How Distributed Energy Is Reshaping the Energy Landscape
Distributed energy resources have set the stage for profound changes in the way power is produced, stored and used across power grids.
02
03
Growth of U.S. distributed solar
There are now more than 2 million solar installations in the U.S., with an additional 2 million coming by 2023. Distributed generation offers both opportunities and challenges for grid operators that have relied on one-way power flows for decades.
U.S. annual solar PV power capacity additions (GW)
Residential
Non-Residential
Utility
0
3
6
9
12
15
18
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019E
2020E
2021E
2022E
2023E
2024E
Pre 2010
Connected home forecast
2016
2017
2018
2019
2020
2021
2022
2023
132 K Connected Lighting
1.4 M Smart Thermostats
891 K Voice Assistant Devices
2.4 M
265 K Connected Lighting
2.9 M Smart Thermostats
3.5 M Voice Assistant Devices
6.7 M
462 K Connected Lighting
4.4 M Smart Thermostats
5.7 M Voice Assistant Devices
10.5 M
682 K Connected Lighting
5.8 M Smart Thermostats
7.7 M Voice Assistant Devices
14.3 M
939 K Connected Lighting
6.9 M Smart Thermostats
9.2 M Voice Assistant Devices
17.1 M
1.2 M Connected Lighting
7.8 M Smart Thermostats
10.6 M Voice Assistant Devices
19.7 M
1.5 M Connected Lighting
8.7 M Smart Thermostats
11.5 M Voice Assistant Devices
21.8 M
1.9 M Connected Lighting
9.5 M Smart Thermostats
12.4 M Voice Assistant Devices
23.9 M
Growth of U.S. distributed storage
Falling costs for energy storage are providing opportunities for grid operators, businesses and homes to use these assets for load shifting, power when it's needed and grid balancing services.
Annual energy storage capacity additions (GW)
AMI penetration by state
99%
0%
2016
2023
2017
2022
2018
2021
2019
2020
Washington, DC
99%
Nevada
Maine
91%
95%
89%
85%
Georgia
Oklahoma
82%
79%
California
Vermont
Michigan
78%
77%
Arizona
Texas
Alabama
Maryland
Idaho
Delaware
75%
74%
72%
72%
66%
Washington, DC
99%
95%
Nevada
Maine
Georgia
Oklahoma
California
Vermont
91%
89%
85%
82%
79%
Michigan
78%
77%
Arizona
Texas
Alabama
Maryland
Idaho
Delaware
75%
74%
72%
72%
66%
Kansas
64%
60%
Illinois
Pennsylvania
Florida
Tennessee
Oregon
South Dakota
60%
59%
57%
56%
40%
Mississippi
37%
32%
North Carolina
Kentucky
Missouri
Arkansas
Alaska
Wisconsin
32%
31%
30%
28%
28%
South Carolina
26%
26%
Wyoming
North Dakota
New Hampshire
Indiana
Colorado
Montana
25%
22%
21%
21%
20%
Virginia
20%
19%
Louisiana
Ohio
Nebraska
Minnesota
Connecticut
Iowa
19%
18%
17%
14%
11%
New Mexico
10%
8%
Washington
Utah
Hawaii
Massachusetts
New Jersey
West Virginia
6%
6%
3%
1%
1%
New York
0%
0%
Rhode Island
Puerto Rico
0%
DERs proliferate
1
Traditional power flows evolve
Large power plants provided energy to homes and businsses and suppot services to the grid. While centralized generation will continue to play a major role in providing power, DERs are changing the picture.
Adapting to DERs
Among most utilities today, adaptation is the first step as DER penetration grows. Customer adoption of solar, smart devices and battery storage has occurred with little coordination with power providers. Utilities have added advanced metering infrastructure, distributed sensors and intelligent grid software, but mainly as a means to accommodate DERs without a clear line of sight to new revenues.
Solar
Other Nonrenewable
Wind
In two years, DERs have more than doubled in the Texas power market ERCOT from Q4 2016 to Q4 2018.
0
40
80
120
160
200
240
Distributed Generation Under 1 MW in ERCOT
Other Renewable
Q4 2016
Q1 2017
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
Q3 2018
Q4 2018
Renewable Penetration Across U.S. Energy Markets
Intermittent renewable generation penetration varies by region, but is growing across all markets, with distributed generation growing in CAISO, ERCOT and PJM due to market condidtions.
4
Power (GW)
0
1
2
3
4
5
2013
2014
2015
2016
2017
2018
2019E
2020E
2021E
2022E
2023E
2024E
United Kingdom
UK has clocked more than a week without burning coal to fuel its power needs for the first time since the Industrial Revolution, instead relying primarily on wind and nuclear generation, followed by biomass, natural gas, solar and imported electricity.
