7 Reasons Distributed Renewable Energy Bilateral Procurement (DREBP) Is the Future of Clean Energy

The global energy landscape is undergoing a transformation, driven by the urgent need to combat climate change and reduce dependency on fossil fuels. Distributed Renewable Energy Bilateral Procurement (DREBP) is emerging as a strategic and scalable solution to enable the adoption of clean energy. As countries transition to greener energy sources, DREBP offers a decentralized, cost-effective, and flexible procurement model. This blog explores the concept of DREBP, its benefits, challenges, and the potential it holds for businesses, governments, and communities around the world.

What is Distributed Renewable Energy Bilateral Procurement (DREBP)?

Distributed Renewable Energy Bilateral Procurement (DREBP) is a decentralized energy procurement model that allows consumers to directly purchase renewable energy from producers through systems like rooftop solar installations, wind turbines, and microgrids. This approach promotes a localized and efficient energy ecosystem, reducing transmission losses and enhancing energy security without traditional utility companies or competitive bidding processes.

Key Components of Distributed Renewable Energy Bilateral Procurement

1. Decentralized Renewable Energy Generation
   • Energy is produced close to the point of consumption using small to medium-scale renewable sources like rooftop solar panels, wind turbines, and microgrids.
   • This proximity reduces transmission losses and enhances energy security.
2. Bilateral Power Purchase Agreements (PPAs)
   • Direct contracts between energy producers and consumers outline terms such as pricing, duration, and delivery specifics.
   • These agreements provide price certainty and can be tailored to the specific needs of both parties.
3. Digital Platforms and Smart Technologies
   • Integration of technologies like blockchain, Internet of Things (IoT), and smart meters facilitates transparent and efficient energy transactions.
   • These tools enable real-time monitoring and management of energy flows.
4. Supportive Regulatory Frameworks
   • Policies such as net metering, open access regulations, and incentives for renewable energy adoption are crucial for DREBP implementation.
   • Governments play a pivotal role in creating an enabling environment for bilateral procurement models.
5. Consumer Empowerment and Participation
   • DREBP empowers consumers to take control of their energy sources, promoting active participation in energy generation and consumption decisions.
   • This model supports energy independence and can lead to cost savings for consumers.
6. Grid Resilience and Reliability
   • Distributed energy systems are less susceptible to large-scale outages, enhancing the overall resilience of the energy grid.
   • By diversifying energy sources, DREBP contributes to a more stable and reliable energy supply.
7. Environmental Sustainability
   • Utilizing renewable energy sources reduces greenhouse gas emissions, aligning with global sustainability goals.
   • DREBP supports the transition to a low-carbon economy by promoting clean energy adoption.

Benefits of Distributed Renewable Energy Bilateral Procurement

1. Empowerment of Small-Scale Renewable Energy Producers

DREBP facilitates market access for small-scale renewable energy projects, such as solar installations up to 5 MW and wind projects under 10 MW. By allowing procurement without competitive bidding, it encourages broader participation in the renewable energy sector.

2. Streamlined Procurement Process

The elimination of competitive bidding processes under DREBP reduces administrative burdens and accelerates project deployment. This streamlined approach benefits both energy producers and consumers by simplifying contract negotiations and implementation timelines.

3. Enhanced Energy Security and Resilience

By promoting decentralized energy generation, DREBP reduces reliance on centralized power grids. This decentralization enhances energy security and resilience, particularly in remote or underserved areas.

4. Economic Advantages for Consumers

Direct procurement agreements can lead to cost savings for consumers by offering stable and potentially lower electricity prices. This financial predictability is especially beneficial for industries with high energy demands.

5. Support for Renewable Energy Adoption

DREBP aligns with broader environmental objectives by facilitating the integration of renewable energy sources into the power supply. This support contributes to the reduction of greenhouse gas emissions and the advancement of clean energy initiatives.

6. Regulatory Support and Incentives

In regions like Gujarat, India, regulatory frameworks have been established to support DREBP, including waivers on domestic content requirements and predefined tariffs for renewable energy projects.

Challenges in Implementing Distributed Renewable Energy Bilateral Procurement

1. Regulatory and Policy Barriers

• Different states and countries have varying regulations for open access, grid interconnection, and renewable energy procurement, leading to uncertainty. The absence of standardized policies can delay project approvals and increase compliance costs. Bureaucratic hurdles and ambiguous guidelines can stall project timelines. Inconsistent regulations across regions can complicate the implementation of decentralized energy procurement (DREBP), creating uncertainty for producers and consumers. Policy gaps in some areas also hinder the growth of DREBP models.

