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Looking ahead to 2020 in the clean, decentralized, flexible power market

Blog post   •   Dec 19, 2019 09:30 GMT

Looking ahead to 2020 in the clean, decentralized, flexible power market

With many significant developments in the climate and clean energy domain in 2019 and with the clear onward march towards a renewable and decentralized electrical power system we look forward to more in 2020. We share our predictions for the energy system in 2020 with a focus on clean, distributed, smart, flexible energy.

Science & Policy

We expect much more clarity of communication and impact from climate science as well as lived experience and observation on climate change effects. There are likely to be many more climate emergency declarations, 100% renewables policies enacted, more ‘net-zero targets’ setting and rolling forward of timelines to reflect the urgency. The conversation is already turning to specific policies that actually reduce carbon emissions and we expect to see more concrete policies and plans for net zero in 2020.

Regulation

We expect regulators to respond to the science and policy landscape through energy market and energy system regulatory mechanisms that progress the low carbon market and tilt the sector further towards a preference and readiness for clean energy. The value of customer participation, self-production and flexibility are likely to be continuing areas of growth, balanced by the need for all customers to pay for the grid and its decarbonization. Regulators will start to get out in front of the climate agenda, reflect the technical advances, opportunities and system changes while incentivizing utility business model changes and the adoption of competitive, non-wires solutions to the many network capacity issues arising from the electrification of heat and transport and the continued connection of renewable energy sources.

Customers

With the wider citizenry being more climate aware and motivated, we expect more innovative customer value propositions from energy and network companies and a greater customer receptiveness. This will include for those wishing a holistic approach to their energy needs.

Technology

We accept the view that many of the energy and system technologies needed for the energy transition are already technologically mature (e.g. energy storage, EVs, flexibility management) or heading that way (electric heating, marine techs, hydrogen). Many of these technologies need to make the jump to commercial solutions to enable implementation at scale (e.g. end-to-end supply chain, productization, and value engineering) while others need effective system integration to the complexities of the electricity system and market. We anticipate plenty more ‘first of type’ technology, hybrid, integration, and commercial implementations through 2020.

Systems & Business Models

To deliver an energy system at least as good as today’s in terms of cost and performance there needs to be more coordination and co-optimization of the many new clean energy technologies, customers, the grid and markets. We expect to see many more deployments of ‘connected’ energy solutions in 2020 including: renewable energy generation, electrified vehicle transport, marine transport, space/water/process heat and other flexibilities from customers – each of these connected through new grid edge capabilities including home hubs, smart inverters, behind the meter aggregation in the cloud, Virtual Power Plant (VPPs) and DER management systems.

We also expect to see the hybridization of technologies in 2020 such as wind/storage, PV/storage, and PV/EV and more solutions to integrate these to grid and market at different scales. Business model innovation should continue from service providers and the supply chain (e.g. as a service, data-focused, flexible licensing and leasing) as well as from customers with some clarity on where low carbon, flexibility value is created and how it needs to be managed.

Finance & Investment

2020 should see a further significant step up in investment finance for clean energy assets and other clean tech, with a clear manifestation in the onward rise of renewable energy capacity and associated operational, market and system integration solutions. The underlying economics and investor sentiment towards fossil fuels and fossil-fired electricity generation will continue to divert investment dollars towards clean sources.

New Players & Entrants

We expect to see greater prominence for new and emerging participants in electricity supply chains as well as direct market participants including EV provision, EV charging, energy storage, behind the meter aggregation, flexibility service providers, hybrid on-site energy solutions and heating & cooling (service) solutions. This will start to have a profound effect on the nature of clean, decentralized energy systems and on the wider system as the electricity sector starts to break away from its past roots with a whole new set of stakeholders and active participants.

The Coming Decade

As we also transition to a new decade in 2020, we can now see many of the effects of the past decade of innovation, policy, regulation, and investment in the clean energy transition. At the same time, these changes seem to be only a starting point for the complete decarbonization of energy with the accompanying creation of a smarter, more flexible and more decentralized, customer-focused energy system. The coming decade will likely see enormous changes in the structure and experience of clean energy with a major shift from a select few markets to all corners of the world and a holistic, integrated and ever more urgent system transition.

Smarter Grid Solutions in 2020

At Smarter Grid Solutions we are pleased to play our role in the clean energy transition and look forward to further cutting-edge developments and applications for our world-leading Distributed Energy Resources Management System (DERMS) technology. We will be working hard to integrate our utility, energy asset, municipal and community operator customers’ 1GW pipeline of clean energy assets to their power grids and markets across the world. We also see new opportunities from the trends and predictions set out above and look forward to working with our customers and partners to grow and use our technology and capabilities to deliver their clean energy goals and the ambitions of stakeholders in each of our active marketplaces.

The Smarter Grid Solutions Executive Team