The power industry is a provider of essential services, playing a crucial part in economic and social development. Market forces such as disruptive technologies, regulatory norms, changing consumer behaviour, competitive forces (new entrants), ageing asset performance with an increased need of reliability, decarbonisation efforts to tackle climate change, increased renewable power generation, and growth of distributed energy resources (DER) are affecting the global power utility landscape. The power sector is gradually undergoing a transformation driven by these factors. The electricity grid is now getting smarter, power generation is becoming cleaner, and greater consumer choice and control is being observed. Following are some of the key trends being observed in the power industry today.
Changing power generation fuel mix
The need for energy security and reduction in CO2 emissions has led to a gradual shift from conventional power-generating sources towards renewables across the globe. Governments worldwide have provided support measures and mandated a certain share for renewable energy in the overall energy mix. To provide support for these plans, numerous incentives have been introduced to support the development of renewable energy sources and offer a level playing ground.
Coal-based capacity decommissioning is being undertaken
Coal continues to be the key thermal fuel used for electricity generation in many countries, especially in developing countries, to meet their growing power demand. Asia-Pacific will continue to lead the global coal-fired power market in terms of capacity additions, whereas in the US, decommissioning of coal-fired power is expected due to environmental regulations and an abundance of natural gas at a competitive price, resulting in lower emissions.
Net metering to be key phenomenon in most major countries
With increasing distributed generation, net metering has seen significant growth in the past few years. A number of countries already have net energy metering protocols and equipment in place, a number of countries are exploring the technology and mechanism currently, readying themselves to start accepting residential or commercial building-level energy generation systems to the grid allowing them to supply their excess energy to the grid at a fair tariff.
EU mandates driving smart grid investment in Europe
The EU mandates for smart grids and smart metering have been driving activity in the sector in major European countries. The EU aims to replace at least 80% of electricity meters with smart meters by 2020, wherever it is cost effective to do so. This smart metering and smart grids roll-out could reduce emissions in the EU by up to 9% and annual household energy consumption by similar amounts.
Cyber-security is increasingly important in a connected and digitised grid
Cyber-security vulnerabilities have been a major concern for power grids across the globe trying to interconnect their critical assets through an IT network. With the proliferation of distributed energy resources, rising decentralisation, and interconnection of a number of smart energy assets such as smart meters and smart homes/buildings, there is a possibility of entry of malicious agents into the utility grid systems. Due to this, power utilities across the globe are working toward measures to evaluate, curb, and prepare for these cyber-security vulnerabilities.
Distributed energy resources proliferation tweaking the electricity business model
New power systems involve utilisation of distribute energy resources (DER), which have three components: distributed generation (DG), demand response (DR), and energy storage. Whether it is DG, DR, energy storage, electric vehicles (EVs), smart meters, or smart appliances, consumers are now getting more energy-savvy and are asking for new generation and control technologies to provide them with a bigger say when it comes to energy consumption.
The increased use of DER is tweaking the power utilities’ electricity business model and policymakers’ planning process. With power utilities facing DER proliferation, they must undergo modernisation of their electricity grids and install smart sensor networks, smart metering, and communication technologies, which will enhance transparency of the system and lead to two-way power flows.
Energy storage is developing into a feasible grid-scale resource
The energy storage market is a nascent but fast-growing industry. Energy storage system (ESS) devices are being utilised for storing energy intended for later usage. The demand for these devices in the power sector is increasing rapidly, particularly after the increase in the renewable energy integration into grids. Renewable energy sources such as wind and solar are faced with issues related to inadequate grid infrastructure, which ESS can help by maintaining grid stability through elimination of intermittent nature of renewable energy sources.
Increasing demand for vehicle electrification
The widespread adoption of electric vehicles (EVs) has led to an increased installation of EV charging stations, and power utilities are playing a key role in electric transportation. EVs release less CO2 than vehicles with internal combustion engine, and many governments set EV targets for 2020 to decrease CO2 emissions from the transportation sector. These targets will result in increased EV production and lead to a change in customer preference for EVs, thus driving installation of EV charging stations across residential and public areas. Taking cognisance of this, a number of utilities are in the process of setting up charging stations so as to be early movers in this space.
Stringent regulatory norms
Power companies are facing rising government interference in energy markets such as policy decisions with respect to renewable support, phase-out plans by various countries after the 2011 Fukushima nuclear disaster, and stringent environmental norms.
Some of the major nuclear power countries revised their long-term energy plans, while many others have introduced stringent norms and safety measures in order to continue with their nuclear development. China has already initiated the process of tackling overcapacity by stringently holding back the construction of new coal-fired power plants. In addition, the European Commission (EC) approved new measures on July 31, 2017 to combat the air pollution from large combustion power plants that account for one-third of the EU countries’ emission of toxic pollutants. The reform comes in the form of Best Available Techniques (BAT) guidelines for thermal power plants of 50MW capacity and above, which number around 3,500 in EU-28. These plants are required to meet the revised emission targets by 2021, based on which permission for carrying out operations will be granted.
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