Shifts, changes and trends in electricity generation have impacted all walks of life and has transformed how we access healthcare, revolutionized the telecom industry and reshaped how we think of transportation. It’s also transforming the century-old electricity markets and offering customers the power of choice. These trends are driving an increase in the adoption of distributed generation over traditional centralized generation.
Today’s electricity markets look very different compared to the markets of just a few decades ago. To better understand this shift, we explore the major trends that are driving this transformation and how their outcomes create an environment favoring distributed generation.
Historically, fossil fuels, nuclear and hydro were the primary components of society’s energy supply mix. In recent years, increased focus on de-carbonisation has resulted in wind and solar accounting for more than half of new power generation capacity additions. Moreover, it is expected that more than 50% of power generation will be renewable (including hydro) by the year 2035. This increasing focus on de-carbonisation results in changes to energy supply mix.
There is an increased use of electric vehicles (EVs) on our roads. We use more appliances and cooling equipment in our buildings. We use more hybrid boats on our seas. In summary, we are using more electricity and expected to increase electricity’s share in our total final energy consumption. This increased use of electrification results in changes to electricity demand patterns.
Electric power infrastructure is getting digitalised end-to-end. For instance, consumers experience this digitisation in the form of smart meters. On the supply side, utilities take advantage of digitisation through energy management systems utilising economic or market-based constructs in managing the generation, consumption or flow of electric power. This increased digitisation of electric power infrastructure results in monetisation opportunities for customers.
Recent technological advancements have reduced costs on generation and storage solutions. Both solar and wind generation are now near or at subsidy free levels. For storage, levelised cost of storage for lithium-ion has decreased 80% in 10 years, making it economically viable for more applications and users. These cost reductions driven by advancing technologies result in increased customer adoption of Distributed Energy Resources (DERs).