2019 Renewable Energy Industry Outlook - Deloitte

2y ago
57 Views
3 Downloads
2.66 MB
12 Pages
Last View : 22d ago
Last Download : 2m ago
Upload by : Gannon Casey
Transcription

2019 renewable energyindustry outlookMy take: Marlene Motyka

2019 renewable energy industry outlookLooking ahead: Strong fundamentalsbolstered by three enabling trends in 2019The fundamental drivers of renewable energy growth in 2018 are poisedto continue in 2019, but we also see three trends coming into sharperfocus that are likely to shape renewable growth in the coming year.In 2018, the US renewable energy sectorremained remarkably resilient, gainingground despite uncertainty about theeffects of federal tax reform legislationand a spate of new import tariffs.Output from utility-scale wind and solar capacity topped8 percent of total US electricity generation through the thirdquarter of 2018, compared with 7 percent for the sameperiod in 2017.1We see the fundamental drivers of this growth poised to continuein 2019, but we also see three trends coming into sharper focusthat are likely to shape renewable growth in the coming year.Those trends include emerging policies that support renewablegrowth, expanding investor interest in the sector, and advancingtechnologies that boost wind and solar energy’s value to the grid,asset owners, and customers.Some of the core fundamentals that drove growth in 2018 weredeclining costs of wind and solar generation, advances in batterystorage technology, and grid operators’ growing expertiseand expanding toolset for integrating intermittent renewablepower into the grid.2 And, perhaps most significant, was robustdemand from most market segments. Utilities demonstrated2strong “voluntary demand,” as opposed to the demand driven bypolicy mandates we’ve seen in the past. Voluntary procurementrepresented 52 percent of utility-scale solar projects indevelopment and 73 percent of projects announced in the firsthalf of 2018.3 This demand was partly driven by corporations’rapidly growing appetite for renewables. As of mid-October2018, corporations had purchased nearly 5 gigawatts (GW) ofrenewables through a variety of procurement routes.4Demand from consumers was also robust in 2018, and thefindings of the Deloitte Resources 2018 Study demonstrate someof the sentiment behind these trends. More than half of allresidential survey respondents (53 percent) indicated that it isextremely or very important to them that part of their electricitysupply come from renewable sources, trending upward since2013.5 And about half (48 percent) of business respondents areworking to procure more electricity from renewable sources.6

2019 renewable energy industry outlookTax and trade policies will likely continue toimpact renewable growthPotentially accelerated project schedules ahead of tax creditphasedowns suggest a favorable outlook for renewable growth in2019, while tariffs could continue to create headwinds.Developers may hasten to begin solar project construction byyear end to qualify for federal tax credits before the investmenttax credit for solar falls from 30 percent to 26 percent and expeditethe in-service dates for wind projects before the production taxcredit for wind phases out entirely in 2020.Federal trade policy will likely continue to create headwinds,specifically the 30 percent import tariff on crystalline-silicon solarcells and modules, and tariffs on imported steel, aluminum, andinverters from China. The solar tariff is scheduled to decline 5percent annually, eventually falling to 15 percent in year four, andmay delay or cancel some projects, particularly utility-scale ones.Steel and aluminum tariffs could increase the levelized cost ofenergy for new US renewable plants by an estimated 3 to 5 percent.7However, exclusions on finished goods and geographic exemptionsfor Mexico and Canada may blunt the overall project cost impact.3

2019 renewable energy industry outlookThree trends likely to shaperenewable growth in 2019Three additional trends appear poised to strengthenrenewable energy growth prospects in 2019: emerging policies,expanding investment interest, and advancing technologies.Emerging policiesNew and renewed policies and initiatives at the local, state, andfederal level will likely boost renewable growth in the coming year,including those listed below.State and local policies likely to promote renewable growthOver the past two decades, nearly 50 percent of US wind and solardevelopment was driven by state mandates, especially renewableportfolio standards (RPS).8 Today, half of the states with RPStargets are poised to reach them by 2021, and several are mullingan increase. A few are even targeting 100 percent renewables.For example, Hawaii set the ball rolling with its “100 percent by2045” target, and California followed its lead with the same goal.Washington, DC and Michigan have also recently been consideringa 100 percent goal. At the same time, several other states suchas Vermont, Massachusetts, Connecticut, and New Jersey, whilestopping short of 100 percent, have significantly increased theirRPS targets.9Recent municipal initiatives are also likely to promote renewablegrowth. For example, as of December 2018, mayors of over 200communities in the United States had adopted goals to transitionto 100 percent renewable energy community-wide no later than2035.10 And programs such as community choice aggregation (CCA),which bring residents, businesses, and municipal accounts togetherto procure energy, are increasingly driving renewable growth andnew business models with community solar developers.11 Put simply,strong demand and renewable development at the state, municipal,and community levels are ushering in growth and opportunities,which may well provide a strong cushion against any potential federaland trade policies impacting competitiveness of renewables.4

