Government agencies have started to carry out the Infrastructure Investment and Jobs Act. As the bipartisan infrastructure package, Congress passed last year. The concerns about the reliability and security of the U.S.power grid and the future of the Build Back Better bill remain high. Also, its clean-energy provisions remain uncertain.
The Federal Energy Regulatory Commission plays a vital role in how much the administration’s climate and energy guidelines advance. States, utilities, and other businesses continue to seek ambitious clean energy and decarbonization plans.
They are providing more placement of storage, renewable energy, distributed energy resources, and electric vehicles across the country. Also, these resources are evolving with time. Their great focus is the storage sector on long-duration assets. And to create the supply chain in the U.S.
The main changes that happened in the U.S. power sector are prodding concerns. Yey, there were concerns about the costs and benefits of the energy as well. It is going to get distributed equally. Let us have a look at the top concerns, challenges, and priorities.
Reliability and Stability Concerns
The power sector is on the way to examining and investing in building a grid. They are focusing on something more flexible to changing climate and more severe natural disasters. And for utilities, they will consider either equipment underground or microgrids.
Seth Hilton, a partner at law firm Stoel Rives, says that some states will have to adjust their regulatory authorities to a changing resource mix.
Decarbonization of the US Economy
The US economy requires billions of dollars to meet the decarbonization demand and years of focused effort to accomplish the planning. Cost allotment and construction to optimize renewables are also huge factors.
The bipartisan infrastructure bill provides information on public funds to endow the growth of new renewable technologies. It includes hydrogen production and eases the approval of high-voltage transmission lines.
The utility industry needs to develop its transmission capacities. Or they will have to risk losing the help of controllers, investors, and clients.
A lot of them have to expand their transmission and distribution spending programs. It will help to accommodate the expansion of EVs, smart home appliances, and other key technologies.
Supporting Investments and Renewals
In times of decarbonization and decentralization, utility companies tend to change their strategies. With the help of spin-offs, stake sales, and asset swaps, they are trying to offer sustained growth.
In previous years, their main aim was to sell non-core assets. That comprises merchant generation portfolios and midstream assets. But this year, they plan to trade part of their transmission and distribution investments. So, they can make room in their balance sheet for assets in renewables. And they can control progressive issuances of equity.
The recoveries on equity on transmission and distribution assets will remain attractive. So, foreign investments will continue in the US market. They will make some strategies to develop the portfolio of products and services.
There are end-to-end solutions throughout multiple energy associates that are increasingly in demand. These investments aim to align with customers’ interest in self-generation (86%), automatic heating and cooling (22%), e-mobility (19%), and storage (17%), based on a recent EY Survey.
More Instability For Gas Price
Variability came back in the natural gas market in the second half of 2021. It will continue this year too. It will make strong demand which will set a floor for prices and geopolitical tension. Further, it will happen between Russia, the EU, and the US, among several aspects that make traders nervous.
Higher prices will transform into higher investments. The US players are looking forward to boosting exports. Also, importers will fund to diversify gas supply prospects.
The high prices will be sad news for suppliers of gas power equipment. So, the higher prices for households and businesses will make energy a matter of discussion in politics.
Virtual Power Plants Growing the Bedrock of Decentralization
The increasing share of electricity from distributed energy resources (DERs), renewable energy sources (RES), and increasing penetration of EVs and their charging infrastructure make grid load management functions extremely challenging for utilities.
In reply, utilities have started influencing creative grid management techniques like virtual power plants (VPPs) to improve resiliency and grid reliability. VPPs are all set to leapfrog and occur as a vital measure for regular grid operations. It limits the need for new peak-period originating capacity.
Many utilities across South Korea, the US, Japan, Germany, the UK, and Australia have already begun to embrace VPP solutions as part of their clean energy adaptation. Frost & Sullivan forecasts that the global economy for Virtual Power Plants will improve from USD 565 million in 2021 to attain $3.3 billion by 2030.
Conclusion
Due to the energy transition, utilities have to face increasing difficulties. To keep utilities on pace, they have to create new business models and technologies.
