs and factories, all keen to harness the benefits of onsite generation. Their primary concerns, of course, are how much it will cost and what the risks might be. When funded by the PPA model, however, there are no upfront costs, making adoption of renewable energy technologies much more accessible for many.

One example of where an industry is going above and beyond to take advantage of distributed energy is the warehousing sector. The UK Warehousing Association’s (UKWA) own research identified that UK warehousing has the roof space for up to 15GW of new solar, doubling the UK’s solar PV capacity.

A further benefit is that, because the UK’s 20% largest warehouses can provide 75 million square metres of roof space, it offsets the need to develop new land equivalent to the footprint of 500,000 houses. Projected to reduce energy costs by between 40-80%, the UKWA estimates that in aggregate rooftop solar PV has the potential to save the industry £3 billon per year.

The new government has said that it is prioritising the shift to clean energy and away from fossil fuels through the electrification of energy supply. Many businesses may think that going beyond renewable energy procurement, to explore areas such as onsite generation, is too daunting, especially with challenges and barriers around grid connections, capacity, returns, pricing and liabilities.

However, when it comes to distributed energy, the models for deployment have been tried and tested worldwide. At ADE, for example, we have an initial £100m to deploy on projects in the UK and across Europe, with more funding coming on stream later in the year. What this means, in practice, is that businesses can access the expertise and funding required to secure a system that is right for them, with no upfront costs.

Via our PPA funding model, businesses can quickly and easily adopt onsite renewable generation, as well as energy storage. This makes it easier than ever to benefit from the distributed energy revolution.

We understand that businesses don’t want renewable energy installations to be a liability, so having a partner that goes far beyond just the acquisition and installation of renewable energy assets and looks for ways to drive optimal performance and value – year in, year out, is going to be critical.

Ultimately, onsite generation, when done well, can save organisations money, increase energy security, increase business competitiveness and ensure compliance… all while ensuring a better world for us all.

To find out how accessible distributed energy systems are in the UK, contact us today.