2019 renewable energy industry outlookPolicies supporting energy storage also support renewablesState and federal policies are boosting offshore wind growthAs highlighted in Deloitte’s recent report, Supercharged: Challengesand opportunities in global battery storage markets, the pace ofbattery storage product deployment and market developmentis accelerating.12 Falling costs and maturing technology aremultiplying opportunities to add value to renewables by combiningthem with energy storage and helping them to compete withconventional technologies. In fact, a solar-plus-storage project outbida natural-gas peaking plant in February 2018 to provide peakingservices in Arizona.13Falling costs, commercial success in Europe, and opportunisticbuying by European developers have set the stage for offshorewind growth in the United States. Combine that with supportivefederal and state policies, and we may finally be on our way toseeing sustained growth in the US offshore wind industry.16Federal and state policies are also supporting battery storagedevelopment, which adds value to renewables and promotesfurther growth. In February 2018, the Federal Energy RegulatoryCommission finalized order 841, which requires grid operatorsto remove barriers hindering participation of electric storageresources in the capacity, energy, and ancillary services markets.14Similarly, state-level policies—such as energy storage mandates,financial incentives, and incorporation of storage into long-termresource planning mechanisms—are providing a strong base forbattery storage deployment.15 Across many states, policy makersare designing new rates (tiered and time-of-use) to drive solar-plusstorage growth, the way net metering drove distributed solar in thepast. But, given battery storage’s versatile use across the electricityvalue chain, its long-term sustained development may requiregreater coordination of federal and state policies.In April 2018, the US Department of the Interior announced majorlease sales off Massachusetts, sought input on potential lease areasin New York and New Jersey, and began an assessment of Atlanticcoast waters for wind energy potential.17 And on the West Coast,the administration is opening the door to offshore wind energydevelopment on the California coast for the first time.18 At the statelevel, several East Coast state legislatures are working to facilitatedevelopment of offshore wind and have instituted goals specificto offshore wind.195

2019 renewable energy industry outlookExpanding investmentRenewable procurement and project investment is expandingamong current buyers and spreading to new groups suchas smaller companies, oil and gas companies, and assetmanagement firms.Corporate renewable procurement expands tosmaller companiesCorporations are continuing to procure increasing volumesof renewable energy, driven by sustainability goals and a growingvariety of procurement options. As of early December 2018, 156corporations across the globe, including many headquarteredin the United States, had committed to achieving 100 percentrenewable power as part of the RE100 campaign.20 To date, 23green tariffs in 17 states have been proposed or approved tofacilitate US corporate renewable procurement.21 That may havecontributed to the record-breaking 4.96 GW of wind and solarcapacity US corporate buyers purchased in the first 10 monthsof 2018. And that number excludes on-site renewable generationcapacity, another notable way that corporations are pursuingtheir renewable energy goals.22As corporate procurement expands, smaller companies arebeginning to enter the renewable market, with support fromestablished corporate buyers such as those in the technologysector. Larger companies are joining with smaller companies todevelop new wind and solar projects.23 One global technologygiant designed a procurement instrument to reduce weatherrelated risks from renewables, making them a safer investmentfor “small” corporate buyers.24 And some large corporations have6also started imposing sustainability standards on their supplychain participants, a trend that brings more companies into themarket and is expected to grow in the future.25Oil and gas players are showing fresh interest in renewablesClimate change, corporate social responsibility, falling renewablecosts, and the drive to diversify have renewed many oil and gascompanies’ interest in the renewable energy sector. Severalcompanies have increased renewable investing in the last twoyears, including investment in wind and solar energy projects andcompanies.26 Royal Dutch Shell, for example, allocates 1-2 billionannually to new energy solutions and acquired a 44 percent stakein solar developer Silicon Ranch,27 following earlier investmentsby BP in Lightsource and Total S.A. in SunPower.28 Oil majors mayalso find opportunities in areas where their expertise can helpthem succeed, such as offshore wind and ultra-large tenders forsolar PV.29Asset management companies collect renewableenergy portfoliosAsset managers have started compiling portfolios of distributedcommercial and industrial renewable projects, as well ascommunity renewable projects. These portfolio projects providean opportunity to manage transaction costs thus allowing themto increase the size of investments. Goldman Sachs, for example,acquired a portfolio consisting of 76 distributed solar energyprojects across 143 sites with a total capacity of 204 megawatts(MW).30 In another transaction, Massachusetts-based BlueWaveSolar sold a portfolio of community solar projects with acombined capacity of 24 MW to Goldman Sachs.31

