The power sector is going through significant changes. GlobalData, a leading research and analytics company, looks at the key trends that will shape the industry in 2020, ranging from electric vehicles (EVs) to corporate power purchase agreements (PPAs).
The adoption of electric vehicles has been increasingly growing in the last few years and is set to continue. International Energy Agency (IEA) data show that the global electric vehicle fleet reached over 5.1 million in 2018 and is expected to grow to approximately 130 million by 2030.
Governments across the world are setting EV deployment targets, encouraging industry stakeholders to invest across the EV supply chain. Large power utilities such as EDF, E.ON and Enel in Europe have been investing in the EV charging station infrastructure. This market is also witnessing consolidation and this trend that is expected to continue.
Increasingly, power utilities are collaborating with EV manufacturers to boost their offering in areas such as EV charging, vehicle-to-grid (V2G) services, energy storage and renewable energy sources. Oil majors such as Shell, BP and Total are also placing huge bets in the market through acquisitions.
Power utilities, which traditionally are opposed to the adoption of new technologies, are now realising their benefits and heavily investing in them. An emerging technology trends survey conducted by GlobalData reveals that cybersecurity, big data, cloud computing, robotics and the Internet of Things (IoT) are being seen as the top five technologies that will have the maximum impact on the sector over the next three years.
Cybersecurity is receiving the maximum attention from power companies to protect grids from cyberattacks. Power utilities have realised the crippling effect that cybersecurity issues can have on the grid and are willing to heavily invest to guarantee protection.
With an increasing amount of data coming out of the customers’ meters, utilities are focusing on data analytics for load forecasting, generation planning, managing peaks and increasing customer energy efficiency awareness.
Big data and cloud computing are useful tools that support these initiatives. Cloud models are helping utilities to lower their IT CapEx and offer unlimited computing and advanced analytics. IoT is helping power companies to remotely monitor and manage their assets. Using IoT, utilities can also conduct predictive asset maintenance.
Grid-scale battery storage
Energy storage installation among end-users (renewable energy generators, grid operators and distributed generation) is expected to witness larger growth due to smart grid development. The battery energy storage system (BESS) market that had an estimated capacity of 4.9GW in 2018, which is expected to reach 22.2GW by 2023, according to GlobalData.
The financial aspect of energy storage in a wide range of applications and the falling system cost would likely result in the rapid growth of battery energy storage solutions. Lithium-ion (Li-ion) batteries are emerging as crucial for energy storage. The increasing growth of EVs resulted in lithium-ion technology development and a steady decline in lithium-based battery cost.
Several energy storage projects in the pipeline have been accelerated by incentive programmes. The deployment is expected to grow as a large number of countries are opting for storage utilisation to support their power sector transformation.
The US introduced multiple bills and policies related to energy storage. The country has comprehensive incentive programmes, supporting battery utilisation for energy storage. India published a national energy storage mission, outlining the country’s ambition to become a market leader in battery manufacturing. Similarly, China and Germany are exploring opportunities to invest in the growing battery market.
The microgrid demand in the power sector continues to grow, driven by the need for resiliency, energy security and remote area electrification. In 2019, a number of microgrid projects were announced by companies across the world. Utilities such as Duke Energy, EDF, Engie and AusNet have also been involved in the microgrid project development.
The microgrid project scale has been increasing with projects as large as the 100MW Armonia Microgrid in Palau being developed. Policy developments have been encouraging. Hawaii in the US has become the first state to initiate microgrid tariffs, which are fees to be paid for microgrid services. California is also following close behind and planning to introduce legislation to move in the same direction.
Large corporations are increasingly signing PPAs with power generator companies to meet their power requirements. Most PPAs are signed with renewable energy generators, enabling them to increase the renewable energy share in their total consumption.
Companies such as Google, Amazon, Facebook and Microsoft continued to sign PPAs during 2019. This trend is expected to continue in the future as expanding data centre market is increasing its power requirements. Major retailers such as Tesco and Walmart also signed a number of PPAs in 2019.
The rise in corporate PPAs is also fuelled by the fact that as governments across countries are withdrawing feed-in-tariffs (FITs) and other incentives for wind and solar power and moving towards auction mechanisms, corporate PPAs offer developers an opportunity to sell their power profitably.