2021 is shaping up to be another historic year. In the U.S., one of the exciting trends we expect is the acceleration of decarbonization through electrification. This process of electrification relates to utilities, businesses, households, and transportation moving off fossil fuels as power inputs in favor of renewables like solar and wind. The transition is happening at a rate that would have been unthinkable just a decade ago, and gives hope that the U.S. can achieve the Biden-Harris administration’s stated goal of fully decarbonizing the power mix of the country by 2035.
Note these remarkable facts, among many others:
- Renewable energy now accounts for nearly a quarter of the nation’s total installed energy generating capacity (23.52%), more than coal (19.97%).
- Wind and solar represented around 90% of total new energy capacity added in 2020.
- Electric vehicles will be 10% of global passenger vehicle sales by in the U.S. by 2025.
This change is quickly transforming our power grid, our built environment, and our transportation industry.
THE POWER GRID
Power grid decarbonization is being driven largely by state and municipal legislation mandating 100% carbon-free or renewable energy (16 states, as well as Washington, D.C., and Puerto Rico, have either introduced or passed legislation to this effect), but also by the fact that renewables are increasingly cost-competitive. Bloomberg recently reported that wind and solar are now the cheapest power sources in most places.
The February weather crisis in Texas underscores the need to take a holistic approach to modernizing the power system over the long term, including planning for extreme weather events. While the lessons from this crisis are still being learned, increasing the tools that are available to the grid operators, such as Distributed Energy Resources (DERs), like demand response and energy storage, could help to improve reliability. As discussed in a previous article, these solutions can move the energy transition forward by helping to mitigate the impacts of increasingly extreme weather, reducing carbon emissions, providing resilience to segments of the distribution or transmission grid, and saving energy costs for businesses.
THE BUILT ENVIRONMENT
Building development is rapidly electrifying as well, with more municipalities—most recently San Francisco—moving to ban natural gas in new building construction, in favor of electric heating and appliances, which are typically much more efficient. For example, electric heat-pump water heaters are up to four times as efficient as conventional gas water heaters. And net-zero energy buildings—generally understood to be residential or commercial buildings that generate all their own power through renewable energy—have grown more than tenfold since 2010. Recent examples of this include the Jones Beach Energy and Nature Center in Long Island, New York; the Unisphere building; and the Phipps Center for Sustainable Landscapes.
Perhaps most visibly for many Americans, our transportation sector is expediting its transition to zero-emission vehicles. With growing consumer demand for electric vehicles, legislative mandates and EVSE incentives in almost every state, and more commercial EV infrastructure being installed, gas-powered automobiles will become antiquated in the near future.
Some indicators: GM vows to sell only electric vehicles by 2035; Ford is investing $29 billion in EVs and autonomous vehicles through 2025; California plans to ban all new non-EV auto sales that same year; and total sales of electric vehicles are expected to surpass gasoline-powered vehicles by 2040.
WHY IT’S HAPPENING NOW, AND WHAT IT MEANS FOR BUSINESSES
In addition to more aggressive government mandates, electrification is being galvanized by major technological improvements in battery storage—a crucial component enabling the transition to wind, solar, and EVs. Another key factor is that renewables are finally cost-competitive with fossil-fuel energy. The International Energy Agency’s 2020 World Energy Outlook found that solar energy now offers “some of the lowest-cost electricity ever seen.”
Some obstacles remain—EV charging infrastructure isn’t yet widespread, and battery storage technology needs to be more widely adopted—but investment in this technology ultimately becomes a kind of virtuous cycle: As more is invested, more people use it, leading to more investment and cheaper overall cost.
HOW TO BEGIN ELECTRIFYING YOUR BUSINESS
Today, more than 20% of the U.S. electrical grid is fed by renewable energy, and as battery storage, demand response, EVs, and smart-charging infrastructure improves, that percentage will grow quickly. The benefits of 100% decarbonization through electrification are tangible—from saving money to improving operations and your sustainability. Delaying the transition in your business risks imposing real costs.
So, what’s the best way for your business to take advantage, now?
- Electrify your own operations and add renewable energy to the extent possible, seek new renewable sources as they come online, and monetize excess production by returning to the grid.
- Take advantage of EVSE incentives while they are available and install smart EV charging infrastructure on your own premises. EV charging will increasingly become a necessity for your customers, employees, and tenants—much like how free WiFi is nearly ubiquitous. Deploying smart EV charging will ensure that charging is done with the cleanest resources available.
- Look at a holistic set of solutions to realize the full benefits of electrification. Making distributed energy resources (DERs), such as solar, storage, and electric vehicle charging stations, part of your energy-management plan will enable your businesses to better integrate renewable energy and manage utility costs. Many DER solutions are available for low or no upfront cost and offer both economic and resiliency benefits.
Acting now means you’ll be ahead of the curve both as regulatory compliance and consumer demand shifts. Federal, state, and municipal regulation will increasingly mandate renewable and net-zero energy standards. And as both retail and commercial customers demand their own energy come from renewable sources, they will gravitate to providers who can do so.
Electrifying now not only helps you more strategically plan for potential mandates and business requirements, but helps you support the energy transition for a cleaner future.