On a recent podcast, Pier LaFarge, Co-Founder and CEO of Sparkfund, sat down with host John Engel to discuss how utilities' roles are rapidly evolving as the U.S. undertakes an unprecedented energy transition. Renewable energy and distributed energy resources (DERs) are now the most cost-effective and reliable options available, creating an opportunity for utilities to deploy these assets strategically at scale.
Pier believes we've reached an inflection point: "Until society arrives at a moment where those technologies align fully with the charter of a utility to provision lowest cost reliable power, they won't take that action. What's exciting is I think we're in that moment now."
The Imperative for a New Utility Business Model
Several factors are converging to drive utilities to embrace DERs and accelerate the energy transition:
"If the grid's going to double, and if they're going to need an infrastructure model to really meet that moment, that's where utilities can become a really powerful force for driving both the doubling of the grid, but also the energy transition forward," argues Pier.
However, the traditional utility business model is not designed to rapidly integrate and scale DERs. Utilities need a new approach - and that's where distributed capacity procurement comes in.
Defining the Distributed Capacity Procurement Model
Distributed capacity procurement (DCP) is an innovative model that allows utilities to strategically deploy DERs at scale throughout their service territories. Rather than relying solely on centralized infrastructure, the DCP model enables optimized DER aggregation and integration to efficiently meet growing demand.
Under a DCP program, utilities partner with companies like Sparkfund to engage customers and procure DERs as grid assets. Sparkfund acts as an extension of the utility's brand, identifying grid locations where DERs provide the most value, and then deploying solar, batteries, and other assets in partnership with local installers and developers.
"Sparkfund becomes an extension of a utility's brand to do a couple of key things," explains Pier. "We help utilities figure out how much distributed energy they need in their territory to grow the grid most efficiently...and then we help them with customer engagement, going and talking to their customers, not selling things to their customers, but under that new distributed capacity procurement model."
By optimizing DER deployment through a DCP strategy, utilities can enhance grid modernization efforts, improve reliability and resilience, and meet decarbonization targets - all while maintaining affordability for customers. It's a triple win.
The Shifting Politics and Inevitability of the Energy Transition
Pier sees the energy transition as inevitable, regardless of political headwinds. The economic fundamentals of renewable energy and the urgent need for new capacity make the transition a foregone conclusion at this point.
"I don't see that as a political question, I see it as an infrastructure question...and I think that's a hopeful thing for our economy and for the climate," he notes. With both parties embracing industrial policy and the economic benefits of cleantech manufacturing, the stars seem aligned for an acceleration of clean energy deployment.
As the US enters "chapter 2" of the energy transition, utilities have an unprecedented opportunity to take the reins. By leveraging distributed capacity procurement and partnering with innovative companies in the DER space, forward-thinking utilities can become the central drivers of a cleaner, more reliable, more affordable grid. The only question that remains is which utilities will lead the charge - and reap the rewards.