04 26, 2023

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From technologies like solar photovoltaics (PV) and electric vehicles (EVs) to customized contracts like virtual power purchase agreements (VPPAs), the demand for clean energy solutions is rising

Global power demand has been growing as electrification and living standards continue to rise and is expected to triple by 2050. At the same time, a combination of crises and government policies – key trends shaping the energy landscape in 2023 – is catalyzing the transition to clean energy. Clean energy technologies have already become cost-competitive over the last decade. Now, economic benefits made available by the Inflation Reduction Act in the United States, as well as growing stakeholder pressure on organizations to meet sustainability targets, are driving further demand for clean energy technologies. 

Organizations are increasingly turning to clean electricity to power their operations. According to American Clean Power’s 2022 report, clean energy procurement by U.S. corporations has increased rapidly over the past decade. In 2022, corporate buyers announced a record 19.6 GW of clean power purchases, more than 4 GW higher than any previous year. With many organizations setting ambitious clean energy and sustainability targets, power purchase agreements remain among the most popular renewable energy solutions used to achieve them. 

About 500 gigawatts (GW) of solar and wind will come online between 2023 and 2030 in the United States, according to BloombergNEF projections. This massive buildout will be accompanied by investments in energy resilience solutions and will proceed despite challenges, such as permitting and grid connections.

Growth in clean energy capacity will require energy storage for reliability

The expanding demand for clean electricity will need to align with a growing need for grid reliability. The grid in the United States is outdated and was not designed for the diverse portfolio of energy sources, like wind and solar, that are integrating into the mix. Operating the grid responsibly will require incorporating technologies that complement one another. Technologies like energy storage can provide grid reliability measures while supporting the expansion of clean energy.

BloombergNEF is projecting that energy storage installation worldwide will reach 411 GW by the end of 2030 – 15 times the 27 GW of storage online at the end of 2021. The reason behind this massive growth projection is that decarbonizing the grid requires thousands of megawatts of baseload resources that run continuously for an extended period – such as coal, nuclear, or natural gas – to be replaced with resources like wind and solar. The switch will necessitate a widespread deployment of energy storage. This technology complements and optimizes renewables while ensuring the grid can keep energy supply and demand in balance. 

Energy storage comes in many forms, including electrochemical systems like lithium-ion batteries, chemical systems like hydrogen storage, mechanical systems like pumped hydro storage, and thermal systems. Whatever form it may take, energy storage will play a critical role in balancing electricity supply and demand on the grid:

  • Energy market services: Energy storage systems, because of their fast response capabilities, can provide various energy flexibility services to ISOs and RTOs. These services include energy arbitrage, ancillary services, voltage support, and black start capabilities. 
  • Utility services: Energy storage systems can also substitute for the need for expensive infrastructure upgrades, through services like distribution and transmission investment deferral, congestion relief, and providing for local resource adequacy. 
  • Customer services: Finally, when sited behind the meter, energy storage can help energy users manage when and how they use power, leading to bill savings from time-of-use bill management, demand charge reduction, and when applicable, increased solar self-consumption. There’s also a growing need for on-site backup power, which batteries, when paired with backup controls, can serve to provide.

Structural constraints may threaten the clean energy buildout but will be offset by favorable economics and demand from organizations

Despite unprecedented momentum for clean electricity expansion, many factors, such as long interconnection queues, congested transmission systems, and permitting delays can limit deployment. The interconnection application process is already slow and is getting slower. According to the Berkeley Lawrence Lab’s report, the amount of new electric capacity in interconnection queues has been growing dramatically. Over 1,400 GW of total generation and storage capacity is now seeking connection to the grid. 

The transmission system needs to be fixed and built out in many states to accommodate renewable energy sources and energy storage. However, the transmission planning process is outdated and can restrict renewable energy development across the country. Project permitting is governed by a patchwork of state and local regulations. Coupled with a rise in politically motivated bans on renewable energy development, it may slow down the ramp up of clean energy production in the United States. 

What does this mean for organizations investing in clean energy solutions?

Renewable energy technologies and energy storage provide clear value to organizations and the grid. They enable organizations to decarbonize and reduce energy costs while boosting the grid’s reliability. However, interconnection, permitting and transmission challenges are causing implementation delays. As a result, organizations considering these technologies must plan ahead and begin their journey sooner rather than later to avoid long wait times. An energy partner is essential to helping organizations navigate this dynamic environment, determining the right timing and technologies to implement, and maximizing value from these complex assets.

To learn more about how the demand for clean energy technologies and other key energy trends will impact your organization’s energy strategy in the years ahead, read our eBook, Top 5 Energy Trends in 2023.

Learn more about advancing your energy strategy by leveraging our integrated energy solutions.