A new study released by Deloitte highlights the key trends, challenges,
and opportunities that may affect the US renewable energy industry in the second half of 2020.
Despite the challenges presented by COVID-19, the US renewable
energy industry’s long-term growth trajectory appears intact.
The report presents the three key trends that are likely to disrupt the sector and they include:
- Market transformation
Renewables’ low costs will likely continue to usher in a new era of competition, intensified by COVID-19 impacts.
As shutdowns continue in the US, Deloitte predicts that there is going to be a decline in electricity consumption and changes in demand patterns.
The Energy Information Agency predicts a 5.7% decline in electricity consumption this year. Renewable energy sources have consistently accounted for a higher share of power generation due to their near-zero marginal costs.
Whilst energy demand decreases, renewable energy generation is expected to rise.
As the pandemic continues to unfold in the second half of 2020 and utilities face revenue challenges, solar and wind plants will likely continue to be operated more than costlier fossil-fuel plants.
- Grid resiliency
Focus on grid resilience is expected to continue to drive renewables and storage adoption.
Utilities and their customers are expected to continue deploying microgrids, often including solar and storage, to help ensure power continuity as they consider workforce logistics, employee health and safety, operations, and supply chains.
While COVID-19 will likely have a short-term impact on the financing and construction of battery storage projects, longterm demand will likely continue to be strong. With rising renewable production, matching the supply of abundant renewable generation with energy demand would require long-duration bulk storage to maintain reliable grid service.
About 46% of the storage projects slated to come online in 2020 are solar-plus-storage, and the pandemic has not stopped new projects from being added.
New types of collaborations are likely while many stakeholders adopt a wait-and-see approach.
Corporations have contributed significantly toward driving renewable energy demand, and many have made voluntary commitments to transition to 100 percent clean energy. This has led to interesting collaborations in the sector, with an expanding pool of companies spearheading renewable procurement deals in recent years. This continued in the first quarter of 2020, and as of late April, companies announced deals for at least 1.76 GW
of renewable capacity.
However, the current pandemic has slowed this activity, and renewable procurement deal activity is also subdued. Future activity will depend on how corporations perform in their core businesses.
Faced with supply chain bottlenecks and multiple projects receiving force majeure notices from suppliers, renewable developers are likely to seek new collaborations to diversify their supplier base and add flexibility.
Further, smaller, less capitalised developers are likely to restructure projects to better handle delays and additional costs or look for opportunities for consolidation or outside investors.
Read more about the report.