Top 5 Characteristics of Future ESCOs

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Energy as a Cost vs Revenue?

If property owners are increasing experiencing economic pain as the environmental impacts and costs of conventional energy rise then why not see Renewable energy, conservation and efficiency as potential revenue opportunities?  The sad reality is that most consumers largely ignore energy costs. They simply don’t see the potential opportunity for Renewable Energy as revenue.

Solutions Exist

Solutions exist such as “disaggregated” conservation, micro power generation and emerging energy storage approaches. Part of the value of this approach is the aggregation of these methods, combining power generation, energy conservation and energy storage into a single solution.

Emerging Value Proposition

The emerging ESCOs, or Energy Services Companies of the Future, will encourage and capitalize on the growth of Renewable Energy penetration.  Accordingly today’s average electric consumers converted into electric producers.  Therefore development of a unified software and financial analysis platform will help enable the achievement of this conversion.

A Virtual Power Company

The emerging ESCOs of the Future’s goal is to become a virtual power company.  By achieving this goal it may be possible to entirely eliminate customers electricity costs for those opportunities identified through onsite power production, efficiency and conservation. Revenue will be generated through services, consulting, incentives and the sale of excess power through micro-grids. Measuring of electricity usage and friendly competition through apps and gamification provide an exciting opportunity for customer engagement.

Related: Is-there-a-strong-business-case-to-pursue-leasing-net-zero-energy-buildings?

Benefits of New Tech

The goal of the emerging ESCOs of the Future is to provide consumers with services that are tied to the increasing growth of distributed renewable energy resources.  For instance solar and wind as well as technology advances in storage, microgrids, peak shaving and load sharing.  As a result, these new technologies are facilitating the conversion of today’s average electric net cost consumers into electric net revenue producers.  This is because they lower the Levelized Cost of Electricity or LCOE.  Therefore the ESCOs of the Future can achieve these results using modern unified software and financial analysis platforms.

The 5 Key Characteristics*:

1 – Access to a portfolio of generation, storage, and flexible demand will remain important in the future.  But with less emphasis on asset ownership.

2 – Risk management, optimization, and trading are essential and remain a core part of the utility business.

3 – Analysis of “Big Data” will give leverage for customer advantage.  

  4 – User-friendly applications and automation tools will enhance customer propositions and unlock demand response.

5 –  Being close to the customers and retaining their trust as their needs change will be important to unlock new sources of value.

Creative Solutions

The emerging ESCOs of the Future will focus on bringing creative solutions to entrenched market problems.  These solutions will be accomplished  through strategic collaborations and a unique application of engineering, IT systems, software development, executive management, financial analysis, and customer engagement.

Who Benefits?

The emerging ESCOs of the Future will help homeowners and businesses achieve a reduction in LCOE by using proprietary methodologies.  These methods will be used to quantify, identify, buy and maintain cost-effective alternative energy products and technologies.  These approaches include conservation, efficiency, micro grids, net metering, connected storage and geothermal generation.

Conclusions

Residential and commercial property owners have largely ignored the economic opportunities available through electrical efficiencies and conservation. In contrast, efficiency improvements can substantially reduce the levelized cost of energy (LCOE = $/kWh) of selected alternative energy projects.  Recent studies have shown that a $0.03 investment in electrical efficiency will yield as much as a $0.09 reduction in LCOE because of the energy supply avoided cost.

The emerging ESCOs of the Future will empower residential and commercial property owners to reach Net Surplus Electricity target enabling power sharing through net metering and distributed generation, tiered software subscription services will provide recurring business and revenue growth. Supporting products and services will be facilitated through partnerships with Electric Utilities, Software & Solar companies.

Services

A modest pre-solar service would entail a small investment in proactive improvements to reduce energy usage prior to a renewable energy investment. This means targeting insulation, replacement of inefficient appliances and change out of hungry incandescent lights for power sipping LEDs. The overarching goal of this service could be Zero Energy, meaning that the customer will save money by completely eliminating electric bills and make money with surplus generation and do it all without changing people’s lifestyles.

The customer’s purchase price, loan or lease payments, grid usage, predicted solar production as well as government incentives define the total cost versus potential monthly savings.  The emerging ESCOs of the Future will provide accurate & automated methods for determining the best ways to serve customers.  This will be accomplished by evaluating select opportunities and pinpointing where the combined factors exist to zero out monthly cost and generate revenues depending on the particular factors of incentivized lower usage and intelligent system design.

*Source: Fereidoon P. Sioshansi. “Innovation and Disruption at the Grid’s Edge.” iBooks.

About the author – Warren Evans

As a Business Owner, Technology Program Manager and Nuclear Engineer I’m proud to be an environmental supporter and advocate of all forms of renewable energy and the game changing technologies and economics surrounding this global transition. I enjoy managing complex technologies and making them accessible to people who need practical solutions. 

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