2019 renewable energy industry outlookAdvancing technologiesAccelerating deployment of renewables across the electricityvalue chain offers unique opportunities to revisit gridinfrastructure and manage household energy usage. As partof this effort, digital solutions for forecasting renewable energyoutput, optimizing grid integration benefits, and influencingsmart home investments have been developed and are nowwidespread with proven ROI. Looking forward, new digitalapplications that could promote or facilitate renewable growthare emerging across the electricity value chain. Many of theseare at the distribution level or even behind the meter—suchas enabling peer-to-peer renewable energy trading, trackingthe provenance of renewable energy certificates, or paying forelectric vehicle charging through blockchain technology. Forexample, Australia’s GreenSync launched the DecentralizedEnergy Exchange (deX), a digital marketplace that, in additionto supporting the grid, connects millions of distributed energyresources to existing markets.32As solar-plus-storage installations gain traction, softwareplatforms that enable aggregators to pool these resources anduse them to offer grid support services in wholesale marketswill likely gain popularity as well. Companies like Sunrun offera comprehensive energy software platform that incorporatessolar, storage, and home energy management systems. They areworking with utilities and organized energy markets to determinehow these assets can be aggregated to provide ancillary servicesto support the grid.33Unlike previous renewable sector innovations based largely onmaterial and design improvements, these innovations enablethe renewable sector to open new business and revenue modelsbased on integrated data and platform analytics. Developers canbuild end-to-end renewable analytics-based platforms that canenable optimization of grid assets, and they can partner withutilities to provide customized services to customers.7

2019 renewable energy industry outlookIn sum, strong fundamentals, emerging policies, an expandinginvestment community, and advancing technologies will likelyunderpin US renewable energy growth in 2019.Increasing customer demand for renewable energy across almostall market segments continues to expand opportunities. While thecurrent US administration is not focused on decarbonization, states,cities, communities, and businesses with increasingly ambitioussustainability goals are driving renewable growth. Market developmentssuch as the entry of smaller corporations into the corporate procurementmarket, renewed interest from oil and gas players, and greaterinvolvement of asset management companies offer new opportunitiesfor renewable growth.The supply side is buoyed by multiple factors beyond technologicaladvances. Renewable energy costs continue to fall, and grid operatorshave an increasing array of tools and the experience to integrate greatervolumes of renewables on the grid. In addition, federal policy on offshorewind and state actions on several fronts will likely stimulate renewabledemand in the short term.Finally, as digital solutions developed for the renewable industry spreadacross the electricity value chain, renewables are at the vanguard oftechnology innovation that can open new revenue and business modelsin the electricity sector.8

2019 renewable energy industry outlookLet’s talkMarlene MotykaUS and Global Renewable Energy LeaderDeloitte Transactions and BusinessAnalytics LLPmmotyka@deloitte.com 1 973 602 5691@MarleneMMotykaMarlene serves as the US and Global Renewable Energy leader for Deloitte and is a principal in theFinancial Advisory practice of Deloitte Transactions and Business Analytics LLP. In her role as USRenewable Energy leader, she steers Deloitte’s overall delivery of a broad range of cross-spectrumprofessional services to renewable energy companies and those who invest in renewable energy.In addition, for over twenty years, Marlene has supervised and performed financial analyses andvaluations in the power and utilities and renewables sectors.9

2019 renewable energy industry outlookEndnotes1.U.S. Energy Information Administration, Electric Power Monthly, release date: October 24,2018, accessed October 2018.2.Mike Scott, “Power Shift: Anything Coal and Gas Can Do, Renewables and Energy Storage Can Do Cheaper,” Forbes, April 3,2018, s-andenergy-storage-can-do-cheaper/#5f78336a300b, accessed October 2018.3.Ibid.4.Business Renewables Center, Corporate Renewable Deals 2013–2018 YTD, 018/10/DealTracker10.17.18-1.png, accessed December 2018.5.Deloitte Center for Energy Solutions, Deloitte Resources 2018 Study: Energy management: Businesses drive and householdsstrive, 2018, p. 6–7, articles/4568 Resource-survey-2018/DI DeloitteResources-2018-survey.pdf, accessed October 2018.6.Ibid., p. 28.7.Julia Pyper, “Trump’s steel, aluminum tariffs create ‘another headache’ for renewables,” Greentech Media, March 8, g1RU, accessedNovember 2018.8.Galen Barbose, “U.S. Renewables Portfolio Standards 2017 Annual Status Report,” Lawrence Berkeley National Laboratory,July 2017, l-rps-summary-report.pdf, accessed October 2018.9.RRA Regulatory Focus, Themes in US energy utility markets and regulation, S&P Global Market Intelligence, April 2018.10. Sierra Club, “Mayors for 100% Clean Energy,” r-clean-energy,accessed December 2018.11. Deanne Barrow, “Community choice aggregators and community solar,” Norton Rose Fulbright, April 10, ndcommunity-solar, accessed October 2018.12. Deloitte Center for Energy Solutions, Supercharged: Challenges and opportunities in global battery storage markets,2018 unitiesglobal-battery-storage-markets.pdf, accessed October 2018.13. Julian Spector, “First Solar made good on its promise to beat out gas peakers with solar and batteries,” Greentech Media,February 13,2018, e-sun#gs.ybwUzXM, accessed October 2018.14. U.S. Energy Information Administration, U.S. battery storage market trends, May ity/batterystorage/pdf/battery storage.pdf, accessed October 2018.15. Robert Walton, “Colorado integrates storage into utility planning process,” Utility Dive, June 5, 2018, es-storage-into-utility-planning-process/524939/, accessed October 2018.16. Michael P. Norton, “Orsted acquiring Deepwater Wind 510M deal,” State House News Service, Gloucester Daily Times, October8, 2018, https://www.gloucestertimes.com/news/local e cd0b60a080b2-5a89-a3bb-23836fcf5753.html, accessed October 2018.17. Paul Dvorak, “President Trump’s Interior Dept. charts big future for offshore wind,” September 7, 2018, WindpowerEngineering & Development, r-offshore-wind/, accessed October 2018.18. Guy Kovner, “Trump administration opens California coast to wind power projects,” The Press Democrat,October 19, 2018, mp-administration-opens-california-coast,accessed October 2018.10

