DER: Local Investments, Unregulated Returns

For many small and mid-sized enterprises (SMEs), energy costs are a significant expense that continually reduces profits and introduces financial uncertainties. Recently we explored how utilities make a profit. SMEs can adopt a similar financial strategy of utilities by turning energy consumption into an asset investment that generates returns.

DER are smaller-scale energy technologies located at or near your business.

• Solar PV Panels
• Small Wind Turbines
• Geothermal
• Combined Heating & Power (CHP)
• Battery Energy Storage Systems (BESS)
• Microgrids

How do you earn your own Return on Equity (ROE)?

When you invest in DERs, just like a utility company building a power plant, you're investing in an asset. However, instead of regulators granting investors a return, your return comes in several powerful ways:

1. Reduction in Operating Expenses (OpEx)
   This is the most direct benefit. You generate your own power, cutting down on what you pay for power each month. These avoided costs directly boost your profit margins.
   
   
2. Asset Creation & Long-Term Value
   When your organization implements DERs, it is investing in long term assets that not only increase its net worth but also enhance operational capabilities.
   
   
3. Eliminating Transmission Costs & Losses
   When you generate power on-site, you avoid paying for the construction and maintenance of massive, long-distance transmission lines that bring power from distant sources. You also eliminate the energy lost as heat during this long-distance journey, known as line losses or transmission losses, which can be significant. Your power goes directly to your operations, maximizing efficiency and minimizing hidden costs.
   
   
4. Energy Price Stability
   You lock in a significant portion of your energy costs, protecting your business from unpredictable utility rate hikes and market volatility.
   
   
5. Enhanced Resilience
   With battery storage and emergency backup generators on site, your business can keep the lights on and critical operations running during grid outages. This avoids costly downtime, spoiled inventory, or lost production; a huge unquantified value.
   
   
6. Sustainability & Brand Value
   Demonstrating a commitment to clean energy resonates with customers, employees, and partners, enhancing your brand image and potentially opening new market opportunities.
   
   
7. Valuable Incentives
   Governments often offer substantial tax credits, grants, and accelerated depreciation benefits that significantly improve the financial returns of DER projects.

Take Control of Your Energy Future

The landscape of energy is changing rapidly. While utilities will continue to play a vital role, SMEs no longer have to be just passive consumers. By strategically investing in behind-the-meter DERs, you can emulate the financial success of utilities, turning a major operating expense into a powerful asset, enhancing your business's resilience, and directly improving your financial health. Stop just paying for power and start owning your power.