Consulting firm Deloitte has issued its 2021 Power and Utilities Industry Outlook. The report explores trends within the US energy industry in 2021.
In 2020, the US power and utilities (P&U) industry led the clean energy transition despite federal policy headwinds—and COVID-19 helped solidify the urgency, according to the report.
Five key trends set to shape industry include:
- Consolidate the regulatory landscape
The Federal Energy Regulatory Commission (FERC) enables competition through regulation.
FERC issued a landmark ruling in September 2020 that could help consolidate the competitive landscape for the energy industry in 2021.
By leveling the playing field for distributed energy resources (DER) to participate in wholesale capacity, energy, and ancillary services markets, Order 2222 could help spur innovative technologies and aggregations of rooftop solar arrays, EVs, and smart building devices.
In another move that may further consolidate the competitive landscape in favor of clean energy, FERC recently took a position of being open to carbon pricing.
- Create new economies
Emerging DER aggregation platforms expand digital utility industry infrastructure
DER integration into the grid would require a new digital infrastructure to aggregate and manage these resources in a way that enhances the grid.
Following a pandemic-related dip in DER capacity additions this year, growth is poised to recover in 2021, with a mix that is shifting from mostly commercial to predominantly residential, solar, and EV load management.
The big question is to what extent utilities, third parties, and customers can cost-effectively manage this DER digital infrastructure.
- Reinvent battery business models
Mobile battery business models develop around EVs and charging infrastructure
The electrification of transportation and its resulting charging infrastructure are also poised to experience unprecedented growth in 2021, opening a significant opportunity for utilities to grow earnings.
In 2021, we may see the introduction of new longer-range batteries in truck and SUV models from startups and established automakers that may further bump EV sales and accelerate their timeline to parity with gasoline-powered vehicles.
Regulators are increasingly coming around to the idea of a leading utility role in EV charging infrastructure development, portending a wave of charging program approvals in 2021 that could help grow utility revenue.
- Scale up with new entrants and frontiers
Oil companies are investing in the power industry
The growth in renewables and clean technologies has engendered interest in the sector from new entrants, including some of the larger oil companies. Over the past several years, oil company investments in storage technologies, transport electrification, and renewable energy have increased noticeably.
This trend is expected to continue in the longer term as oil companies move beyond the immediate impact of the oil price drop and COVID-19–related demand decline.
- Fortify disaster readiness
Digital strategies to help address wildfires, COVID-19, and cyberattacks
Several disasters buffeted the power and utilities industry in 2020, bringing disaster readiness to the forefront going into 2021. Utilities may increasingly deploy digital tools to address the “twindemic” of COVID-19 and extreme weather events such as wildfires.
The first set of solutions revolves around a remote workforce, while the second set of digital solutions pertains to a remote workplace.
A poll conducted by Deloitte showed that most power and utility industry executives think that utilities should primarily focus on decarbonisation strategies (33%) and digital strategies (29%) over the next year.
Key areas to watch amid a change of administration include the uptake of distributed energy resources, EVs, and hydrogen. Meanwhile, pending FERC decisions and new FERC appointments could shape the extent to which this uptake will translate into market participation.
These trends, in turn, would expedite the process of convergence we are now seeing as new entrants and incumbents position to serve a growing clean power industry in an economy that’s gradually electrifying.
The recent uptick in antitrust activity around big technology companies may also alter the competitive landscape by limiting their penetration of the energy industry. Expanding to the international market, carbon taxes could be a game-changer in both the energy and trade sectors as well.
Learn more about the report.