Unleashing Data and Algorithms to Quantify, Value, and Monetize Resilience-Enhancing Investments

As the energy landscape rapidly transforms due to the risk of increasingly frequent weather-caused grid outages, understanding and wisely investing in resilience has become a high priority for Commercial & Industrial (C&I) operations. Energy and fleet managers must identify flexible and sustainable solutions that not only bolster resilience but also provide financial benefits.


Through provisions in the 2023 Inflation Reduction Act (IRA) on transferability, direct pay, and various adder credits, industry analysts expect sustained expansion in the C&I solar market, forecasting 12% growth for the commercial solar segment in 2023 and 13% in 2024. As companies deploy more intermittent energy sources, commercial PV further increases the urgency of strengthening resilience.


To assist in building resilience strategies, National Renewable Energy Laboratory (NREL) recommended identifying an approach to quantify, value, and monetize the resilience provided by different system designs.


Here, we examine the complexities of quantifying, valuing, and monetizing resilience for C&I fleets and provide insights into enhancing a resilience strategy’s flexibility, robustness, and financial benefits with a modern microgrid and more intelligent energy analytics.


Why Quantify, Value, and Monetize Resilience?


Quantifying and valuing resilience is crucial for justifying investments in backup power systems, demand response programs, and other measures that enhance an organization’s ability to weather the storm — both metaphorically and literally. The appeal of energy resilience resonates more deeply when translated into financial terms.


  1. Quantifying resilience transforms it from an abstract concept into measurable metrics that speak to decision-makers, investors, and stakeholders.
  2. Assigning numerical values to key resilience parameters provides the framework to evaluate and prioritize investments effectively.
  3. Monetizing resilience arises from using these metrics to assess the economic impact of disruptions and comparing this against resilience-enhancing investments or by participating in grid services.


When viewed from this comprehensive lens, resilience creates a pivotal juncture where theory meets pragmatism to net actual results for:


  1. Informed Decision-Making: Valuing and quantifying resilience empowers decision-makers with data-driven insights to make well-informed choices about prioritizing investments for optimal outcomes.
  2. Risk Mitigation: By establishing a tangible metric for risk assessment and quantifying potential losses and mitigation costs, stakeholders can develop strategies to minimize financial exposure.
  3. Resource Allocation: Valuation and monetization ensure efficient resource allocation. Investments in resilient technologies and strategies become justifiable and quantifiable based on their anticipated economic returns.
  4. Stakeholder Engagement: The ability to communicate the financial benefits of energy resilience facilitates buy-in from stakeholders, garnering support and resources for implementing resilience-enhancing measures.


However, measuring a resilience strategy’s effectiveness can be complicated. Since each company — and often each facility — faces unique challenges and objectives, the dynamic characteristics of resilience defy a one-size-fits-all metric. Company-specific factors such as goals, event context, hazards, scale, and location must all be factored into a resilience strategy.


Quantifying Resilience with Precision and Depth


As noted, quantifying resilience has been a complex endeavor involving intricate metrics and variable contexts. Typical performance-based metrics include:


  1. Outage time in hours
  2. Load not served in kilowatt-hours (kWh)
  3. Number/percentage of facilities experience an outage
  4. Time to recovery in hours
  5. Cost of recovery in dollars


Lacking the right solution, energy and fleet managers may find it difficult, if not impossible, to accurately analyze this data and glean the valuable insights locked inside. This task can become even more complicated for companies deploying renewable energy sources or installing an on-site microgrid.


Fortunately, control systems with advanced software and algorithms can now facilitate this process by collecting and analyzing energy data from various sources and simulating scenarios to predict the system’s response to disruptions.


For example, imagine a C&I facility deploying a microgrid with a control and optimization platform equipped with advanced algorithms. Using emergent intelligence and machine learning, the platform can model the system’s behavior under various conditions, quantifying resilience regarding outage survivability, load sustainment duration, and even the number of critical services maintained. This granular insight offers a quantifiable measure of the stability provided by the microgrid.


In this hypothetical scenario, the typical performance-based metrics can provide the framework to gauge the impact of deploying an on-site microgrid for resilience enhancement:


  1. Outage Time: Minimizing downtime is a top priority. Microgrids enable localized power generation, reducing the impact of outages on critical operations.
  2. Load Not Served: Microgrids ensure a consistent power supply, mitigating the loss of productivity and revenue due to interrupted operations.
  3. Number/Percentage of Facilities Experiencing an Outage: Enhanced resilience translates to fewer facilities within a fleet in a particular region affected by outages.
  4. Time to Recovery: Microgrids with advanced controls expedite recovery, minimizing downtime and associated costs.
  5. Cost of Recovery: The ability to rapidly restore operations significantly reduces the financial impact of disruptions to minimize the cost of recovery.


Quantifying resilience leads to the critical task of assigning value.