2. Grid Integration and Technical Challenges

• Existing grids may not be designed for two-way power flows, causing congestion, voltage fluctuations, and reliability issues. Interconnection delays can postpone project commissioning. Balancing supply and demand requires advanced grid management and forecasting tools. Existing grid infrastructure may not handle the bidirectional flow of electricity in distributed renewable energy generation (DREBP) systems, leading to voltage fluctuations and overloading. The complex process of connecting distributed energy systems to the grid can cause delays in project timelines.

3. Financial and Investment Challenges

• Renewable energy installations often face high upfront costs, limited financing access, uncertain revenue streams due to fluctuating energy prices and evolving tariff structures, and financing difficulties due to perceived risks and lack of investor confidence. These factors can deter smaller players from participating in distributed renewable energy projects, hindering growth and causing uncertainty in project returns.

4. Market and Economic Obstacles

• Market Volatility: Fluctuations in energy prices can affect the economic viability of DREBP agreements, making it difficult to predict long-term returns.
• Economic Uncertainty: Broader economic factors, such as inflation and supply chain disruptions, can impact the cost and feasibility of renewable energy projects.

5. Technological and Operational Challenges

• The renewable energy sector faces several challenges, including supply chain constraints, workforce shortages, interoperability issues, innovation gaps, maintenance and operations challenges, and cybersecurity risks. Supply chain constraints include delays in components like solar panels and batteries, while workforce shortages can lead to delays in installation and maintenance. Interoperability issues involve seamless communication among different technologies, while innovation gaps can lead to obsolescence of existing systems. Maintenance and operations are further complicated by the need for ongoing monitoring and skilled personnel.

6. Consumer Awareness and Engagement

• DREBP adoption is hindered by limited understanding, behavioral resistance, and capacity building needs. Many potential buyers and producers lack technical knowledge about its benefits and processes. Traditional energy procurement methods and cultural attitudes can also slow adoption. Training and education are necessary for stakeholder participation. Cultural attitudes and resistance to change can also hinder DREBP adoption.

7. Environmental and Social Factors

• Renewable energy projects may face land use conflicts due to land availability, environmental concerns, or community resistance. Engaging local communities to build trust and support is crucial, but often overlooked. Land use disputes, especially in agricultural areas, can arise from concerns about aesthetics, noise, or environmental impact.

Global Trends in Distributed Renewable Energy Bilateral Procurement

Distributed Renewable Energy Bilateral Procurement (DREBP) is rapidly transforming the global energy landscape by enabling direct transactions between renewable energy producers and consumers. This decentralized procurement model aligns closely with worldwide sustainability goals, offering enhanced flexibility, cost savings, and energy resilience. One of the most significant drivers of DREBP’s growth is the surge in corporate commitments to renewable energy, with over 400 major companies pledging to switch entirely to renewable electricity, many targeting completion by 2030.

This corporate push is fueling the rise of power purchase agreements (PPAs), particularly in regions such as the Middle East and Africa, where countries like Morocco, Egypt, and South Africa lead in facilitating distributed renewable energy projects. Furthermore, distributed solar photovoltaic (PV) systems are expanding rapidly, accounting for nearly half of global PV capacity additions in 2023, propelled by declining installation costs and supportive policies. Another notable trend is the rise of Virtual Power Plants (VPPs), which aggregate distributed energy resources to provide grid stability and improved energy management, particularly evident in the United States.

Small and medium enterprises (SMEs) are also increasingly participating in renewable energy procurement, motivated by cost reduction and sustainability goals, with half of voluntary clean energy procurement attributed to new energy customers as of 2021.Governments worldwide are backing this momentum through policy frameworks encouraging distributed generation; for instance, India aims to install 500 gigawatts of renewable capacity by 2030. Technological advancements such as smart metering, blockchain, and IoT are further enhancing the efficiency, transparency, and reliability of DREBP transactions by enabling real-time monitoring and management.

Market projections reflect this upward trend, with the Distributed Energy Generation market expected to grow from USD 372.6 billion in 2023 to nearly USD 971 billion by 2031, driven by increasing demand and cost-effective distributed technologies. Overall, DREBP is emerging not only as a procurement method but as a strategic approach to achieving sustainable, resilient, and economically viable energy systems worldwide.

