For many executives, energy strategy remains a line item on the budget rather than a lever for competitiveness. Yet energy costs are climbing at multiples of inflation, and the shape of electricity consumption is becoming as important as how much is consumed. This is where the concept of distributed energy resources, or DERs, comes into play. At its simplest, DER refers to the collection of smaller scale technologies that sit on the customer side of the meter and give companies more control over how they use or even produce electricity.
Executives may first picture rooftop solar panels or a backup battery in a plant corner. “Distributed energy resources can be essentially anything on premise, which might mean solar, it might mean a battery, it might mean the ability to regulate the amount of energy that you demand at any given time,” says Tad W. Piper, CFA, an energy strategist. That can include smart thermostats, industrial controls and software that allows a facility to “create flexibility in your energy usage.” The operative word is flexibility. DER is not a single technology; it is a portfolio of controllable assets that change when and how a business interacts with the grid.
A Three-Step Playbook for the C-Suite
Piper’s framework is designed for boards and finance leaders who need a clear path from strategy to savings. He breaks it into three clear steps:
- Quantify the business impact. Decide whether energy is a growth constraint, a cost risk, or a business continuity concern. “How important is energy to your business? How important is the risk of it rising at five times the rate of inflation?,” asks Piper. For power‑hungry growth sectors, “your energy strategy is synonymous with growth.” Manufacturers should prioritize volatility and total cost.
- Map your options. Build a menu that spans on‑site assets and market instruments. “There’s a number of different both financial instruments as well as physical changes to your plant and equipment that you can access in order to manage these costs,” Piper says. That list can include batteries to shave peaks, controls to shift load to cheaper hours, and forward contracts to lock in price.
- Commit to execution. Rank risks, select tactics, and assign owners. Make explicit go or no‑go decisions and tie them to procurement and operations. Avoid generic budgeting. “If you link your utility cost to the same number you use for wage inflation… you are going to find that is a mistake and lead to surprises, which no one likes.”
The Cost of Missed Signals
The biggest missed opportunity, in Piper’s view, is treating the utility as a biller rather than a strategic partner. “If most data centers knew that they were going to need 10 times the amount of electricity five years ago, they would have been further ahead procuring the energy,” he says. Planning forward load and engaging utility teams can unlock interconnection options, tariff choices and bespoke programs that standard account management never surfaces.
Another common challenge is leaving incentives on the table. “The first movers in a lot of cases will get the incentives to take advantage of either grants or specific programs or funding opportunities,” Piper says. By hesitating, companies miss out on funding designed to lower upfront costs and accelerate adoption. A third pitfall is focusing only on total kilowatt‑hours consumed, when the real money often sits in the shape of demand. For example, in some California utilities, a 10% reduction in total electricity consumed may only save 10%, while shifting the same amount of load to different hours can cut bills by more than 35%.“They don’t always understand that the shape of your energy usage, how much peak energy you use, oftentimes has a far greater impact on your overall cost.” In many facilities, a well‑sized battery or targeted load control delivers an order‑of‑magnitude bigger impact than another round of lighting retrofits.
Flexibility, New Tech and the Path to Dispatchability
Where does DER pay first? Start with power-dense operations and businesses that can move when they consume. “Data centers, hospitals, and cold chain logistics are what I will call the biggest opportunities based on power usage,” Piper says. The next tier includes companies with operational flexibility, such as shifting production runs or cycling equipment to off-peak hours. “Those who identify ways in which they can variableize demand have an opportunity to have a lot more control over their energy costs.”
Technology is tilting the field toward flexibility. Piper points to lessons from blockchain workloads. For Bitcoin miners, “the bit watt spread” is transparent every second, so operators run when power is cheap and pause when it spikes. For him, that mindset should extend to other digital and industrial workloads. “My cat video doesn’t need to be produced when energy is really expensive,” he quips. As time-of-use rates widen and demand charges rise, the question becomes simple: can you reduce usage from 5 to 9 p.m., when power is most dear, and shift noncritical processes to midday when solar is abundant?
This is where virtual power plants enter the picture. Aggregating distributed assets lets utilities and markets treat flexible load like supply. “A kilowatt saved is the same as an incremental kilowatt produced in balancing the market,” Piper says. Curtailment can mean turning down equipment, adjusting set points or leaning on an on-site battery to serve internal load and reduce grid draw. “Every year the amount of dispatchable energy is going up,” he adds, and the sophistication of programs that pay for it is rising with it.
Making Energy a Strategic Priority
Treat energy like any other strategic spend, listen to the price signals, and align operations, contracting and capital to capture them. “Thinking strategically about energy cost risk as something that you can and should manage and control is probably one of the more important aspects that customers should be considering.”
Connect with Tad W. Piper on LinkedIn for more insights.
