‘First movers’ have already integrated self-generating power solutions to help meet ESG goals.
The U.S. system for generating and distributing electrical power is amid a great transition, and “first movers” have already integrated self-generating power solutions into their operations. In many cases, this integration has reduced costs for the new technologies, highlighting their ability to be competitive as the transition to lower carbon energy continues to achieve investor returns while meeting their ESG commitments.
This is possible in part because declines in the cost of renewable energy over the last decade have revolutionized the economics of lower-carbon technologies. Battery energy storage systems and demand-side management solutions have made remarkable progress in design and cost, providing smart energy solutions for onsite power demand with resulting capabilities to help control operational costs.
Solar production and related storage systems have advanced to the degree that projects are able to optimize production in real time by gathering, analyzing and sharing information remotely. Recent advancements in technology and platforms for solar and storage systems have also helped reduce system downtime and allowed for remote diagnosis and services, further reducing operational cost.
Development in automation has allowed for more sophisticated smartcharging, reducing load components during expensive peak power periods. This aspect of demand-side management is not a new business model, but as system designs of solar equipment and batteries continue to advance, the ability to better manage during high load has the effect of maximizing system values during these critical periods.
“When evaluating self-generating technologies for oil and gas operations, it is important to understand power markets and the variance in structure of rate design, which affect how self-generated power can be fed back into the grid. If power use is not analyzed appropriately, reducing demand may actually increase rates by the power provider.” – Emily Easley, NOVUS Clean Energy
Smarter energy solutions have also had a profound impact on the power business and planning requirement sectors. As states commit to more aggressive low-to-zero carbon policies, their regulators are working to govern the solutions to ensure the increased renewable generation capacity is supplemented by the energy storage and natural gas supply critical for grid reliability in their jurisdictions.
In particular, state regulators govern the procedures that utilities employ to manage the interconnection application process. Their goal is to ensure that power systems are interconnected in a safe and efficient manner, which governs how applications are screened and evaluated. A specific focus is often
on how systems will impact operations on the distribution circuit, notably where components of the system will be interconnected.
Self-generating technologies like solar and battery storage systems can be implemented to reduce power cost when compared to traditional electric utilities. Grid congestion during peak hours often strains the grid in rural areas, raising peak demand charges from traditional electric utilities. These charges add significant cost to asset operations, but they can be reduced through a long-term, behind-the-meter power agreement between solar and storage on land adjacent to facilities.
Power market challenges?
When evaluating self-generating technologies for oil and gas operations, it is important to understand power markets and the variance in structure of rate design, which affect how self generated power can be fed back into the grid. If power use is not analyzed appropriately, reducing demand may actually increase rates by the power provider.
On the other hand, in some state markets, net-metering policies allow systems to sell power back to the grid at wholesale power rates and, perhaps, provide grid services to the power system. Understanding the rules governing metering and technical configuration requirements for solar and storage systems is critical to proper analyses of project economics.
The increased appetite for ESG investments by institutional investors has created a rush to develop new investment opportunities similar to the activity seen in the late 2000s. As solar power costs have decreased due to increased efficiencies in larger panels, balance of systems, and installations, quality control is even more important due to the flood of capital hungry for investments in renewables.
Photovoltaic panel technology has improved, and the balance of systems and inverters has been a key driver in the reduced cost to build. However, first generation products can present technical challenges, even with the warranties from a reliable company. In such circumstances, operators can use digital remote monitoring to monitor current and historical operating conditions and troubleshoot potential issues without leaving their workstations.
Pairing advancements in oil and gas operations with self-generating technologies can create significant opportunities for operators to leverage current infrastructure and capabilities, adding value to existing asset operations. This can make these traditional energy based companies more attractive for exit, thus allowing them to benefit from the transition to clean energy.
See original article published on Hart Energy here.