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Published: May 21, 2023

What are Distributed Energy Resources?

Quick Facts

Topics: Energy Services

Distributed Energy Resources (DERs) are energy generation and storage technologies that may help organizations manage energy costs, mitigate challenges with electric power access and reliability, and advance both sustainability and resiliency initiatives. DERs can supplement or replace the power generation provided by central utilities to improve efficiency, lower emissions, and reduce downtime events.

There are several technologies and solutions that may be used to generate or store energy as distributed energy resources for a building or operation. Here is a brief summary of these technologies:

Diesel Engine Generator (Gensets)

Application

Fuel Source

Benefits

Drawbacks

Standby Power

Simple cycle (power only) for baseload or peaking

Diesel fuel

Highly proven, reliable, quick start as standby.

In an off-grid system, can be used for base-load, load following or for peak-load power

Uses fossil fuels, which may contribute to increased emissions.

Dual-Fuel Gensets

Application

Fuel Source

Benefits

Drawbacks

Standby power

Simple cycle (power only) Base Load or Peaking

Combined Cycle (combined heat and power) - Base Load

Diesel fuel + natural gas

Benefit of quick start (diesel)

Lower emissions and higher efficiency than 100% diesel gensets

Can be installed as CHP

Uses fossil fuel, still utilizes diesel fuel which generates very high emissions

Natural Gas Gensets

Application

Fuel Source

Benefits

Drawbacks

Standby power

Simple cycle (power only) Base Load or Peaking

Combined Cycle (combined heat and power) - Base Load

Natural gas

Highly proven, reliable

Can be used as a cost effective baseload, load following and peaking unit

Lower emissions and higher efficiency than diesel gensets

Can be installed as CHP

High CHP efficiency for hot water or combined hot water and steam (<50% steam)

Some units may be converted to clean H2 fuel as the price of H2 falls over time

Uses fossil fuel, equipment can be installed with emissions reduction equipment

Combustion Turbines

Application

Fuel Source

Benefits

Drawbacks

Simple Cycle (power only) - Base Load or Peaking

Combined Cycle (combined heat and power) - Base Load

Gas or liquid fuel, typically high pressure natural gas

Efficient, lower maintenance than gensets

Designed for base load, peaking and load following applications

High CHP efficiency, for applications with steam requirements.

High Supplemental Duct Fire efficiencies (near 100% LHV).

Uses fossil fuel, equipment can be installed with emissions reduction equipment

Higher first cost than Gensets, requires high pressure fuel

Microturbines

Application

Fuel Source

Benefits

Drawbacks

Simple Cycle (power only) - Base Load or Peaking

Combined Cycle (combined heat and power) - Base Load

High pressure natural gas

Compact, pre-packaged

Low emissions

Modular for moving applications

Less efficient than combustion engines and larger combustion turbines

Limited lifecycle applications

Fuel Cells

Application

Fuel Source

Benefits

Drawbacks

Simple Cycle (power only) - Base Load or Peaking

Combined Cycle (combined heat and power) - Base Load

Hydrogen (potentially produced from natural gas or propane)

One of the cleanest forms of energy

Efficient, quiet

Modular

Expensive, low overall efficiency

Cogeneration or Combined Heat-and-Power

Application

Fuel Source

Benefits

Drawbacks

Using gensets, turbines or fuel cells as listed above

Waste heat from power generation, exhaust or engine cooling is converted to useful heat in the form of steam, hot water or chilled water through hot water, steam or HW/Steam absorption chillers

Recovered waste heat reduces the heat that must be generated by conventional equipment including boilers and chillers

Reduces emissions and improves efficiency

Only applicable for locations where the electrical AND thermal loads are consistent for more than 5,000 hours per year

Solar Photovoltaic Cells

Application

Fuel Source

Benefits

Drawbacks

As-available generation

Can be coupled with battery storage and utilized as baseload or peaking power

Sunlight

Renewable, no emissions

Modular, minimal maintenance

Can be used in remote applications, at utility scale, and in transport applications

Regions with low or highly variable sunlight may be less suitable

Wind Turbines

Application

Fuel Source

Benefits

Drawbacks

As-available generation

Can be coupled with battery storage and utilized as baseload or peaking power

Wind

Renewable

Can be used in remote power systems, small scale residential, or at utility scale

Regions with low or highly variable wind may be less suitable

Storage Technology and Devices

Thermal Energy Storage / Thermal Battery (Ice Storage or Stratified Chilled Water)

Electrochemical Battery Storage (most common form of storage)

Uninterrupted Power Supply (UPS)

Flywheels

Superconducting Magnetic Energy Storage (SMES)

_{Information above derived from: Using Distributed Energy Resources: A How-To Guide for Federal Facility Managers, https://www.nrel.gov/docs/fy02osti/31570.pdf.}

Depending on an organization’s specific goals, one or more of these technologies may be used together to supply and/or store electricity. As building infrastructure is decarbonized through electrification and critical equipment becomes increasingly more electrified, using creative ways to generate cleaner, less expensive energy and harness wasted or renewable energy to enable grid independence will be important for reliable, resilient operations.

Not all electric grids are created equal.

Depending on your location, the energy sources used to create electricity may be more or less clean and more or less expensive. Moving toward electrified equipment may not improve the sustainability or cost-effectiveness of your operation if the grid uses carbon-intensive or expensive energy sources to produce electricity. Distributed energy resources can provide a means for facilities to manage generation assets and fuel sources, whether the goal is to minimize the carbon footprint, mitigate costs, or maximize resilience.

Considering how to Incorporate Distributed Energy Resources in your Operation?

If you’re considering how to incorporate DERs into your operation to help improve cost reduction, advance sustainability initiatives, or enhance resilience, the first step is to work with a trusted energy services company to help understand your operation. Through an analysis of your building and environment, and by reviewing utility charges and assessing demand patterns, it will be possible to determine the opportunities that may be available for power generation, and how to appropriately right-size and optimize a solution for your unique application.

The second step is to identify a funding or financing solution that works best for you, while considering how to incorporate tax incentives, utility rebates and credits, and Renewable Energy Certificates (RECs). Legislation like the Inflation Reduction Act has provided or expanded a variety of incentives for DER technologies like fuel cells, solar, and thermal energy storage , and local implementation of government programs may further improve the attractiveness of pursuing a DER solution.

Lastly, in conjunction with a funding solution, you’ll want to identify procurement and implementation options that meet your needs, such as Energy Service Agreements (ESAs), Power Purchase Agreements (PPAs), or Energy Savings Performance Contracting (ESPC). These holistic programs can streamline the process to implement solution to relieve the burden of having to manage complex project variables. They may also support guaranteed energy rates or energy savings, or eliminate the need for upfront capital expenditure to begin development.

What are Distributed Energy Resources?

Not all electric grids are created equal.

Want to learn more about DERs?

Case Studies in Renewable Energy and DERs