Legal & Regulatory

Distributed Power, EAAS—New Ways to Join the Clean Energy Transition

The first image that likely comes to mind when the average energy consumer thinks about renewable energy is some kind of vast (utility-scale) solar or wind farm, or a massive battery project, usually pictured against a picturesque backdrop of rolling fields or a delightful sunset. But the way many energy customers are actually engaging in the renewable energy and battery storage green energy transition is actually different (and in fact, is changing).

Corporate customers interested in pursuing green energy or sustainability strategies now have more options than the conventional method of purchasing renewable energy credits from utility-scale renewable energy projects. Energy customers large and small can also opt to install a behind the meter (BTM) distributed power project, and electricity customers can also enter into agreements to buy services from those BTM projects, such as having the BTM/distributed project operated and maintained.

These small-scale, localized projects offer a variety of benefits. Community solar garden subscriptions have allowed customers without their own rooftops or suitable surfaces for solar development to participate in bolstering the solar industry by financially supporting the installation of a solar array in their own service territory. In the same way, BTM/distributed projects enable a broader group of electricity customers to participate in the generation of clean energy, the storage and strategic use of that energy, or even encouraging the electrification of vehicle fleets by allowing for electric vehicle charging.

These BTM/distributed projects can offer significant cost savings and other benefits to a wide variety of electricity customers. For example, commercial and industrial customers looking to shave off coincident peak energy charges (the costly charges paid to a utility for consuming electricity at the time when electricity demand on the system as a whole is highest) can deploy battery energy storage projects. There are a growing number of proficient developers and contractors specifically in the BTM/distributed renewable energy and battery space (in addition to offering residential services) that can help design, install, operate—and either own or lease—BTM/distributed projects for electricity customers, which do not require any specialized technical or commercial expertise from those electricity customers. While regulatory and other considerations must be worked through on a case-by-case basis, there are myriad of financial (reduced electricity bills), tax (based on federal, state, and local incentives), and sustainability benefits that can be enjoyed.

Recently, a new suite of “energy as a service,” known as EAAS, and energy efficiency offerings from commercial real estate enterprises to their tenants across the nation provide opportunities to buy green energy. Tenants can manage energy costs through storage, electrify vehicle fleets, and create more sustainable supply chains, with the same ease and simplicity as entering into a simple commercial contract for services.

For years, the development of energy generation projects has largely been dominated by utility-scale projects located far from load centers, requiring transmission for delivery to consumers. As Arshad Mansoor, president and CEO of EPRI, pointed out in his “The Clean Energy Balancing Act” article for POWER: “[T]he electric sector is decarbonizing rapidly, reducing its emissions by almost 40% in less than two decades. As solar and wind deployment accelerate, and some aging carbon-emitting plants are shuttered, the electricity supply will need to remain reliable. While speed is essential, prudency suggests keeping existing plants for the occasions when they are needed and accelerating the development of new technologies to balance the future system.”

In addition to the cost savings and ease of implementation, another advantage to BTM/distributed projects is they can reliably provide for electric customers’ energy use and ongoing operations without the transmission and electric grid risk (including congestion). Battery systems can protect against power outages and manage electric system reliability issues. Sometimes utilities will even pay customers for the ability to take advantage of these opportunities, offering payments for the frequency regulation and voltage control that batteries can provide to the electric system.

As Mansoor also pointed out, “[w]hile demand for electricity grows, our nation’s infrastructure is under increasing stress from extreme weather events. One-hundred-year extremes are now occurring every year.” Because BTM/distributed projects are local by design, they don’t require transmission lines or, typically, the build-out of extensive, expensive infrastructure. As a result, they can serve as a strong tool in the fight to make the electric system more resilient in the face of extreme weather and can provide localized solutions to protecting against extreme weather nationally that disrupts the broader electric system.

One more consideration, as more employers are making corporate decisions based in part on the values of their employees. Gen Z, Gen X, and millennials are—thankfully—quite focused on the urgency of halting and reversing the impacts of climate change. These employees are looking for ways to participate in the green energy transition and increasingly expect their employers to pursue climate, energy, and environmental policies that help address climate change. When employers can point to the EV charging stations in the solar-canopied parking lot of the building, it helps demonstrate that prioritizing green energy and sustainability is a company priority.

Ashley Wald is a partner at Holland & Hart LLP, providing guidance to clients in the solar, battery storage, wind, hydropower, and biomass industries as they develop, construct, buy, and sell projects and related infrastructure across the U.S.

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