Before businesses became so reliant on digital technology, a few minutes of standby power was sufficient for most facilities. An outage today can cost tens of thousands, or even millions, of dollars, according to an April, 2005, article in Energy User News.

Standby power for many businesses today is almost as important as for critical services, such as hospitals. Jim Iverson, an applications engineer for Cummins Power Generation, describes these as "Category Four" facilities -- they need enough on-site generation to maintain normal operations for extended periods.

At the other end of the scale is "Category One," where facilities can go without power, so their willingness to invest in standby power is low. Even businesses in this category have self-contained uninterruptible power supplies on critical computers and phone switches.

The middle two categories need standby power, but they do not require self sufficiency for extended periods. As a minimum, they need to keep emergency lighting and alarm systems operational while the building is safely evacuated -- the familiar model for standby power. At most, they need to continue full operations through a brief outage, if only to prevent damage to sensitive machinery.

On-site power and demand-response programs
During times of peak demand, utilities often need to reduce strain on their generation, transmission and distribution systems. One way to accomplish this is to ask large users of electricity to shed loads for a few hours. Utilities increasingly offer demand response programs to large users of power, whereby customers are compensated for the power interruption.

Businesses of sufficient size are taking demand response into consideration when sizing their standby power needs. The utility incentive is enough to warrant larger on-site generating capacity.

Almost any approach to distributed generation will cost more per kilowatt hour than utility tariffs, but there are notable exceptions. When utilities choose penalties over incentives, imposing peak demand charges on their largest customers, the relative cost of running on-site generation can be favorable.

Emerging business models and technologies
The business aspects of distributed generation, and the economics of power outages, are bringing life to a new kind of business. Companies such as Celerity Energy are serving as aggregators of distributed generation and demand response participation. The model makes it easier for smaller facilities to maintain standby power capacity, or participate in demand response programs, or both.

Some facilities that need continuous power have trouble siting a standby generator. Retail space often has no access to outside equipment locations; leases may forbid running generators on premises. Restaurants and spas do not want exhaust odors to interrupt their customers' experiences. For these situations, new technologies such as fuel cells, capacitors and high-capacity batteries may hold the answer.