DERs are the connective tissue of the grid — but there’s a missing piece

A message from
 
HSBC

Electricity in the U.S. is currently generated by 20% renewable energy sources and 80% thermal sources — this ratio must be flipped to combat climate change. 

🛑 Okay, but: Decarbonizing the grid can only be done if it’s paired with reliability and affordability. 

Here’s the deal: Renewables are intermittent and require the backing and balancing resources that distributed energy resources (DERs) — such as rooftop solar, electric vehicles and battery storage — can deliver. 

🔆 Why it’s important: DERs help wind and solar power the grid, increase renewable energy’s resiliency and efficiency, and reduce carbon emissions.

  • 📈 50% of the world’s $3.2 trillion annual electricity spend will be delivered by DERs in the coming decades.

The challenge: It’s a lot harder to run an electric grid with thousands of distributed resources than it is with a few centrally located power plants and traditional resources that don’t fail. 

  • And technology is needed to unlock the full value of DERs and bring them to every market no matter where it’s located.

📝 Take note: Providing climate tech companies with access to capital and expertise is crucial to bolster the growth of DERs and bring the technologies to life. 

  • That’s where global financial partners, like HSBC, can play a unique role. 

🤝 HSBC partners with Voltus, a leading DERs technology company, which created automated technology that unlocks the value of DERs.

  • “The energy transition is about decarbonizing our energy sources while bolstering the electric grid's reliability”,” says Mark Hillhouse, Head of Sustainable Finance at HSBC US. “That’s why at HSBC, we’re very excited to be able to work with a leader and an innovator in this sector.”

The goal: As a distributed energy platform, Voltus aims to advance the transition to a fully renewable grid by solving rapidly growing problems facing grid operators and electricity consumers alike.

🔌 Here’s how: The company connects DERs to wholesale electricity market programs, maximizing their value with no upfront cost or risk for its over 600 customers, including some of the largest energy consumers in the world. 

  • Voltus helps these companies manage their energy spend and creates the absolute best financial value proposition for them.
  • “We dispatch our commercial, industrial and residential customers to reduce their consumption of electricity when the grid simply doesn’t have enough resources to meet demand,” says Matthew Plante, President and Co-founder of Voltus.

An example: Back in March the Southwest Power Pool had a couple of hours where it ran its grid 90.2% on wind resources. 

  • To make this a reality, the market uses Voltus as a safety net if ever the wind stops blowing. 
  • “About 20 times a month, Southwest Power Pool asks us, for periods of up to 30 minutes, to reduce electricity consumption for the grid while things balance so that they can run the grid by using our DERs in the place of what used to be a natural gas peaking plant,” says Plante.

The strategy: Voltus is the only platform currently that provides a single unified entry point to all nine wholesale electricity markets in the U.S. and Canada through more than 50 different DER programs.

  • These markets pay Voltus to aggregate and optimize the DERs through its marketplace software platform. 
  • Voltus then passes a portion of these payments back to the DER owners, generating more cash for the businesses.  

But, DER platforms like Voltus need capital to scale their innovative technologies.

💡What you need to know: Access to capital, funding and global connections help Voltus scale, monetize additional megawatts of DERs, develop products and enter new markets. 

  • “There’re sometimes collateral requirements associated with our business. So, you’ve got to put skin in the game,” says Plante. “We couldn’t grow and do the good that we’re doing without access to the capital and backing of HSBC.” 

Additionally, HSBC’s strong global presence can help the company call upon some of the bank’s relationships around the world as Voltus moves its solutions beyond the U.S. and Canada. 

👀 Looking ahead: “If we want to create this world where you can turn your lights on and have it come from clean energy, and have it be affordable, you’ve got to make that profitable and you can’t make this happen without capital,” says Plante. 

  • “So, when capital providers like HSBC step up and put their support behind solving this problem, that’s incredibly powerful.”