Demand for Renewable Energy May Outpace Supply

 

Big companies are increasingly signing deals to buy wind and solar power, and their large and growing demand may exceed the capacity of existing and planned transmission lines – yet transmission planners aren’t taking this into account as they draw up their future plans. That’s according to a new report released this week by the Wind Energy Foundation (WEF).

Large US businesses – including Fortune 500 companies – are increasingly acting on their publicly announced renewable energy goals as new utility-scale wind and solar energy projects are now often the lowest cost power available. According to the WEF report, a coalition of more than 100 corporate entities set a goal of purchasing 60 gigawatts (GWs) of renewable energy by the year 2025, equivalent to the amount of energy produced by 110 conventional power plants and enough electricity to power nearly 50 million homes. The report estimates that the coalition still has some 51 GWs left to purchase in order to meet that goal, and questions whether current transmission plans can accommodate the increase in demand.

“This report demonstrates that there is an immediate need for transmission planners to account for the significant renewable energy goals of corporate purchasers,” said John Kostyack, executive director, WEF. “As costs continue to decline for new utility-scale wind and solar projects, an ever-increasing number of large corporate buyers are acting to lock in low-cost renewable power purchase agreements.”

The WEF report looked at a range of different scenarios, and found that existing and planned transmission facilities may not be sufficient to deliver the amount of renewable energy companies have already committed to buying. For example, using a conservative set of transmission-building assumptions, the report found that planned transmission build-outs would meet only 42% of corporate renewable energy demand in a high-procurement scenario, or 78% of the demand in a low-procurement scenario.

“It is important to continue to focus on the fact that wind and solar costs have come down considerably in the last 3-5 years and continue to come down,” said Rob Threlkeld, global manager of renewable energy at General Motors, in an interview with Energy Manager Today. “Focus needs to be on how we continue to gain access to what is becoming the lowest cost generation on the grid. Collaboration is key for success, such as efforts with the Renewable Energy Buyer’s Alliance. Increasingly, utilities are working closely with corporations looking to source renewable energy through such mechanisms as green tariffs, beyond just power purchase agreements. As collaborative efforts increase, the next natural step in the evolution is working with Regional Transmission Operators (RTOs) to address needs in the voluntary market, but more importantly incorporate the lowest cost generation resources.”

Action Items

Given the findings from WEF, the report recommends that corporate buyers and other large institutional customers take the following actions:

  • Encourage transmission planners and state Public Service Commissions to increase access to affordable, renewable energy by approving upgrades and expansion to transmission lines.
  • Participate in regional and inter-regional transmission planning conversations to ensure future transmission infrastructure meets customer demand for renewable energy.
  • Urge the Federal Energy Regulatory Commission to continue to work to improve the interregional planning process, consistent with Order 1000.

“Any company aiming to buy renewable energy should engage in the transmission planning process,” said David Gardiner, president of David Gardiner and Associates, which produced the report on behalf of WEF. “Access to the lowest-cost renewable resources depends on transmission, and corporate renewable energy buyers need to communicate their procurement goals to transmission planners.”

As for General Motors, the company has set a goal to power 100% of its operations from renewable energy by 2050 (the automaker joined the RE100 effort in September 2016).

“This is increasingly important as GM looks to an all-electric future in transport focused on zero crashes, zero emissions, and zero congestion,” said Threlkeld. “To really get at a short- and long-term sourcing of renewable energy and meet our goals, collaboration will be key.

Threlkeld said the Renewable Energy Buyer’s Alliance and collaboration with all stakeholders will be the key to a successful transition not only for the utility sector and how it uses electricity, but also the transportation sector.

“Technology is driving fundamental changes in both how we use and when we use electricity with more changes taking place in the next five, 10, 15 years in the utility and transport sector than we have seen in the last century,” he added. Continued and expanded collaboration to include RTOs will drive the means to support this trend.”

 

 

Mark your calendars: The 3rd Annual Environmental Leader & Energy Manager Conference takes place May 15 – 17, 2018 in Denver. Learn more here.

 

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