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Solar, Wind, Storage Becoming ‘Default Choice’ for U.S. Utilities

A new analysis is pointing toward monumental shifts in U.S. electricity generation markets, with renewable energy and energy storage becoming the “default choice” in regions that were previously dependent on natural gas.

At an event earlier this month in Austin, Texas, Prajit Ghosh, head of global strategy at Wood Mackenzie Power and Renewables, said a trend that began in California as early as 2006 is now showing up in regional markets like Texas, North Carolina, and the 13 northeastern states plus the District of Columbia served by the PJM regional transmission organization, described by Greentech Media as “the cradle of natural gas”.

“Really, in the last two years, it’s all solar, wind and storage. There’s no gas,” Ghosh told conference participants. “We know that story.”

The shift is now extending into markets” that need gas, especially where there’s a lot of coal,” Ghosh added. “It seems like even those markets—PJM, the home country of gas—even there, a lot of gas is being replaced by renewables. It’s a reasonable question to ask: Are we already in this new paradigm where solar, storage, and wind are the default choice?”

Many energy insiders, and certainly the current U.S. federal administration, “would likely answer that question with a no,” Greentech notes. And the U.S. Energy Information Administration recently pointed to an increase in natural gas capacity between 2013 and 2017.

But “while low-cost natural gas has pushed out coal capacity, renewables have begun to compete on price, as well. Utility requests for proposals that incorporate more renewables and increased investments from oil majors show that even the biggest incumbents are beginning to reckon with the clean energy transition.”

The industry publication notes that some fossils’ recent acquisitions of distributed energy companies “may help companies more quickly pivot when the transition picks up,” with Ghosh suggesting the future could belong to companies that are looking ahead.

“It’s important to keep in mind that when you’re investing in a transition market, it’s like hopping on a moving train. It keeps moving,” he said. “What you have to do is anticipate what the next piece of change will be.”

But to get the transition done, “the industry must tackle the structure of power markets to ensure renewables aren’t snagged in market rules and regulations built for a conventional supply that doesn’t include them,” writes Greentech reporter Emma Foehringer Merchant.

“You’re putting new technologies over an existing system. The way this market is designed is not made for renewables,” Ghosh said. “We’re at the stage now where we need to seriously think about what these power markets of tomorrow will look like.”

Because, ultimately, “you can call it evolution—you can call it industrial revolution,” he told the conference. “When a revolution happens, everything sort of revolves around it. How quickly it happens depends on all the things we are worrying about today.”

Read more: theenergymix.com