2018 is over, and a new year of energy evolution is upon us.
The past year laid a robust foundation for growth in 2019. It ended with six states and territories, including two of the three largest state economies, committing to 100 percent clean electricity. The solar industry weathered the much-feared tariffs without excessive bleeding. The list of cleantech failures was much shorter than in previous years.
There’s still plenty of room to grow.
In the 12 months ending in October 2018, solar accounted for about 1.6 percent of utility-scale generation, according to Energy Information Administration data.* That share rises to 2.3 percent if you count estimated small-scale solar. Wind delivered 6.6 percent. Grid edge technologies are helping the grid adapt, but they're still in limited real-world use.
Keeping in mind that contrast between heady potential and modest achievement so far, we shall venture into the prediction game to identify key clean energy developments to come over the new year.
More states commit to clean
GTM’s Emma Foehringer Merchant dubbed 2018 the year of 100 percent clean energy. Watch for another wave of jurisdictions to follow the past year’s trailblazers.
In 2018, California joined Hawaii in legislatively committing to a carbon-free electricity system. Governors in New Jersey, New York and Puerto Rico made their own executive commitments to that end. Washington, D.C.’s city council passed a target of 100 percent renewables by 2032.
For a while, debates over 100 percent clean energy policy broke down into intellectual tribalism, as different factions jostled over who had the better vision for a clean energy future. Meanwhile, skeptics could dismiss the whole exercise as a folly.
Once economic and demographic powerhouses like California and New York got on board, it became exceedingly difficult to dismiss the policy as a fairy tale. Suddenly, passing the target switched from seeming intractably difficult to eminently achievable; following through is now the hard part.
Other states need not worry about breaking new ground; they have a buffet of policy options to pick at, with a variety of stances on timeline, tools and enforcement mechanisms. Instead of battling over whether only renewables should be allowed, states can follow California in legislating carbon out of the system and leaving it to industry and utilities to figure out the best mix of resources to fulfill that directive.
Soon, leaders will face a different set of questions: If they care about climate change, air pollution, or a more localized, secure and affordable energy system, why wouldn’t they entertain some sort of systematic overhaul?
In the near term, look for action in Colorado, Connecticut and Oregon, where governors won in November calling for 100 percent clean energy. Governors-elect in Illinois, Maine, Nevada and New Mexico called for very high levels of clean energy in the coming years.
Utilities get smarter about planning their investments
Utilities had resource planning down to a science: figure out load growth and build enough gas plants to meet your future peak. Then things got a lot harder.
Load growth stopped showing up when it was supposed to. Wind and solar started filling in energy production, but not necessarily during those peak times. Battery storage appeared on the scene, frustrating the clean categories of generation and wires that had worked for so long. And controllable, customer-sited equipment created the possibility of lowering peak demand instead of raising production to meet it.
It took a while, but at least some regulators have caught up to these changes in how utilities can plan for the future. Now the utilities have to follow suit.
The harbinger came in March when Arizona’s all-Republican regulatory commission froze new gas plant construction for the year and rebuked the investor-owned utilities for relying too much on gas plants in their 15-year plans. The regulators had been mulling a clean energy overhaul to use storage to deliver more solar power during the evening peaks, rather than building lots of new gas peakers.
The unexpected news demonstrated how quickly new energy technology can move: Storage offered uninspiring economics when the integrated resource planning began in 2016, but that changed by the time the plans were submitted for approval.
The other conundrum was that Arizona Public Service, for instance, had already built more energy storage and solar than its own plan called for. The technologies spoke for themselves in competitive solicitations, and the gas-heavy planning document didn’t get in the way.
That might offer some comfort for all the other jurisdictions where utilities haven’t factored new assets like storage into their planning. Just this year, Duke Energy called for a base case of 300 megawatts of storage in its Carolina territories, while neighboring Dominion Energy didn’t plan for any.
But Virginia regulators rejected Dominion’s plan in December for overestimating load growth and failing to account for a recently passed grid transformation law that will hasten renewables deployments.
The message for other utilities: Expect greater scrutiny on your planning calculations than ever before. Conveniently bountiful load growth expectations, or exclusion of viable alternatives, are not going to slide anymore, at least for some regulators.
Flexible load comes into its own
There are a lot of tools to modulate energy consumption in homes and businesses, but getting them to work in sync within a building and within the broader grid network has taken a while.
“2019 is going to be the year of orchestrating flexible resources, both on the residential and C&I side,” said Elta Kolo, research manager for the Grid Edge team at Wood Mackenzie Power & Renewables. “You’re going to see increasing diversity in the resource mix that’s being orchestrated.”
This development is part of a long-awaited shift from old-school, unidirectional demand response signals to a bidirectional system where utilities communicate with a range of devices out in the field and get them to respond to peaks or other stresses on the system.
The necessary ingredient of connected energy devices is finally coming into place. Smart thermostats are reaching market penetrations unheard of for heavier home energy investments. And advanced battery systems are finally incorporating other home devices, like smart appliances, solar panels and electric vehicle chargers.
Sonnen unveiled a luxury home automation battery in September, clocking in at $26,000. The ecoLinx can predict extreme weather and automatically shed loads to prepare for an outage, then switch seamlessly to backup mode. A new model priced for a broader market will come to market in 2019, outfitting a sustainable home development planned for construction in Florida that year.
Upstart company ElectrIQ also said it will release a smart home-enabled battery in 2019 for $9,000; it raised a $6 million seed round to finance that effort.
Residential storage heavyweights Tesla and Sunrun aren’t talking much about connected-home capability just yet, focusing more on backup power as a selling point. If early autonomous home battery products win customer appeal, other companies are likely to follow.
For big action on flexible resource orchestration, follow the money — to the Empire State, where the New York Power Authority recently got approval to spend $75 million by the end of 2020 on grid flexibility, part of a longer-term $250 million initiative. The first phase will focus on alternatives to wires infrastructure upgrades, distributed energy resources, and storage-paired renewables.
Storage hits the big time
It was a lackluster year for large-scale storage in the U.S., punctuated by South Korea coming out of nowhere and nabbing the title of most megawatts deployed in a country.
2019 will be different.
The value of the U.S. storage market will more than double, to $973 million from $474 million in 2018, according to Wood Mackenzie’s latest Energy Storage Monitor report. The market value is expected to double again in 2020.
Getting within spitting distance of a billion-dollar annual industry is a huge landmark for what has been the new kid on the energy block for the last decade. Sufficient scale attracts people with more capital. Already, private equity firms are coming out of the woodwork with ample balance sheets to develop storage and earn longer-term returns than most of today’s financiers would accept.
The industry will nearly double its megawatts deployed (338 to 659) and more than double its megawatt-hours deployed in 2019 (686 to 1,682), according to the Energy Storage Monitor. That makes 2019 the first year in which the industry delivers more than 1 gigawatt-hour of storage capacity. The subsequent years will likely dwarf this high-water mark.
Storage developers still face a fearsome series of obstacles: outdated market design, supply constraints, slow sales timelines with cautious customers, just to name a few. After years of an infant market with dramatic swings in quarterly activity, 2019 will kick off the era of steady deal flow at gigawatt-hour scale, with billions of dollars on the table.
*This article originally cited the E.I.A's 2017 data, reflecting the last full year of generation information. It has been updated with the rolling 12-month tally from October, the most recent year-long data available.
