Rising utility rates, volatile natural gas prices, and multi-year interconnection queues are pushing commercial and industrial (C&I) energy consumers to reevaluate how they procure power. While traditional grid reliance exposes companies to unpredictable marginal generation costs and expanding transmission fees, onsite clean energy solutions offer a direct path toward cost certainty and operational resilience.
To explore how businesses are navigating these grid constraints and capital requirements, pv magazine USA spoke with Mary Beth Mandanas, chief executive officer of Onyx Renewables. In this interview, they share insights on fixed-to-floating energy swaps, the role of third-party ownership models, and why distributed solar-plus-storage is becoming the fastest route to meeting commercial energy demand.
pv magazine: How does shifting from grid-supplied power to onsite generation protect commercial users from the volatility of gas-driven energy prices?
Mandanas: Because the retail price of generation for grid-supplied power is determined by the marginal unit of power cleared by gas generating units, the volatility of natural gas pricing directly impacts the price that customers pay for each kilowatt hour. As opposed to grid-supplied power, onsite solutions typically allow a company to hedge their power prices through a physical energy hedge. At Onyx, we utilize solar for our projects’ fuel source, so we have no volatility in fuel pricing. We provide our customers fixed pricing for the electricity generated from our onsite solar and storage systems for a 20-to-25-year term. In essence, it is a fixed-to-floating swap for the portion of power supplied by an onsite solution.
Plus, onsite solar paired with energy storage provides an opportunity to reduce peak demand and shift power to cheaper time-of-use periods. This can mean significant savings beyond the energy swap alone. Even if customers have a fixed price contract for gas-powered generation, they would not benefit from a direct physical energy hedge.
pv magazine: What are the primary operational or financial obstacles businesses face when attempting to deploy onsite clean power, and how are commercial energy users addressing them?
Mandanas: The primary obstacles businesses anticipate are the complexity of building a customized solution and the capital required to fund it, but commercial energy users are increasingly turning to providers who handle both. At Onyx, our company takes care of all aspects of project development, from helping build a fully customized solution for the business to providing all the capital necessary to build the project as Onyx maintains ownership of the system. We then sell power to the customer at an overall savings to the utility price.
pv magazine: What trends are emerging in Onyx’s project pipeline that show how corporate energy strategies are changing in response to regional grid constraints?
Mandanas: Corporate energy strategies are changing as Company Boards of Directors are actively discussing the risks and volatility around energy pricing for their businesses and how to offset significant increases in utility rates that have already occurred and are expected to continue to rise. Management teams are focused on how to maintain and improve their profit margins. They may be seeking to expand product lines, for example, so it is important to assess how they control input costs such as electricity prices.
In addition to hedging power prices, businesses are also seeking quicker response times to address their need for incremental power. Due to the centralized nature of utility grids and the socialization of upgrade costs across a utility service area, the benefits for one customer (i.e., ratepayer) may result in only higher costs for another ratepayer. The trade-offs are typically dealt with during a utility rate case which may take years to resolve.
In the meantime, businesses need power, and onsite solutions are enabling speed to power and providing a more efficient and cost-effective power solution. The trend is more demand for onsite solutions and a recognition of the reliability benefit of more onsite energy.
pv magazine: How do you see the balance between central grid updates and distributed onsite power shifting over the next decade for major commercial consumers?
Mandanas: We expect the grid to keep expanding, but that onsite, decentralized power will move faster. We’re already seeing that shift with our own customers. In terms of the broader ecosystem, S&P Global projects that by 2030, onsite generation of all kinds will meet about a quarter of new data center demand, an area where power demand is growing quickly. We see that same pattern playing out for commercial and industrial customers more broadly and expect onsite solar and storage in particular to take a growing share of that mix as businesses look for cleaner, more predictable options. Speed to power is relevant. Businesses aren’t waiting for the grid to catch up, and onsite generation is becoming the faster, more immediate answer for businesses.
Another factor at play is the rising share of transmission and distribution costs as a part of a customer’s utility bill. A report from the Edison Electric Institute estimates that investor-owned electric utilities will invest $1.4 trillion through 2030 to strengthen the grid. Commercial consumers will have to bear a solid portion of this cost, as residential ratepayers do not want to be burdened with higher rates that may not directly benefit them. Distributed onsite power solutions such as solar and energy storage can be less costly to implement, provide a more immediate solution to meet commercial consumers energy demand, and the solution costs less with direct and indirect benefits for the community through enhanced grid reliability.
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