Unveiling the Value of Resilience: The Power of Data-driven Insights


Valuing resilience is a multifaceted process that goes beyond traditional cost-benefit analyses and involves understanding how much a company gains by minimizing disruptions and ensuring continuous operations. As regulatory environments and stakeholder expectations continue to shift, the ability to quantify and communicate the actual economic value of resilience becomes a strategic advantage.


Determining the monetary value of resilience involves a meticulous assessment of avoided costs during an outage, typically covering:


  1. Loss of revenue
  2. Cost of damages
  3. Avoided outage cost
  4. Cost of recovery
  5. Loss of perishables
  6. Business interruption costs


Or implement more sophisticated control techniques such as:

  1. Optimal power flow
  2. Economic dispatch
  3. Advanced strategies for distributed generation systems


Economic Impact: Consider the costs incurred during downtime – lost production, spoiled goods, halted services, recovery expenses, and extra labor to get back on track. These are real monetary losses that can be avoided through better resilience. The culmination of these estimates can provide a better view of the potential economic impact of a resilience investment.


Risk Reduction: Consider the potential harm and financial consequences caused by extended disruptions. Valuing resilience means quantifying risk reduction and safeguarding against uncertainties.


Here’s where the integration of microgrids with advanced controls truly shines. The software and algorithms in the control platform can deliver data-driven insights to provide a holistic understanding of the economic implications of resilience investments.


Algorithms can tap into a wealth of historical data, regional specifics, and predictive analytics to assess the long-term value of a resilience strategy. Energy managers can enhance the fidelity of the analysis by enabling the simulation of diverse outage scenarios to forecast potential costs and cascading effects with unprecedented accuracy. This capability is particularly vital in decentralized microgrids, where the dynamic interplay of energy sources and loads demands an intricate valuation approach.


Continuing with the hypothetical scenario above, consider how an on-site microgrid with advanced controls can help avoid the costs associated with:

  1. Loss of Revenue: Microgrids help ensure a continuous supply of power, which diminishes revenue losses for companies.
  2. Cost of Damages: With decentralized controls, microgrids limit the extent of equipment and machinery damage during adverse events, saving on repair costs.
  3. Avoided Outage Cost: Microgrids’ ability to prevent outages or directly minimize their impact contributes to financial savings.
  4. Cost of Recovery: In the event of a disruption, microgrids enable quicker recovery, which translates to reduced expenses as operations return to normalcy swiftly.
  5. Loss of Perishables: Consistent power supply prevents losses associated with perishable goods.
  6. Business Interruption Costs: Microgrids reduce the financial repercussions of interrupted business activities by minimizing operational downtime.


The journey towards resilience culminates in the monetization of investments, a critical bridge between theoretical assessment and real-world implementation.


Monetizing Resilience: Bridging Investment and Implementation


Monetizing resilience involves assessing the cash flow potential from enhanced energy strategies and investments.


However, the transition from valuing resilience to monetizing its benefits can present a unique set of challenges. This is where advanced software and algorithms can bridge the gap, allowing energy managers to explore novel revenue streams and incentives associated with decentralized microgrids, such as grid services and demand response participation.


  1. Value from Grid Services: The modern microgrid can participate in grid services, generating revenue by selling excess energy or providing stability to the broader grid.
  2. Demand response participation: The modern microgrid enables easy reduction or shifting of electricity consumption during certain hours, called “events,” in exchange for a financial incentive.


Sophisticated software can model different monetization scenarios, weighing factors such as energy market dynamics, regulatory frameworks, and technological feasibility. Consider a scenario where a decentralized microgrid not only sustains critical loads during outages but also participates in demand response programs, selling excess energy back to the grid. Advanced algorithms can predict revenue potential, helping energy managers make informed decisions about project financing and implementation.


Although grid services and demand response participation arise as primary revenue stream options, other possible avenues still need to be explored. These emerging opportunities include peer-to-peer energy trading, carbon credit incentives, monthly resilience payments from site hosts, insurance premium reductions, and incentives for government incentives for resilience enhancement, which can all potentially contribute to the monetization of resilience.


Redefining C&I Energy Resilience


For C&I operations, enhancing resilience translates into a shield against disruptions, a safeguard for operations, and a boost to the bottom line. But remember, resilience is not a one-time assessment; it’s an ongoing process, requiring regular assessment updates and strategy adjustments based on new business needs, technological advancements, shifting regulations, and even changing weather patterns.


As technology continues to evolve, the role of advanced software and algorithms in resilience quantification, valuation, and monetization will become increasingly pivotal. This is especially true as decentralized microgrids become a cornerstone of modern energy systems, where the intricacies of energy flow and distribution demand a nuanced approach. The ability to harness data, simulate scenarios, and derive actionable insights empowers energy managers to make cost-effective and strategic resilience investment choices.


Understanding the metrics, valuing the benefits, and making informed investments aren’t just future-proofing a company’s energy infrastructure – it’s empowering businesses to thrive in the face of challenges that lie ahead.


Seeking a way to quantify, value, and monetize your resilience strategies? Reach out to us today to learn how we can help.