How Distributed Capacity Procurement Benefits Vendors and Developers

The rapid growth of distributed energy resources (DERs) is transforming the energy landscape, creating new opportunities for vendors and developers in the solar, battery, and storage industries. As utilities increasingly adopt the distributed capacity procurement (DCP) model to lead this transition, vendors and developers stand to benefit significantly from this innovative approach.

What is Distributed Capacity Procurement?

Distributed capacity procurement  (DCP) is a utility-led model for deploying DERs at scale. By proactively planning and procuring DERs, utilities can optimize grid performance, enhance resilience, and meet the growing energy demand. For vendors and developers, DCP offers a comprehensive roadmap for integrating their technologies into the utility framework, transforming the built environment into a valuable extension of the grid.

According to a recent report by Wood Mackenzie, the U.S. DER market is expected to nearly double in capacity from 2022 to 2027, with capital expenditure reaching US $68 billion per year. The DCP model positions vendors and developers to capitalize on this growth by providing a clear path to market and reducing deployment barriers.

Benefits for Vendors and Developers

Participating in a utility-led DCP program offers several key advantages for vendors and developers:

Accelerated Deployment

DCP programs aim to massively scale DER deployment, creating a steady pipeline of projects for vendors and developers. 

Predictable Demand

Utilities have a comprehensive understanding of grid needs, enabling more effective and strategic deployment of DERs. By incorporating DERs into utility planning, vendors and developers benefit from predictable demand and lower risks associated with project deployment.

Economic and Regulatory Support:

The DCP model leverages regulatory frameworks to ensure compliance and reduce the complexities vendors face when navigating local and federal rules. This support can help lower costs and streamline deployment processes.

Societal Benefits

By focusing on the societal benefits of DERs, such as affordability, reliability, and environmental sustainability, DCP programs align with the values and missions of many vendors and developers pushing for a greener grid.

Overcoming Challenges and Seizing Opportunities

The energy landscape is rapidly evolving, with DERs playing an increasingly crucial role in the transition to a more sustainable and resilient grid. As utilities embrace the potential of DERs, they are driving a significant shift in the market dynamics for vendors and developers. Utility-led DER deployment programs, like the DCP model developed by Sparkfund, offer a range of benefits that can help businesses thrive in this new era of energy innovation.

Stable and Predictable Market

One of the most significant advantages of utility-driven DER deployments is the creation of a stable and predictable market. Utilities often undertake large-scale, consistent projects that provide a reliable demand for vendors and developers. This stability helps mitigate the boom-and-bust cycles frequently experienced in independent DER projects, allowing businesses to plan their production and expansion strategies more effectively.

Streamlined Permitting and Construction

Utility-managed DER projects, which typically involve smaller, customer-sited resources, can significantly reduce bureaucratic bottlenecks. This streamlining benefits vendors by shortening the time from contract to installation, enhancing cash flow and reducing project risks. 

Economy of Scale and Cost Reduction

As utilities scale up their DER deployments, economies of scale can lead to lower average costs for these technologies. Bulk purchasing power can result in lower component pricing and installation costs, making DER solutions more competitive in the market. The DCP Program notes that smaller customer-sited resources are fast to permit and build, suggesting an expedited deployment timeline that can further reduce costs.

Enhanced Market Penetration

Utility-led procurement can open up new geographies and customer segments, accelerating market penetration for DER technologies. Vendors and developers can benefit from new opportunities that align with grid reliability and economic development goals, which is crucial for market growth. 

Enhanced Credibility and Trust

Utility procurement increases credibility and trust among customers regarding quality, maintenance, and long-term performance. Vendors and developers can leverage this enhanced credibility to promote higher adoption rates, as customers are more likely to trust utility-backed projects.

Grid-Specific Targeting

Utilities have an in-depth understanding of grid constraints, ensuring that DER projects are more likely to be successful and beneficial. This targeted approach facilitates easier funding and support for vendors and developers' projects, as they are aligned with the specific needs of the grid.

Regulatory and Financial Support

Collaborating with utilities through programs like the DCP simplifies navigating the complex energy landscape, allowing vendors and developers to focus on technological innovation and deployment.  Program administrators like Sparkfund can provide valuable support on behalf of the utilities in securing necessary approvals and navigating financial incentives, further reducing barriers to entry for businesses.

The shift towards utility-led DER deployment, exemplified by programs like DCP, presents a significant opportunity for vendors and developers to grow their businesses and contribute to the transformation of the energy sector. By leveraging the benefits of stable markets, streamlined processes, economies of scale, enhanced market penetration, credibility, grid-specific targeting, and regulatory support, businesses can thrive in this new era of energy innovation.

Accelerating the Energy Transition One Building at a time

As a DER vendor or developer, you have a unique opportunity to play a pivotal role in the energy transition. By partnering with Sparkfund and participating in a DCP program, you can unlock the full potential of your technologies and drive the transformation of the built environment into a valuable extension of the grid.

At Sparkfund, we understand the challenges you face in navigating the complex energy landscape. That's why we've developed the DCP model to simplify the process and empower you to succeed. Our program offers a clear path to market, reducing deployment barriers and providing the support you need to thrive in this rapidly evolving industry.