Policy Recommendations for Scaling DREBP

1. Streamline Regulatory Frameworks

• Governments should streamline licensing, approval, and interconnection procedures for distributed renewable energy projects to reduce administrative burdens and facilitate quicker project deployment. Standardized contract templates for Power Purchase Agreements and interconnection agreements can lower transaction costs and legal complexities, promoting easier bilateral negotiations between producers and consumers. Implementing clear and expedited procedures for small-scale projects can also reduce bureaucratic delays. Waiving Domestic Content Requirements (DCR) for small-scale projects can also encourage quicker deployment and reduce costs.

2. Enhance Financial Incentives and Support

• Policymakers should introduce feed-in tariffs (FiTs) to encourage investment in distributed renewables, providing fixed payments for renewable energy producers. These incentives can offset initial capital costs and provide predictable revenue streams, making projects financially viable. Green financing platforms and low-interest loan programs for small and medium enterprises (SMEs) can enhance access to capital and broaden market participation. Additionally, providing tax incentives and subsidies can offset initial capital costs for renewable energy installations. Lastly, establishing green financing mechanisms and low-interest loans can support SMEs in adopting renewable energy solutions.

3. Promote Market Access and Participation

• Policies should encourage corporate renewable energy procurement, such as RE100, by committing companies to 100% renewable energy sources. This creates demand for distributed renewable energy projects. Supporting renewable energy cooperatives can democratize energy production and consumption. Virtual Power Purchase Agreements (VPPAs) can enable businesses to procure renewable energy from distributed sources without physical infrastructure. Governments can incentivize corporate commitments to 100% renewable energy, driving demand for distributed renewable energy procurement arrangements.

4. Invest in Smart Grid Infrastructure

• A robust, flexible grid is essential for efficient integration of distributed energy resources. Policymakers should promote the use of advanced metering infrastructure for real-time monitoring and settlement of transactions. Investment in bidirectional energy flow technologies and local flexibility markets will enhance grid stability and generate new revenue streams for distributed energy producers. Smart metering systems, bidirectional energy flow technologies, and local flexibility markets can help establish markets where distributed energy resources can provide grid services, thereby enhancing grid stability.

5. Foster Public Awareness and Capacity Building

• Scaling Distributed Renewable Energy Projects (DREBP) requires raising awareness among businesses, communities, and regulators about its benefits and opportunities. Educational campaigns and technical training programs can equip stakeholders with the necessary knowledge and skills for project development. Involving local communities in planning and decision-making ensures projects align with local needs and gain public acceptance. Technical assistance and training programs can also be provided to build local capacity in renewable energy technologies.

Future Outlook of DREBP

The future of Distributed Renewable Energy Bilateral Procurement (DREBP) is bright and promising, fueled by a combination of corporate sustainability commitments, advanced technologies, evolving market models, and supportive policy frameworks. As more global corporations join initiatives like RE100, the demand for bilateral procurement mechanisms is expected to surge, with an estimated 290 TWh of additional renewable electricity needed by 2030 to meet these clean energy goals. Technological advancements, particularly in smart grids, blockchain, and the Internet of Things (IoT), are revolutionizing the DREBP landscape by enabling real-time energy tracking, improving transaction transparency, and enhancing system efficiency.

Additionally, the rise of Virtual Power Plants (VPPs) is helping aggregate and optimize distributed energy sources, offering increased grid flexibility and reliability. On the policy front, governments are starting to implement forward-looking regulations—such as Gujarat’s scheme for distributed bilateral solar purchases—which simplify access to clean energy for small-scale investors and developers. Moreover, small and medium enterprises (SMEs) are becoming increasingly active in renewable energy procurement, with nearly half of voluntary clean energy deals in 2021 coming from new market participants. As these trends converge, the global distributed energy generation market is projected to grow significantly, positioning DREBP as a cornerstone in the transition toward a cleaner, more resilient, and decentralized energy future.

Conclusion

Distributed Renewable Energy Bilateral Procurement (DREBP) is more than a trend—it’s a transformative model that’s redefining how energy is produced, distributed, and consumed. With its ability to empower consumers, accelerate clean energy adoption, and reduce dependence on centralized grids, DREBP stands at the forefront of the global energy transition. From large corporations and SMEs to community cooperatives, the opportunity to participate in a cleaner, more resilient energy ecosystem is now within reach.

At Soleos Solar, we are committed to unlocking the full potential of DREBP by offering tailored solar EPC solutions that empower industries, businesses, and communities to take control of their energy future. Our team of experts is here to help you navigate the technical, regulatory, and financial aspects of bilateral energy procurement with ease and confidence.