Key Renewable Energy Investment Trends Innovative Utilities Can’t Ignore

Venture capital and private equity investments into electricity-related categories broke a new record last year. With more than $2.5 billion invested over 85 deals in 2018 alone, target areas include energy storage ($5 billion), customer energy management ($2.8 billion), and EV Infrastructure ($1.5 billion). Data from WoodMac’s Grid Edge Data Hub presented during GreenTech Media’s Grid Edge Summit reveals key areas of focus as well as the speed at which renewable energy investments are increasing.

As utilities look to the future, this assessment of capital flows serves as a bellwether for where that future might be just a few years from now.

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Energy Storage

Storage systems can absorb the excess capacity to balance the grid and return it when later needed. Because of the intermittent nature of wind and solar power, renewable energy investments in storage systems are essential to ensure a smooth transition to a renewable grid.

The diversity within the storage landscape is substantial. We are seeing applications both in front of the meter and behind the meter, covering everything from small, residential systems to large, commercial systems. Because of its flexibility and enormity of impact, it is no surprise that it is seeing the largest capital flows.

Green Mountain Power’s (GMP) Bring Your Own Battery (BYOB) program is an example of how utilities can manage energy storage in a way that balances the grid while saving money. In this program, we (Virtual Peaker) communicate with customers’ battery systems through our Application Programming Interface (API). Through this approach, we can provide real-time control of a fleet of battery systems from several different vendors to minimize costs and maximize efficiency.

EV Infrastructure

Renewable energy investments in EV Infrastructure are bringing more and more EVs onto the grid, but are utilities equipped to handle this electric load growth? According to a study published in the IEEE Electrification Magazine, utilities have three options to effectively face this challenge:

  1. Pay for expensive grid reinforcement to increase the capacity of feeders
  2. Deploy local storage at impacted feeders
  3. Shift EV charging load to off-peak times

While the first two options would be costly and demand higher rates from customers, the third option can easily be accomplished if utilities adopted a proper distributed energy management system. According to the National Resources Defense Council, if just 30% of EV charging shifted to off-peak times, then only 15% of the feeders in the San Francisco Bay area would need to be upgraded (reducing the number of affected feeders by a factor of four). This would result in savings for both the customer and the utility all while improving grid reliability.

Customer Energy Management

Smart home technologies are playing a huge role in customer energy management, and the market is on the rise. According to a report from Transparency Market Research, the global smart thermostat market is estimated to reach a value of $8.7 Billion by 2026 from $1.2 Billion in 2017, expanding at a CAGR of 23.7% during the forecast period. Last year, Amazon and other investors contributed a combined $155 million to two Alexa-enabled smart thermostat startups, ecobee, and Tado.

Smart home technologies like smart thermostats not only allow customers to save on their energy bills but also provide valuable data to utilities. As many are already doing, utilities can see when peak usage occurs and incentivize customers to shift hours of usage so that energy consumption will be more evenly distributed and grid stability will be enforced. Customer energy management software can help automate this process by controlling systems based on price signals as well as other specialized advanced control frameworks such as real-time price arbitrage, Time-of-use (TOU) optimization, or load-following on renewable energy production.

Renewable Energy Investments Conclusion

Between the twin pressures of tech disruption and global decarbonization efforts, the time for renewable energy investments is here. The entire trend of customer energy management solutions is built around the rising efficacy of the average utility customer. As customers increase their understanding of where their energy comes from and how it is used, utilities must find solutions to engage customers more effectively.

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About The Author
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Amanda Zhang is a Yale student studying Sustainable Finance & Development and former intern at Virtual Peaker. She has worked as a research analyst at Point 72, a research assistant and writer for the Yale Center for Business and Environment (CBEY), and Project Manager and Analyst at the Yale Undergraduate Consulting Group. Amanda has a host of honors and awards and has had her work published in a variety of publications.

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