A Solution to the Need for Reliable Electricity

The energy transition involves a number of significant changes to how the grid delivers electricity.? In this transition, we are “electrifying everything,” removing fossil fuel-sourced generation and introducing non-carbon sources.? At the same time, demand for electricity is growing at a pace greater than that of the economy.? The risk to the grid is reduced reliability, as evidenced by the increase in number of power outages over the last five years (discussed in a previous post).?

For entities that need reliable electricity 24/7, one solution is Distributed Energy Resources, or DER.? The idea behind Distributed Energy is to invest in small-scale, low carbon energy infrastructure that is close to the point of use so that the users can be “off the grid” and not reliant on its centralized generation and distribution system.? The graph below, published in the Financial Times on August 8, shows the increase in investment in this kind of energy infrastructure since 2018.

The sectors showing the most significant increases in investment are Residential and Commercial and Industrial.? Growth of investment in the Residential sector is driven demand for back-up generation during power outages caused by extreme weather events that damage distribution of electricity on the grid.? Investment in the Commercial and Industrial sectors is driven largely by data centers that need to run continuously.?

We are in the early stages of the energy transition, and we believe that Distributed Energy will grow as an investment opportunity.