The U.S. power sector has been in the midst of a transformation with the increased implementation of a smarter power grid. In order to get a better idea as to where the U.S. power industry is headed in 2017, keep an eye on these five industry-shaping trends:
Energy storage had a record year in 2016, and this year it’s set to grow even more. With the increasing number of plant retirements, energy storage has emerged as a new grid resource. Energy storage offers a clean, efficient and cost competitive advantage as battery prices continue to fall. According to the DOE, battery costs have declined 78% since 2008. This trend seems to be following other alternative energy technologies such as wind and solar.
Through the advancements in battery technology, and with more innovative ideas in the works, energy storage is gearing up for more growth. Currently, the Joint Center for Energy Storage Research is looking into alternative battery materials, liquid flow batteries and other potentially transformative technologies that could not only lead to increased energy potential, but lower costs. As utilities and policymakers continue to look at clean energy alternatives, energy storage is an increasingly viable and effective solution.
In terms of power generation in the United States, natural gas is ranking at the top. After a record-breaking year in 2016, natural gas surpassed coal as the top U.S. generating resource. Since the price for natural gas has been historically low in recent years, utilities have been encouraged to run their gas plants more, and this has often been at the expense of coal. The large number of retirements of coal-fired power plants has also played a role in increasing the demand for natural gas. According to the EIA, domestic oil and gas production is also expected to increase, which would allow for gas generation to widen its gap over coal even further.
If the low prices continue, natural gas generation will continue to increase its dominance in the U.S. power sector.
The fate of coal power is uncertain. It’s not too far out of the realm of possibility to think that coal could get a second lease on life.
The Clean Power Plan was set to accelerate coal retirements, but with the new administration, that could change. Whether or not the Clean Power Plan goes into effect, utilities aren’t expected to add substantial new coal capacity. However, if it is repealed, coal generation could at least stay steady for the next decade.
Distributed energy resources, or DERs, as defined by the Electric Power Research Institute, are “smaller power sources that can be aggregated to provide power necessary to meet regular demand.” As the grid continues to modernize, DERs are proving to be an efficient and cost-effective option.
As consumers continue to become more energy-savvy, demand is increasing for DERs and other energy efficient technologies such as smart appliances and programmable thermostats. These technologies offer cost-saving benefits to users.
Consumers are forcing utilities and policymakers to adapt as DERs continue to proliferate the electric utility industry. Utilities are going to be tasked with modernizing their grids in order to meet this growing demand. This requires a new kind of planning and the industry is still in the very early stages of figuring out exactly how to do it.
States continue to focus their attention on clean energy goals, regardless of federal policy. California, Oregon and New York, as well as 29 others, are still ambitiously pursuing their clean energy standards. Hawaii has by far the most aggressive goal, targeting 100% renewable power by 2045.
The demand for renewable energy has certainly increased over time. Over the past 10 years, Beta Engineering has connected nearly 3,400 MW of renewable energy to the grid. Beta has completed numerous high voltage renewable energy EPC projects including wind, solar and biomass across the United States, and additional projects are currently underway.
Many states have grown their economies over the last decade by integrating renewable energy. With solar and wind having contributed to virtually all of 2016’s newly installed capacity, states are expected to continue their path toward increased renewable energy.
Because the power industry is sensitive to market prices and public policy, it is difficult to predict its future. In an industry that has been undergoing transformation, these five areas are just a few of the trends expected to shape the power sector in the coming year.