2019 renewable energy industry outlook19. American Wind Energy Association, Vast US market for offshore wind comes into focus” (press release), February 2, focus, accessedOctober 2018; Jason Deign, “US offshore wind opportunities in 2018,” offshoreWIND.biz, April 12, fshore-wind-opportunities-in-2018/, accessed October 2018.20. RE100, Companies page, http://there100.org/companies, accessed December 2018.21. Priya Barua And Celina Bonugli, “Emerging Green Tariffs In U.S. Regulated Electricity Markets,” World Resources Institute,October, 2018, s 1.pdf? ga 2.1066

2019 renewable energy industry outlook Three trends likely to shape renewable growth in 2019 Emerging policies New and renewed policies and initiatives at the local, state, and federal level will likely boost renewable growth in the coming year, including those listed below. State and local policies likely to promote renewable growth

Related Documents:

Outlook 2013, Outlook 2016, or volume-licensed versions of Outlook 2019 Support for Outlook 2013, 2016, and volume-licensed versions of Outlook 2019 ends in December 2021. To continue using the Outlook integration after the end of 2021, make plans now to upgrade to the latest versions of Outlook and Windows. Outlook on the web

renewable resources (renewable energy) and sets the FiT rate. The DLs will pay for renewable energy supplied to the electricity grid for a specific duration. By guaranteeing access to the grid and setting a favourable price per unit of renewable energy, the FiT mechanism would ensure that renewable energy becomes a viable and sound long-term

4.0 Renewable Energy Market 4.1 Policy Framework for renewable energy 4.1.1 Policies and Strategies for Renewable Energy Promotion 4.1.2 Main actors 4.1.3 Regulatory Framework 4.1.4 Licensing Procedures for Renewable Energy 4.1.5 Feed-in-Tariff 4.2 Business Opportunities and Potentials of Renewable Energy Sources 4.2.1 Bioenergy 4.2.2 Solar energy

The EU's renewable energy policy framework 5 - 9 Renewable energy support schemes 10 - 12 Renewable energy within the EU's rural development policy framework 13 - 17 Audit scope and approach 18 - 22 Observations 23 - 82 The EU's renewable energy policy framework could better exploit the opportunities of renewable energy deployment in .

1. FOUNDATIONS OF RENEWABLE ENERGY TARGETS 14 1.1 Overview of renewable energy targets at the global level 14 1.2. Brief history of renewable energy targets 17 1.3. Key aspects and definition of renewable energy targets 22 1.4. Theoretical foundations of targets 28 2. MAIN FUNCTIONS AND BASIS FOR RENEWABLE ENERGY TARGETS 31 2.1.

renewable energy sources. The Government has set a very ambitious target of adding 175 GW of renewable energy by 20226. While this is a recent policy announcement, it would be pertinent to highlight the progress of renewable energy sources over the last two decades. The following graph depicts the journey of renewable energy

NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC. Renewable Energy Certificate (REC) Tracking Systems: Costs & Verification Issues . Jenny Heeter, Renewable Energy Analyst . National Renewable Energy Laboratory . October 11, 2013

Academic literary criticism prior to the rise of “New Criticism” in the United States tended to practice traditional literary history: tracking influence, establishing the canon of major writers in the literary periods, and clarifying historical context and allusions within the text. Literary biography was and still is an important interpretive method in and out of the academy; versions of .