Utilities are rapidly transforming by embracing new technologies and greater amounts of renewable energy resources, according to two new reports released Tuesday by consulting firm Deloitte offering 2019 industry outlooks.
The Power and Utilities Outlook report finds utilities are "jumping in the driver's seat" with developments and new designs for technology by using venture capital and start-up initiatives. Those efforts are being supported by new business models for behind-the-meter technologies and services and more flexible regulatory structures and initiatives.
New technologies are also enabling new business models for renewable energy projects as robust demand, particularly "voluntary demand," pushes renewables to wider deployment, according to Deloitte's Renewable Energy Outlook.
"[Renewable energy is] definitely going up and this next year will likely see another healthy increase."
Marlene Motyka
Global and U.S. renewable energy leader, Deloitte
Through the third quarter, output from utility-scale wind and solar plants contributed more than 8% of total U.S. electricity generation, compared with 7% of total generation for the first three quarter of 2017, according the Deloitte's Renewable Energy Outlook.
That trend is likely to continue into 2019, but new trends are beginning to come into play that will shape the growth of renewable energy going forward, according to Marlene Motyka, author of the report and Deloitte's global and U.S. renewable energy leader.
"It's definitely going up and this next year will likely see another healthy increase," possibly a double digit increase, Motyka told Utility Dive.
In addition to declining costs, the new trends include emerging policies that support renewables growth, expanding investor interest in the sector and advancing technologies that boost wind and solar energy's value.
Among the new technologies that are advancing growth of renewable energy are advances in battery storage and new software platforms that allow more people to aggregate distributed resources to add reliability and to generate additional revenue streams, Motyka said. She identified peer-to-peer energy trading and companies like Sunrun, which offers an energy software platform that incorporate solar, storage and home energy management systems.
Unlike previous renewable sector innovations that were largely on material and design improvements, these new innovations enable the renewable sector to open new business and revenue models, Motyka said.
"Perhaps, the most significant trend," though, Motyka said, was robust demand for renewables, particularly "voluntary demand," which she differentiates from demand driven by policy mandates. She noted that voluntary procurements represent 52% of utility-scale solar projects in development and 73% of projects announced in the first half of 2018.
That demand was partly driven by rapidly growing appetite for renewables from corporations. Through the first 10 months of the years, corporations have purchased a record breaking 4.96 GW of wind and solar capacity.
And worldwide, 156 corporations — many of them are based in the United States — had committed to achieving 100% renewable power. Those goals are, in part, being facilitated by the 23 green tariffs adopted in 17 states.
Among emerging policies, Motyka pointed to local support for renewables and noted that as of December, mayors of over 200 communities had adopted goals to transition to 100% renewable energy no later than 2035.
In addition, this year several states have either joined the ranks of states with energy storage mandates or — like New Jersey and New York — are in the process of crafting energy storage mandates.
In addition, grid operators across the nation recently filed their responses to the Federal Energy Regulatory Commission's Order 841, which is designed to level the playing field for energy storage resources.
The advance of energy storage is also likely to encourage wider adoption of renewables, Motyka said. The states that support energy storage often the same states that have strong renewable policies and high renewable portfolio standards. "They are thinking of their systems more broadly," she said.
"Renewables are impacting the entire value chain."
Marlene Motyka
Global and U.S. renewable energy leader, Deloitte
Some of the same transitions that are driving renewables can also be found in the wider utility sector, Scott Smith, Deloitte's U.S. power and utility leader and author of the Power and Utilities Outlook, said.
Utilities are tapping into new technologies to serve increasingly sophisticated customers, he said. Those technologies are also expanding opportunities to improve operational efficiencies and prompting experiments with new business models.
The two trends are not isolated, Motyka said. "Utilities are trying to deal with how they are going to meet the needs of their customers" and how they integrate renewables into the operations they already have, she said. "Renewables are impacting the entire value chain."
Smith says the top trends to watch in 2019 are rising customer expectations and greater competition from third-party electricity providers; utilities taking a more active role in adopting and deploying new technologies; the emergence of new utility business models for behind-the-meter technologies and services; and more flexible regulatory structures.
In particular, he mentioned developments such as community energy projects, and residential rooftop solar coupled with battery storage. With those, utilities have a "tremendous opportunity" to develop new profitable businesses around offering services related to these developments, he said. Conversely, he said utilities that are not positioned to capture value from the shift toward distributed energy resources risk losing revenue.
