Navigating the New Energy Landscape: Energy Arbitrage Under VDER, Value of Distributed Energy Resources

In today’s rapidly evolving energy market, the opportunity to optimize energy consumption and create new revenue streams has never been more critical. The introduction of the Value of Distributed Energy Resources (VDER) by the New York State Energy Research and Development Authority (NYSERDA) marks a pivotal shift in how energy producers and consumers engage with the grid. As businesses and property owners look to leverage distributed energy systems, understanding VDER—and how energy arbitrage can fit into this model—will be key to unlocking the full financial potential of clean energy assets.

What is VDER?

The VDER tariff replaces traditional net metering in New York State for distributed energy resources (DER) like solar panels, wind turbines, and energy storage systems. Unlike traditional net metering, where customers simply sell excess energy back to the grid at the retail rate, VDER provides a more nuanced compensation structure based on the actual value the distributed energy resources provide to the grid. This includes:

• Energy Value: Based on the local wholesale energy market.
• Capacity Value: Reflecting the ability to reduce peak demand.
• Environmental Value: Compensation for reducing emissions.
• Demand Reduction Value (DRV): Linked to reducing the grid’s peak demand at specific times.
• Locational System Relief Value (LSRV): An additional incentive for DERs located in high-need areas.

By reflecting the true value of distributed energy, VDER incentivizes businesses to manage energy more strategically, optimizing when and how energy is generated, stored, and consumed.

The Role of Energy Arbitrage Under VDER

Energy arbitrage refers to the practice of storing energy when prices are low and selling or using it when prices are high. Under VDER, this becomes a powerful strategy, as the time and location of energy generation can significantly impact the financial return. By capitalizing on price fluctuations in the energy market, businesses can generate additional revenue through:

• Storing Energy During Low-Cost Periods: Using solar or other distributed energy resources, businesses can generate excess energy during the day when prices are lower.
• Selling or Using Stored Energy During Peak Demand: When demand is highest, energy prices spike. Selling or using stored energy at these times can yield higher returns, particularly when combined with the DRV and LSRV components of VDER.

At ClimaFi, we design and fund microgrid solutions that are optimized by our technology to make the most of energy arbitrage opportunities under VDER, ensuring that businesses maximize their returns in this new energy landscape.

This is accomplished by our advanced software continuously analyzing real-time market conditions and optimizing your energy use to capitalize on the most favorable pricing conditions. This ensures that your distributed energy resources not only reduce your reliance on the grid but also become a significant revenue driver.

How ClimaFi’s Technology is Optimized for VDER

ClimaFi’s platform is designed to deliver the financial optimization needed to thrive under the VDER structure. Here’s how we ensure maximum return:\

• Dynamic Energy Management: We identify the best times to store and sell energy, ensuring you earn the highest possible compensation under VDER.
• Peak Shaving and Demand Charge Reduction: By anticipating peak demand periods, ClimaFi reduces your energy costs and demand charges while armoring your energy supply against grid failures.
• Fully Funded Pricing Models: ClimaFi offers fully-funded solutions that align with your business model, making it easier than ever to participate in VDER without upfront capital expenses.

Why VDER is a Game Changer

The VDER tariff represents a forward-thinking shift that better reflects the value distributed energy systems bring to the grid. For businesses looking to reduce energy costs, gain independence from volatile grid prices, and contribute to a cleaner energy future, VDER offers a new avenue to generate revenue from DERs. By aligning energy usage with the grid's needs, companies can achieve better financial outcomes, while simultaneously supporting the state's renewable energy goals.

This paradigm shift, however, requires sophisticated tools and expertise to navigate. Without a strategy optimized for the nuances of VDER, many businesses will fail to capitalize on the program’s full benefits.

Conclusion: The Future of Energy is Here

The introduction of VDER by NYSERDA marks a significant turning point in the distributed energy landscape. With the right strategy and technology, businesses can unlock new revenue streams, achieve greater energy independence, and support a more resilient, sustainable energy grid. 

Partnering with ClimaFi to Maximize VDER

As VDER becomes the new normal in New York, it's essential to have the right partner who understands the intricacies of the program and can optimize energy arbitrage opportunities. At ClimaFi, we’re at the forefront of energy management technology, offering a solution that turns distributed energy resources into financial assets and without capital cost. Contact us today to learn more.