Five trends to shape the distributed energy resources market through 2050

With distributed renewable energy resources increasingly disrupting utility operations and causing challenges to both traditional and emerging business cases, how are utilities riding the storm?

At Itron Utility Week for Asia Pacific smart city and utility leaders, Alex Beveridge (Itron’s vice president in Southeast and North Asia) and JP Harper (global leader of Distributed Energy Resources products and Strategic Analytics at Itron) discussed key drivers of DER deployment and trends associated with the DER market through 2050.

Distributed energy resources market drivers

To set the scene: There are several ways utilities can integrate more distributed energy resources (DERs) with grid networks while protecting the network and power quality through technology.

One of the key reasons utilities are deploying DERs, despite the safety issues and grid challenges they are causing, is the need to modernise their grid networks in line with emerging and future business models.

Consumers are increasingly becoming aware of sustainability and the environmental, health and economic benefits associated with renewable energy. As such they want their utilities to provide them with cleaner and more affordable energy produced using clean sources.

DERs are also expected to enable energy companies to adhere to decarbonisation and climate mitigation strategies being adopted by governments globally. For instance, US states including Hawaii and California have pledged to become carbon-free by 2045 and as such utility companies operating in the regions are being forced to align their operations with such regulations.

Renewable energy will enable utilities to retire coal plants whilst DER mechanisms such as battery storage, demand response, and vehicle-2-grid will help them to leverage flexibility for the reliability of the network.

There is no doubt that retiring fossil-fueled energy generation will strain the grid since they account for the majority of the capacity used to meet baseload demand. However, DERs are expected to provide utilities with various options to replace the baseload capacity previously sourced from fossil fuels. Consumers with EVs and onsite battery storage systems can store energy during times when renewable energy generation is high and offload the capacity on the main grid when demand is exceeding generation on the main network.

Read more about Itron Utility Week:
Addressing infrastructure pressures in Asia-Pacific
Tips for a successful utility grid modernisation programme
Top six utility benefits for deploying distributed intelligence

Anticipated trends associated with DERs

Based on their experience in the field and their strategic market insights, Beveridge and Harper anticipate five trends:

  1. Distributed renewable energy will continue to grow and increasingly become competitive with traditional supply chains

The growth of distributed renewables is expected to rise sharply owing to continued decreases in the prices of wind and solar products. Moreover, corporate customers are expected to continue renewables commitments resulting in an increase in demand for renewable energy and in the signing of renewable power purchase agreements with developers.

2. Coal generation will continue to decline

To date, more than 16 US states have set clean energy goals and asked their energy providers to shut off coal-fired plants. The number of states is expected to increase and more and more utilities are expected to expand their investments in clean sources such as hydrogen, wind, and solar over the next 20 years.

Overall, US power generation using coal was 28% in 2018, declined to 25% in 2019 and 22% in 2020, demonstrating the focus on decarbonisation.

3. Increased regulatory and financial backing from governments

JP Harper says he anticipates seeing the adoption of more regulatory frameworks supporting incentives for renewable energy and battery storage projects. This has already started to surface with leading international investors such as the European Investment Bank pledging to increase their focus on renewable energy and banning their involvement in coal energy projects. These regulations are also expected to encourage the use and adoption of DERs, for instance, FERC’s Order No. 2222, which enables DERs to participate alongside traditional resources in the regional organised wholesale markets through aggregations, opening US organised wholesale markets to new sources of energy and grid services. 

4. Energy storage and electrification of transport will form key parts of the future grid

There will be more behind- and front-of-the-meter battery storage projects which will increase renewables optimisation, said Harper. The focus within the battery market is expected to shift to long-term duration shortage systems and decrease costs.

In addition, new electric vehicle models are expected to be introduced as automakers shift their business models to electric. As a result, more collaborations between the auto, technology and utility sectors are anticipated with the aim to address inadequate EV charging infrastructure, which is hindering the adoption of EVs. Technology breakthroughs in vehicle-2-grid and vehicle-2-everything are also expected to result from these partnerships, developments which will result in new use cases of EVs on grid networks.

5. A large degree of automation will be seen on the low-voltage energy network

As utilities struggle with the intermittency of renewables, solution providers are expected to come up with new solutions that will provide energy companies with advanced distributed intelligence for grid stability.

The integration of technologies such as advanced metering, distribution and substation automation, volt optimisation, outage management and AI-enabled grid monitoring are expected to help optimise wind generation, distribution and management on utility grid networks.

These technologies are expected to encourage consumer participation in utility projects such as demand response.

Despite focusing on DERs, utilities are also increasing their investments in grid and worker safety, grid planning, rapid response, cybersecurity and renewables integration.

In order to maintain performance, Harper and Beveridge call for utilities to scale up their pace of DER adoption by embracing technology.

“Customers are ready for greater innovation,” reiterated Harper.