April 7, 2021

Why Distributed Energy Projects Don’t Work

Whether you are pitching a distributed energy solution or having a distributed energy solution pitched to you, the topic of conversation is typically focused on why the project will work. We explore benefits, quantify value, and identify the unique points that make an opportunity a strong business case. While project drivers remain front and center, it is equally important to consider why projects don’t work. We believe that by addressing and working to solve these challenges, the industry will see greater rates of success and fewer projects abandoned due to circumstance.

---

You will find no shortage of stakeholders in the energy sector who will tell you that projects can be complicated. Creating economically viable projects is challenging, and development cycles can be long and tedious. Below we have outlined some of the most common reasons that projects fail. While this is not indicative of every technology or opportunity, these are observed trends that have emerged as the GridMarket team has worked across a diverse range of customers, properties, and projects.

Costs – For those who have the balance sheet and available capital, purchasing a DER system is often the most lucrative opportunity; however this is not a reality for many who do not have the cash surplus for technologies that are still quite expensive. While there are a wide variety of incentives, tax credits, grants and other viable revenue streams that bring down capital costs, these can be narrow in focus or have certain requirements that cause issues for the project. Additionally, securing financing can be a challenge as projects often do not meet standard return thresholds or are held up in modeling and analysis, and during that time circumstances often change.

Bandwidth – While sustainability and energy initiatives are gaining mainstream traction, there are still very few companies with dedicated resources focused on implementing clean energy projects. Internal engagement and interest can come from a wide range of departments (facilities, finance, operations, etc.) but these internal champions have primary responsibilities and limited time to dedicate to managing the needs of project development. Many aspects of these projects can be time sensitive, and hold ups due to availability can be detrimental.

Education – For many of us, there is an energy disconnect - flip a switch or press a button, and our electricity needs are instantly met. When presented with new energy solutions, we are forced to critically consider how these technologies work and this can lead to hesitation, discomfort and doubt. Facilities and buildings have engineering staff who will have a more technical operational understanding, so their reservations often stem from the risks involved in trying something new. With many of these technologies and operational structures still in relative infancy, we can’t expect customers to be fluent in the market landscape. There are very few resources to help energy consumers view and compare the full spectrum of viable technology options.

Infrastructure – Many distributed energy technologies and systems are large and have specific infrastructure requirements. Buildings that lack the ideal layouts, space allocations, or necessary infrastructure upgrades present hurdles for implementation. These often result in stalled projects or additional costs.

Variables – The energy market is dynamic and constantly evolving. This makes progress very exciting and opportunistic; however, it can also muddy the waters and make it hard to keep up. Rules and regulations differ by region, by property type, by technology, and more. It can be very challenging to track local market developments and design systems that provide economic and environmental value, while meeting the unique requirements of all involved parties.  

Approvals – In order to implement new technologies, there are a number of approvals that must be secured before construction can begin. Additionally, these approvals all come from different entities. It can be extremely challenging to ensure that project designs meet safety requirements from authorities having jurisdiction such as buildings and fire departments. Projects must meet interconnection requirements and have approvals from the local utility. Any additional programs or revenue streams must be adequately aligned and requirements of the administrator met. With all these participants and moving parts, it can be challenging to coordinate the process and make sure all boxes are sufficiently checked.

There is no denying that distributed energy solutions face many challenges. This list, though representative of the major issues, is certainly not exhaustive. It is very important to acknowledge that issues do exist - the market as a whole must work through them and proactively find solutions so that DERs can continue to scale and prove value

That is where GridMarket comes in.

---

GridMarket has developed many of our project resources directly in response to these trending challenges. We have experience with a wide variety of customer types, project structures, and technologies, so we have come up against many of these issues and been forced to craft solutions. These solutions have been transformed into active project tools and integrated with our platform to better service our partners. Our customer-centric process focuses on taking pressure off the customer so that bandwidth and educational challenges can be immediately alleviated. We survey all viable opportunities, bring these back to the customer, and help them make informed choices. Participation in our platform is low risk and does not require significant time or resource involvement. Our active ecosystem of solution providers, developers, financiers, utilities, jurisdictional authorities, professional service firms, and other stakeholders have access to actionable project opportunities and meaningful analytical support. Our network is primed with the necessary expertise, addressing challenges to accelerate and streamline projects to ultimate success.

If you are interested in learning more about our platform and process, please visit our website and send us an email here!

Related Posts

How Impact Investing Is Helping Take Clean Energy Mainstream

How Impact Investing Is Helping Take Clean Energy Mainstream

NJHEPS 2020 Distributed Energy Resources Lunch and Learn with GridMarket

NJHEPS 2020 Distributed Energy Resources Lunch and Learn with GridMarket

2020: A Year In Review

2020: A Year In Review

RETC’s 2020 PV Module Index Provides Valuable Insight For The Renewable Energy Market

RETC’s 2020 PV Module Index Provides Valuable Insight For The Renewable Energy Market

Get News From GridMarket