Five energy industry trends of tomorrow impacting companies today
Energy is a long game, and all stakeholders have made a long-term affirmation that we are headed toward a more renewable future, REC Solar Senior Vice President Alan Russo writes.
It’s plain to see that the energy market is rapidly evolving, and the rate of transformation is only increasing. If there is one constant in the energy industry, it’s change. In this article, I outline five trends on the horizon and how companies can be equipped to maximize them.
1. Increased energy storage
Energy storage is a growing segment for solar manufacturers as it maximizes the capacity for wind and solar energy. Power markets are increasingly asking for storage options on projects, particularly in California where time-of-use shifts by utilities will push a meaningful portion of solar’s economic value out of peak production when the sun is most available.
The way to get the most value out of solar panels is to use storage, which takes that solar energy and puts it into a battery for you to use later. Commercial and industrial organizations are beginning to develop a comfort level with batteries on-site; there is not a high rate of adoption yet, though there is a high rate of interest. But, as battery prices continue to fall, there will be a 100 percent attach rate of solar to storage in the coming years. The science of how the technologies work together, as well as the economic arithmetic, is compelling.
2. Greater customer control
There is a revolution taking place in energy being driven by load-side technologies, which are technologies driven by the customer’s ability to take more control of their energy destiny. Energy is a long game impacted by current and future tariffs, incentive values and tax considerations, and there is an increasing amount of on-site technologies that all must play together to make sense of it all at the customer site. Consequentially, companies are looking for an energy roadmap, and a partner that can come in and be their guide in this landmine of various factors that can undermine the energy goal they are trying to accomplish.
Microgrids, which allow customers to produce and consume their power locally, are a step in the right direction. Microgrids give customers more predictability and control over how their businesses operate. When they are beholden to traditional power grids, customers have much less control than they would like. We’re seeing a lot of these technologies coming into the marketplace today, along with the emerging expertise that allows customers to have control that they never had before.
Market by market, economic benefits will shift to centralized renewables or varied distributed energy, or something in between, like community solar. Companies that seize control of their energy destiny can better hedge future risks, optimize cost and diversify supply exposure.
3. Infrastructure evolution
Customers now frequently suffer from the performance of our aged infrastructure. We rely on traditional centralized power grids; they are the lifeblood of our economy. But today, as opposed to 100 years ago when these systems were first designed, we have access to much more sophisticated technology and expertise. Whether it’s solar, fuel cells, electric vehicles or microgrids, we have a different tool kit available to us to think about how to fuel the economy. Renewable energy manufacturers are the architects of what the energy of the future will look like.
The strength and weakness of a centralized generation distribution system is that you share it with millions of people, and you put the generation far away from the point of consumption. The architecture hasn’t changed in 100 years, but businesses and business needs have, and this puts 100% of the problem on the customer. Therefore, we’re going to see infrastructure evolving to better suit customer demands.
4. More diversified energy portfolios
The Achilles heel of on-site solar is that you’re often constrained by available space — you only have so much roof, ground or carport space to install the panels. For energy intensive industries, it becomes difficult or even impossible to offset brown power with green power using on-site alone.
On-site is attractive because it’s efficient; you make your power at the point of use, and you know with every panel you install, you are adding green energy to the planet. Off-site is attractive though because you get access to as much green power as you want — enough to obtain renewable goals without having to build those systems on the properties you own.
Overall, there is a huge customer demand to move toward renewable generation sources across the board — on-site or off-site, or both; this is where the market is heading — it’s inevitable. Companies should take the time to consider whether on- or off-site is best for them.
5. Enhanced consolidation and partnerships
Renewable energy tax credits, tariffs on solar equipment, and things of that nature create opportunities to wait, and opportunities to go fast. Certainly, with the potential expiration of the Investment Tax Credit (ITC), it’s an opportunity for customers to take advantage of the credit now while it’s here. But prices are continuing to fall, and markets are efficient, so I’m not concerned that the ITC expiration is going to be the end of renewables or solar.
Massive consolidation is going to come in solar energy, because scale matters when incentives go away. We will see a consolidation in energy — customers see market factors and are looking for partners that will be there for the long-haul with them. They don’t want to have to put all the building blocks together themselves, they want experts there alongside of them.
In conclusion, energy is a long game, and all stakeholders have made a long-term affirmation that we are headed toward a more renewable future. However, energy is one of the largest non-discretionary items in any company’s budget. More and more, customers should take ownership of what they want the future of their budget — and the planet — to look like.
Alan Russo is senior vice president at REC Solar, which was recently acquired by Duke Energy Renewables.