M Douglas Dagan is the Vice President of Strategic Initiatives & Renewable Energy at Suburban Propane, L.P.
Energy reliability is one of the biggest challenges for businesses, communities and policymakers today. While centralized grids work well in cities, extreme weather, rising electricity demand and shifting energy policies have made distributed energy systems an essential part of the conversation.
I’ve spent years working in this space and have seen both models at their best and their worst. No single solution fits every scenario. Businesses need to approach energy the way they approach financial investments: diversify risk, ensure reliability and use the right tools for the right job.
The Strengths And Limits Of Centralized Energy
For businesses in cities and densely populated areas, centralized energy is the most practical option. These areas are where large-scale investments in decarbonization can be spread across millions of users, which keeps costs reasonable. Cities that rely on natural gas pipelines for heating also benefit from economies of scale.
But centralized grids have vulnerabilities. Natural disasters and extreme weather can knock out power for days or weeks, and in some cases, the infrastructure itself isn’t designed for every climate. The 2021 Texas freeze exposed a major flaw. Natural gas contains water, and unlike in northern states, Texas pipelines weren’t built with dewatering technology. When temperatures plummeted, that water froze inside the pipes, partially blocking the flow of natural gas. Because natural gas fuels power plants and heats homes, the freeze paralyzed the grid and left millions without power or heat.
Businesses and local governments that depend on centralized power should have contingency plans in place based on the greatest risk in the area. On-site generation, backup power and demand-response programs can help offset the impact of widespread outages.
When Distributed Energy Makes More Sense
Centralized grids work well in cities but struggle in rural areas. Running power lines and pipelines over long distances is expensive and restoring power after an outage takes much longer. That’s where distributed energy comes in.
Disaster recovery is one of the clearest use cases. After major hurricanes or wildfires, communities need power long before the grid can be repaired. Mobile energy solutions like generators, microgrids, fueled by distributed and portable energy like propane can restore critical services almost immediately.
Upstart Power, a company we’ve partnered with in New England, deployed propane-powered fuel cells in Puerto Rico to support microgrids after hurricanes devastated the grid. These microgrids—set up in churches, schools, hospitals and residential areas—used solar, wind or other renewables along with battery storage. But instead of relying on large, costly battery banks, they paired the system with propane fuel cells that automatically kicked in when solar generation dropped, reducing the number of batteries needed. While we weren’t involved in this project in Puerto Rico, we’ve seen how fuel cells like these improve microgrid resilience and provide a lower-emission backup option when renewables alone aren’t enough.
In Texas, when the grid failed, homes were left in the cold without electricity or natural gas. During 2012’s Hurricane Sandy, similar grid failures occurred in the Northeast. Homes and businesses that depend on natural gas should consider alternative heating and electricity sources, whether propane, hybrid systems or other distributed solutions, so they aren’t left vulnerable.
The Business Case For A Hybrid Model
The best energy strategy blends centralized and distributed systems. Businesses that diversify energy sources have more control over costs, sustainability goals and ultimately resilience.
Virtual power plants, or VPPs, are one way to make distributed energy more valuable. These programs allow businesses and homeowners with backup generators or battery storage to sell excess power back to the grid during peak demand. Several states are now considering legislation to separate VPPs from demand-response programs, turning backup systems into a revenue-generating asset for participating businesses.
Mobile energy solutions are also gaining traction. Some businesses, especially those that host large events or operate in seasonal locations, don’t need permanent charging infrastructure year-round. Instead of installing expensive and underutilized equipment, they’re deploying mobile EV chargers powered by alternative fuels. These systems, already in use at disaster recovery sites and remote locations, offer a practical way to keep EVs charged without requiring major infrastructure investments.
What Businesses Should Be Thinking About Now
Companies that want to future-proof their energy strategy should start by assessing risk. A few key questions to consider: How reliable is the local grid and what happens if it fails?
• What energy sources provide the best balance of cost, carbon intensity and reliability?
• Could backup power systems generate revenue through VPPs or demand-response programs?
• How do emerging fuels like hydrogen or renewable propane fit into long-term sustainability plans?
Hydrogen fuel cells are getting more attention as companies look for zero-carbon power sources. Many data centers, industrial sites and transportation fleets are already investing in hydrogen fuel cells. The technology isn’t yet widespread, but investment is accelerating. Businesses should start paying attention now to understand where hydrogen might fit into their future energy mix.
Energy planning isn’t just about cost. Companies that diversify their energy sources will be in a stronger position to handle disruptions and adapt through shifting energy sources.
Forbes Business Development Council is an invitation-only community for sales and biz dev executives. Do I qualify?