Predictions for 2022: The year ahead

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Areti Ntaradimou and Nicholas Nhede collected insights from industry experts about the year ahead.

What are their predictions for 2022?

Which technologies will see widespread adoption?

What new trends will disrupt the energy market and what changes are likely to continue?

Pritil Gunjan, Associate Director, Guidehouse

In 2022, decarbonisation will be on everyone’s priority list – corporates, institutions and the industrial clusters. The sentiment around meeting emission targets and climate change will continue to drive net-zero ambitions and collaborations across energy stakeholders.

Digitisation will play a critical role to ensure grid resilience and in building smarter and cleaner energy ecosystems where both distributed energy resources (DERs) and centralised generation technology will operate in harmony.

Energy efficiency measures and initiatives will be increasingly important in optimising demand and supply of clean energy applications and reducing energy intensity across customer groups.

Renewable energy technologies will have an accelerating run; and we will also see alternate/low carbon fuels such as hydrogen and renewable natural gas becoming an integral part of decarbonisation efforts. Electric vehicles and energy storage will become increasingly accessible as they evolve across the technology learning curves.

Virtual power plants will become a critical solution to integrate and aggregate DERs on the grid. Key technologies to watch out for: hybrid solar/wind+storage systems, fleet electrification, hydrogen generators and virtual power plants!

Virtualisation and application of more sophisticated digital enablers across the upstream energy value chain, such as analytics, robotics, digital twins, etc., will disrupt the sector. Sector coupling and integration across power-transportation industrial will need more sophisticated business models and application of best practices. Supply chain disruptions will create a need for more local sourcing strategies.

In 2022, fossil plant retirements will continue. The same goes for the legislative push to decarbonisation and ESG policies, grid modernisations and resiliency efforts; and the grid integration and solution flexibility between DERs/renewable energy generation and distribution systems will continue.

Ben Gardner, President of research firm Northeast Group

In 2022 we will see both continued progress on the future path of our energy and infrastructure systems and also some ‘back to the future’ elements as well. Continued progress will be seen in the accelerating growth of renewable generation, smart infrastructure investment to accommodate these renewables, and many positive steps towards a low carbon future.

The ‘back to future’ elements can be seen in the potential re-emergence of stimulus funds devoted to smart grid infrastructure and flexibility investments, especially in the US market.

The proposed bipartisan infrastructure bill in the US will support robust investment in the nation’s power grid with some $73 billion in funds. Part of the bill includes rebooting the Smart Grid Investment Grant programme that was first launched in the wake of the financial crisis more than a decade ago.

The current version would see $3 billion in grants plus another $3 billion in matching ratepayer funds to invest in smart grid infrastructure and other measures to enhance grid flexibility. Other smart infrastructure components of the infrastructure bill include $7.5 billion for EV charging infrastructure and some $500 million in funding for intelligent transportation systems.

These are all positives for the US as it seeks to boost investment in smart infrastructure to improve the efficiency and flexibility of its energy and transportation systems. Outside of the US, we see similar continued investment in smart infrastructure, renewables and low carbon technologies. But the pace of this investment needs to accelerate to meet ambitious low carbon goals while ensuring grid reliability.

At the same time, we will also see several headwinds throughout 2022. Unfortunately, supply chain pressures will continue to be a drag on the smart infrastructure sector. Chip and component shortages will lead to some delays and rising prices.

Elsewhere, in some of the niche segments Northeast Group covers, 2022 will see continued investment. Many will be surprised to learn that the smart street lighting market has nearly 20 million endpoints that are part of projects either currently underway or in the advanced planning stages. It is the foundational layer of the smart cities market and will continue to see strong investment in 2022 and beyond.

Roberto Castiglioni, Co-Founder & CEO, Ikigai Group

I think hydrogen and carbon capture will leap ahead in 2022. In addition, given what is happening with petrol in the UK, I won’t be surprised if EV sales enjoy a massive hike and all the infrastructure that comes with EV deployment. I also think storage will continue with its steady rollout across Europe.

More EVs will penetrate the market so infrastructure for EV charging will be increasing across Europe. I don’t think hydrogen will be at its tipping point in 2022, as there’s still a lot to be done on the upstream, storage and downstream infrastructure. Other forms of fuel are becoming more common, with biomethane and CNG being adopted for medium-sized trucks.

