Strategic Market Analysis

Distributed Sun

Project: Changes in the energy market were allowing customers to own (or finance) their energy generation capability with an incentive to save on their utility bills, add resilience to their personal and business needs, and contribute to a greener environment. For example, a customer could invest in geothermal and ground source heat pumps for heating and air-conditioning (i.e., converting one kWh of electricity into one BTU of heat); Combined Heat and Power, or CHP, (i.e., converting one BTU of heat into one kWh of electricity); and battery or other chemical forms of storage, energy efficiency and peak-shaving or peak-shifting load management (i.e., converting one kWh of electricity at one value into one kWh of electricity at a different value). The cumulative effect of these changes could allow commercial and residential customers to use the arbitrage between prices of energy sources to evaluate an investment in customer-sited generation and storage assets. The investments were impacted by market and non-market forces: • Market Driven: Energy markets, states or regions that currently offer an arbitrage spread between price trends of natural gas, heating oil and electricity without government incentives and allow prospective customers the ability to switch their current energy sourcing practices to save on their utility bills. • Government Driven: States that currently offer subsidies or incentivize customer-sited generation or load management practices and offer prospective customers the ability to switch to different energy sources (higher technological risk and or lower savings potential). The SGE Immersion team analyzed the extent to which this was possible in select markets by evaluating the constraints and opportunities available and recommended the best investment landscape for Distributed Sun to pursue.