IEEE Power & Energy Magazine - September/October 2016 - 68
Companies found that they could optimize the use of various tax
and production incentives for renewable energy technology by
deploying and owning the equipment themselves.
Equipment Sales
This is the simplest, and therefore default, business model
of most renewable energy "hardware" companies. examples
include leading photovoltaic (pv) module manufacturers
such as Trina solar and canadian solar or siemens, ge, and
vestas in the wind turbine manufacturing industry. com-
panies like aes, aquion, and Tesla, with their lithium-ion
energy storage offerings, and google's nest also fall into
this category. several of the traditional power equipment
vendors are currently rethinking their offerings toward oper-
ations technology-information technology energy analytics
and services, for example, abb/ventyx/powerone, alstom
grid/ge, sas/osi-soft, and others.
Electricity Sales
companies can choose to become power producers for a
variety of reasons. some are project developers with a long
history of identifying land, securing rights and permits,
and arranging financing for the construction of utility-scale
generating facilities; these companies have moved in recent
years from a focus on gas-fired power plants to wind and solar
as the economics of the latter technologies have improved.
others, such as solar pv manufacturers First solar and
sunpower, began as pure technology providers and found,
through the economic downturn, that they could stabilize
their businesses and create downstream demand for their
products by becoming active in the project development of
power plants. similarly, many technology providers, such as
fuel cell maker bloom energy, learned that they could earn
more business by selling electrons instead of selling equip-
ment. not only did this shift help their customers overcome
the large up-front capital cost and performance risks associ-
ated with buying and operating renewable energy equipment
directly, but companies found that they could optimize the
use of various tax and production incentives for renewable
energy technology by deploying and owning the equipment
themselves. indeed, some companies, such as solar installers
solarcity, vivint, and sungevity, focus almost exclusively
on energy sales or solar leasing as a revenue model. in recent
years, some have tapped capital markets to fund their growth
with solar securitization vehicles, essentially turning a port-
folio of energy sales to homeowners into a bond in which
Wall street can invest.
Electricity Services
electricity services include a broad range of activities that can
deliver value to electricity consumers and providers. These
68
ieee power & energy magazine
include traditional energy service companies (escos) that
recommend energy efficiency investments for consumers and
businesses and often package that with tailored financing or a
risk-sharing arrangement to minimize out-of-pocket costs for
their customers. increasingly, escos, such as enernoc and
advanced Microgrid solutions, are providing more sophisti-
cated consulting, software, analytic services to help businesses
dynamically reduce their energy bills by optimizing their
usage pattern and recommending investments accordingly (or
making these investments themselves).
other players, such as battery manufacturer alevo and
enbala, provide dynamic services directly to the grid, ancil-
lary services including pv smoothing, frequency regulation,
voltage regulation, real-time power balancing, blackstart and
spinning reserves, and optimizing the dispatch of energy
storage. underlying all of these more sophisticated energy
service business models is the need to gather, analyze, and
act on a large quantity of data. This requires a combination of
hardware and software solutions that has drawn the attention
of technology companies like cisco (grid architecture), sas
(resource and load forecasting), and alphabet (nest as a part
of a platform to gather data on home energy use) looking to
energy as the next big market opportunity.
The Grid Integration Challenge
ders are currently integrated into the grid at an accelerat-
ing rate. distributed solar, with competitive prices, and fast
automatic demand-response controllers are the game chang-
ers, moving the concept fast forward. The focus is now mov-
ing toward optimizing the system, including distributed and
centralized resources, to operate more efficiently and at a
higher reliability and resiliency in an existing and aging grid
infrastructure. on all these levels, new players are entering
the energy and power arena.
These technological and economic developments are
currently developing an integrated grid vision that integrates
these resources into a distributed way that uses distributed
intelligence in the integration process (see Figure 1). The
vision includes an integrated power system that is highly
flexible and resilient against events that optimizes the differ-
ent energy resources and assets.
grid operations are moving in such an integrated grid
from hundreds of control nodes to millions or billions of
them. The need for distributed intelligent automation and
control becomes evident in such an integrated grid. sys-
tem operators are not able to manage these high numbers
of nodes, which further require the need for automatic
september/october 2016
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