Biomethane is a growing trend that we’re witnessing in transport with investment across the value chain with consolidation of players. Digitisation of the industry is still in its infancy; so many digital applications are not yet being adopted so we hope to see more digital solutions being introduced across the industry.

Electrification of transport will continue to be one of the main drivers of the energy transition and it will have a massive impact on the grids around Europe. We also see an increase in decarbonisation of the industry with more sectors always looking for sustainable solutions to achieve their net-zero objectives.

Mark Copley, CEO European Federation of Energy Traders (EFET)

In 2022, I hope we will see good progress in further decarbonising our economy following a successful COP26, with the Fit for 55 package moving through the legislative process. I’m particularly keen to see proposals to extend the ETS to other sectors, such as transport, taking shape – because I see carbon pricing as central to a market based approach to decarbonisation. I worry, however, that concerns about the high energy prices will see energy further politicised, with investor confidence and market functioning negatively affected.

EFET is technologically neutral – so our focus is on creating the markets that allow efficient investments to come forward. However, personally, I would hope the demand side of the market develops further. I hope that the rises in prices during 2021 promote a wave of innovation – particularly in technologies which aggregate demand or small-scale generation and help customers shift consumption. I also hope that it is not regulatory or political decision making that causes the disruption.

We will continue to see a lot of volatility in electricity markets, with the weather being a big determinant of the price. I think we will see prices in auctions for renewable subsidies falling further. Energy prices will remain a political hot potato.

Håkan Ludvigson, CEO of customer engagement solutions firm Eliq

In 2022, the electrification of everything will continue apace and, like Tesla and IKEA in 2021, we will see more companies such as these with strong brands and deep customer relationships start offering energy to customers, causing significant disruption across the value chain.

Driven by this market shift, and rising public support for fighting climate change, 2022 will see energy providers move the focus of their innovation efforts in new products and services from early adopters to their broader customer base, to help consumers faster decarbonise their energy usage and speed up the energy transition.

Incumbent energy providers will continue to look to move away from kWh plus margin into energy-related services, in a drive to increase in non-commodity revenues and margin.

As energy providers are moving to establish themselves as broader energy solutions providers, we will see a battle for the customer play out between traditional energy providers, technology companies and retailers, determining how customers will buy technology and services for heating, microgeneration, e-mobility and flexibility – and to whom they will turn. Much of this battle will play out on customer’s phones and 2022 will continue to see an ecosystem to support developers of energy applications take shape alongside end-to-end solutions.

Jonathan Robinson, Global Director of Frost & Sullivan’s Energy & Environment Insights team

I think the COVID-19 rebound in demand will continue to influence the market, so raw material and supply chain issues are likely to persist into 2022. This will mean that whilst demand for renewables continues to be strong, the number of projects will be slightly lower than would have been previously forecast.

Decarbonisation will continue to be a big theme, with COP26 giving this a further boost. I think there will be a focus on emissions throughout the supply chain – so corporates will be looking for solutions that can reduce emissions across their production, not just the end of pipeline. Higher energy costs will further boost demand for decentralised assets, and also solutions that can maximise energy efficiency; for example, reducing the volume of fossil fuels required for industrial processes.

I also think that there will be a push on methane emissions, which have a shorter half-life in the atmosphere, meaning a reduction there can really deliver an impact on 2030 goals. I also expect the flurry of hydrogen-related announcements to continue.
In terms of the adaptation of technologies, I think heat pumps could gain some momentum in 2022 – the need to decarbonise heat is gaining more prominence and the technology continues to improve. At the same time, I think the rate of EV adoption is likely to accelerate faster than some expect and this could finally mean that vehicle to grid opportunities gain serious traction.

Next year will show that there is no way back for coal, and the number of planned projects will continue to decline, while some of those under construction will never come online.

However, the rate of closures will probably slow down, as many of the older plants have gone now, and utilities will sweat the assets where they can. Natural gas will remain under pressure because of renewables, but I would also hope there is a more mature debate about the practical role renewables can play in ensuring grid stability.