WoodMac: V-Formed Restoration for Distributed Power Sources in 2021

The second quarter of 2020 supplied a clearer image of the dramatic impression that COVID-19 is having on the grid edge sector in the US and overseas.

The restrictions imposed to struggle the pandemic, coupled with the unfolding financial downturn, have created delays in grid edge mission implementation schedules, in line with a brand new Grid Edge market replace from Wooden Mackenzie.

This has in flip severely curbed development trajectories for distributed power sources (DERs) within the close to time period. Photo voltaic, storage, microgrids, residential EV charging shops and different DERs have all been impacted, and the recession is anticipated to additional weigh on development in 2020.

Nevertheless, momentum will choose again up for the grid edge sector over the subsequent few years.

Wooden Mackenzie additionally finds that the pandemic is offering a chance to speed up some grid edge tendencies, resembling electrical automobiles (EV) penetration and grid modernization.

The place COVID-19 is creating pockets of alternative for DERs

WoodMac analysts discover that coronavirus stimulus packages are an ideal alternative to advance EV penetration and EV charging targets.

The stimulus packages adopted in Germany, France and China all boosted subsidies for buying EVs and promoted the development of EV charging stations.

Conversely, the U.S. has not but included any EV provisions of their coronavirus stimulus packages, however Home Democrats have proposed a separate a $1.5 trillion infrastructure invoice — The Transferring Ahead Act —geared toward updating the nation’s getting old transportation system.

The Transferring Ahead Act, amongst different issues, would put aside a whole lot of billions of dollars to the deployment of zero-emissions buses and different gas charging infrastructure, in addition to growing an EV charging community as a part of a reworked electrical grid and offering tax credit for buying zero-emission automobiles.

The pandemic has additionally emphasised the significance of distant meter readings and of knowledge analytics for grid forecasting amid shifting load patterns. Consequently, COVID-19 might feasibly present an argument for higher digitalization of energy metering throughout U.S. distribution grids sooner or later.

It is too early to say whether or not it will strengthen U.S. utilities’ case for superior metering infrastructure (AMI) deployment with regulators. Nevertheless, analysts count on AMI distributors to double down on their technique of partnering with suppliers of analytics and automation options to supply utilities extra superior functionalities.

Funding is down however not out in 2020

Rising coverage assist to electrical automobiles and EV charging infrastructure aligns with the truth that the sector continues to obtain funding, despite the fact that general enterprise and strategic funding in DERs slowed down considerably in Q2 2020.

In truth, power storage and EV charging distributors make up greater than half of funding bulletins in 2020 to date. Within the second quarter of this yr, Hevo Energy, Freewire Applied sciences and Tritium collectively raised greater than $75 million. These distributors provide both wi-fi charging or DC quick charging options.

On the similar time, COVID-19 has not stopped utilities from getting into contracts for AMI deployments, despite the fact that shelter-in-place orders have delayed meters’ set up within the U.S. and lots of different international locations.

Within the second quarter of 2020 utilities and distributors around the globe introduced that they contracted over 1.1 million new electrical AMI meters, with Landis+Gyr disclosing the most important variety of offers – two with utilities within the U.S., and one in Sweden and Hong Kong.  

Quantifying the pandemic’s harm

Whereas no section is unscathed, the impression of COVID-19 on the U.S. grid edge sector varies by kind of DER and phases within the useful resource lifecycle. Total, DER funding and deployments have continued to happen over the previous quarter, although at a slower tempo than in 2019.

Provide chains have been largely unaffected, as most merchandise are sourced from Asian markets the place factories are ramping again to full capability provided that essentially the most extreme results of the virus appear to have handed.

Deployment phases that require face-to-face interplay — resembling buyer acquisition and mission implementation — have been most vulnerable to delays and/or full stoppage as a result of social-distancing measures adopted to struggle the unfold of coronavirus.

Wooden Mackenzie presently expects a V-shaped restoration of the general DER market in 2021, after a 61 % drop in mixture DER capability development in 2020.

Wanting previous this yr, decrease financial exercise and better unemployment will lower each shoppers’ disposable revenue and enterprise funding within the early 2020s, lowering funding in non-critical purchases resembling customer-owned or leased power infrastructure.

Consequently, annual development in DER capability won’t exceed its 2019 pre-coronavirus excessive till 2024.

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Francesco Menonna is a part of Wooden Mackenzie’s Grid Edge crew, the place he’s liable for protecting distribution grid modernization and superior metering infrastructure. The Grid Edge Quarterly Govt Briefing is obtainable right here or through a Grid Edge analysis subscription.

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