As decarbonizing takes a deepening root around the globe, clean energy solutions such as wind and solar power complemented by battery storage quickly are becoming more of a fixture in today’s energy ecosystem. That landscape cannot continue to evolve without the help of utilities, and it’s crucial for them and their stakeholders to understand clean energy trends to reach a net-zero future.
Decarbonization will require integrating more renewable energy onto the grid, which has recently become a significant concern for utilities. In fact, in our 2021 Electric Report, utilities ranked renewable integration as their top challenge — above aging infrastructure — for the first time ever.
Clean Energy Trends
Again, that parity remains this year. In our survey of about 250 electric industry stakeholders for Black & Veatch’s 2022-2023 Electric Report roughly one in three respondents (29 percent) ranked renewable energy integration as their top challenge, tied with aging infrastructure. While renewable integration remains in the No. 1 spot, fewer respondents are concerned about it than in last year’s report, where a whopping 34 percent voted for it (Figure 20).
The lowered percentage from last year may indicate that there is increasing migration to an awareness of renewables among utilities —a promising sign for the future of green energy.
However, it should be mentioned that last year, the 2021 Electric Report survey was released last November around the time of hope — albeit waning — that the massive “Build Back Better” spending plan targeting physical infrastructure improvements would get through Congress, and responses may have reflected optimism. At that time, renewables were top of mind for utilities. By comparison, this year’s report survey was released before a far narrower version of Build Back Better was hammered out and eventually signed into law by President Joe Biden in August, perhaps negatively skewing survey responses slightly.
Nevertheless, the numbers still show utilities’ growing emphasis on renewable generation capacity.
While the future of renewable energy continues to gain more acceptance among utilities, the power grid needs a major upgrade to accommodate the energy transition. And such grid modernization certainly will present its own challenges.
According to survey respondents, the top two concerns for future grid development over the next three to five years are supply chain issues (54 percent) and generation mix (53 percent). These concerns aren’t minor, considering that their percentages nearly double any other option on the list. With the supply chain crisis ongoing at the time of this report, that number isn’t too surprising.
Across the country, utilities must start strategizing about their decarbonization goals. According to our respondents across the Northeast, Midwest, South, and West regions of the United States, the percentage of utilities with a carbon reduction goal apart from any mandate was on average 56 percent. Among respondents with a carbon-reducing blueprint, 41 percent consider it well-defined to meet their goals.
When it comes to mapping out investment in new generation capacity over the next five years, solar, microgrids, and energy storage are leading the charge in what respondents say they’ll spend much more or somewhat more on.
Investments in Solar, Microgrids and Energy Storage
These results aren’t too shocking considering how well solar and battery energy storage work together. Some 60 percent of respondents expect some increase in hydrogen-related investment over the next five years (Figure 20).
When respondents were asked which technologies they intend to invest in the near-term (one to five years) and the long-term (more than five years), solar and wind both remained atop the heap in both categories — unsurprising, given their status as relatively established technologies. Looking ahead, hydrogen climbed significantly from just 14 percent in the short term and 22 percent past five years, while distributed energy storage rose to 40 percent, from 33 percent. (Figure 21).
Investments in Clean Energy Technologies
The survey found that respondents intend to invest in solar and wind in both the near-term and long-term, which is not surprising given their established status. However, there is an increasing interest in hydrogen, with a significant climb in planned investment in both the short-term and long-term. Similarly, distributed energy storage is also gaining interest among respondents for investment in the near future. These findings are illustrated in Figure 21 of the report.
Longer term — looking out the next five years to a decade in actual investment spending — respondents appear to be prioritizing big investments (those of more than $10 million) in conventional generation while increasingly aligning behind energy from wind, the sun, hydrogen and small modular nuclear reactors.
As is the case for many technologies, they often start out slow and pick up momentum at the drop of a hat. A few decades ago, light-emitting diodes (LED) took a room full of equipment and tens of thousands of dollars to get a fraction of a lumen of light. Now people can buy a string of 100 for a dollar during Christmas time.
The same can be said for clean energy technology, where there’s a consistent positivity surrounding renewables that weren’t there just 20 years ago. That appears true about hydrogen, a technology prone to skepticism today but poised to become the next big trend a decade or 15 years from now.
The fact of the matter is, decarbonization is on the minds of nearly every utility right now. And while utilities may be adopting new technologies at different rates, the enthusiasm towards renewable energy is ever-present — and building.
As renewable solar and wind developments continue their rapid growth across the country, energy storage increasingly is viewed as a critical component to decarbonization, given that the intermittency of renewables means there are times — days or even weeks — when there won’t be the appropriate amount of generation throughout the day to satisfy load needs.
While at first glance it may appear that the two key energy storage technologies — battery energy storage systems (BESS) and hydrogen — are in competition, the two technologies in important respects are complementary to each other, particularly suited to addressing hourly and daily shifting versus longer duration and seasonal shifting of energy supplies, respectively. The two can be used in tandem to maximize the value of electrons from green energy.
The investment tax credits and production tax credits made available to BESS and clean hydrogen in the Inflation Reduction Act would be significant as they would materially reduce the cost of both energy storage technologies and resultingly improve the resiliency of the grid. Investment spending in both technologies could continue to increase in the utilities’ planning budget.
