Introduction
Table of Contents
The AES Business Model describes how solar and storage can be used by utilities to grow business revenues. This model has been developed in partnership with AES and other industry experts over the past year. The most important part of this model is that it can be adapted by utilities as they see fit based on their own unique needs and circumstances.
Utilities can utilize the conceptual model that we have developed or they can use the AES platform services to develop and grow their own business models.
Now that you have a basic understanding of AES, let’s discuss the business model at hand. Utilities can utilize the conceptual model that we have developed or they can use the AES platform services to develop and grow their own business models.
The concept of a DG service provider (DGSP) is a new way to think about the role and value of a storage asset owner.
A DGSP would be licensed by regulators, and able to participate in wholesale energy markets through pre-arranged contracts with utilities similar to retail suppliers but working on a larger scale. This means that a DGSP can sell the host’s excess electricity into the grid, thus reducing their demand charges (which are typically paid for by consumers who use electricity from the grid).
In addition, it could also sell storage capacity as a commodity that can be bought and sold on an exchange.
DGSPs would be licensed by regulators, and able to participate in wholesale energy markets through pre-arranged contracts with utilities similar to retail suppliers but working on a larger scale.
In this business model, DGSPs would be licensed by regulators and able to participate in wholesale energy markets through pre-arranged contracts with utilities similar to retail suppliers but working on a larger scale. This would allow them to bid into the market anonymously and they could also hedge their exposure against price movements.
Wholesale markets seem like the best place to start localizing power production and consumption as they are best set up to handle these types of transactions.
Wholesale markets seem like the best place to start localizing power production and consumption as they are best set up to handle these types of transactions. Wholesale markets have a central owner that handles the transactions between buyers and sellers, so it can be easier for them to adapt their own systems if they want to build in new features for consumers or businesses.
The idea is that the DGSP could help manage and balance regional power production, even if it is not produced on site.
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The question is not so much how does AES do this, but rather how do we shape the market, regulatory and asset environments so that AES makes sense for customers?
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This can be done by setting up market structures and rules that are conducive to microgrids and other localized generation.
Microgrids, also known as distributed generation (DG), are localized power systems that can operate independently of the grid or connect to it. DGSPs are companies that manage these microgrids.
AES’s business model is based on a series of platforms and services:
- The Solar Platform provides solar energy solutions through grid-connected rooftop PV and utility-scale projects (including wind farms).
- The Microgrid Platform provides electric reliability solutions through its microgrid technology portfolio.
- The AES Platform Service provides flexible capacity to utilities in regulated markets by selling a range of electric service offerings, including demand response products, frequency regulation services and wholesale market participation contracts to serve as an alternative to purchasing traditional generation resources such as peaking plants or battery storage systems for use during peak demand periods.*
There is an opportunity for all types of participants in the energy industry including utilities, oil & gas companies, regulators, state legislatures, tech startups and more to take advantage of microgrids.
The microgrid market is growing because of the benefits it can offer to customers and utilities. Microgrids allow customers to take control over their energy usage and production, while utilities can use them as a way to increase capacity during peak demand periods.
Microgrids have been around for some time now, but they are only recently becoming popular in the West where regulations have been more flexible than in other parts of the world. However, this trend will likely continue as solar prices continue to drop and technology improves.
AES has developed an entire business model based on solar
We have developed an entire business model based on solar.
Our main products are solar panels, solar farms, and the electricity they generate; we also sell wind turbines and power plants that use natural gas as a backup fuel source.
Conclusion
We have demonstrated that AES has developed an entire business model based on solar. This can be done by setting up market structures and rules that are conducive to microgrids and other localized generation. There is an opportunity for all types of participants in the energy industry including utilities, oil & gas companies, regulators, state legislatures, tech startups and more to take advantage of microgrids.
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