10,000 MW
Germany
10,000 MW
Germany will effectively have to replace 47 percent of its baseload capacity with new forms of generation in the coming years as it phases out nuclear generation and coal entirely.
Japan
10,000 MW
Japan’s most recent Big Energy Plan calls for 44 percent of its 2030 power mix to be zero-emission using a mix of renewables and nuclear. Since 2016, the country has also deregulated its electricity sector with more than 450 energy retailers competing to offer solar and energy storage.
Australia
10,000 MW
Australian utility Evoenergy is creating virtual power plants using a mix of residential and commercial demand response paired with distributed battery storage.
India
10,000 MW
The consultancy Bridge to India expects utility-scale solar capacity additions to cross 10,000 megawatts for the first time in 2019 in India, and for rooftop solar capacity additions to rise nearly 50%.
Africa
10,000 MW
Off-grid energy investment, which includes solar panels to power lights, cellphones and other household devices, up to microgrids that power entire communities, rose from nearly nothing prior to 2010 to a total of nearly $1.7 billion at the end of 2018, with about 80 percent of that investment going to Africa.
Brazil
10,000 MW
Brazil is the leader in distributed solar Latin America with more than capacity growing more than 10-fold since 2017 to 750 megawatts.
United States
10,000 MW
In the U.S., utilities and regulators are increasingly looking at distributed energy solutions, such as demand response and energy storage, instead of natural gas peaker plants. For example, in April, Southern California Edison selected a roster of energy storage projects to supply capacity needs instead of the 262-megawatt natural-gas peaker plant it had chosen previously.
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The combination of advanded metering infrastructure (AMI), connected devices such as smart thermostats and voice assistant devices are offering new opportunities for homes to be active participants in grid services.
27%
21%
20%
8%
6%
5%
5%
Customer Engagement
Utilities are increasingly focused on the needs of their customers in areas that represent a new role, and business opportunity, for the utility. The goals of various customer engagement initiative can be categorized in three groups: new revenue streams, increased program participation, and customer retention and management.
While the Grid Edge is at the distribution and customer level, it’s impact can generate revenue thoroughout the power sector. This revenue areas breakdown into three main areas: wholesale supply, transmission and distribution, and retail power sales.
Revenue Area
Utilities have long-standing obligations in maintain power infrastructure and operations. Grid Edge solutions can help address these legacy operational in three primary ways: optimizing assets and infrastructure utilization, maintain a reliable and resilient system, and improving its ability to proactively detect issues and deploy solutions.
System Performance
Utility systems are grappling with a host of new technologies that provide challenges and opportunities for system operations. These technologies can be categorized in three groups: software & analytics, distributed energy resources (DERs), and connected hardware devices.
Technology Segment
Utilities are increasingly focused on the needs of their customers in areas that represent a new role, and business opportunity, for the utility. The goals of various customer engagement initiative can be categorized in three groups: new revenue streams, increased program participation, and customer retention and management.
Customer Engagement
0.38 GW
0.69 GW
0.10 GW
0.24 GW
0.34 GW
0.27 GW
0.30 GW
0.83 GW
0.78 GW
0.49 GW
1.07 GW
1.80 GW
0.80 GW
1.10 GW
2.85 GW
1.26 GW
1.05 GW
3.92 GW
2.17 GW
1.06 GW
4.26 GW
2.63 GW
1.70 GW
10.80 GW
2.24 GW
2.25 GW
6.35 GW
2.41 GW
2.11 GW
6.16 GW
2.49 GW
1.79 GW
7.78 GW
2.87 GW
1.93 GW
10.00 GW
3.42 GW
2.01 GW
10.38 GW
3.27 GW
2.02 GW
8.65 GW
3.56 GW
2.10 GW
8.63 GW
3.29 GW
2.28 GW
9.28 GW
0.04 GW
0.06 GW
0.22 GW
0.23 GW
0.21 GW
0.31 GW
0.64 GW
1.90 GW
2.72 GW
3.18 GW
3.83 GW
4.44 GW
115
5
4
0
131
5
3
0
143
5
4
0
150
5
4
1
157
5
5
1
171
5
5
1
182
5
5
1
201
0
5
5
227
5
5
0
A Changing Grid
2
Market & Business Transformation
3
Grid Edge Wheel
4
A Global Snapshot of Grid Innovation
4
82%
CA
95%
NV
56%
OR
8%
WA
72%
ID
20%
MT
26%
WY
6%
UT
77%
AZ
10%
NM
21%
CO
25%
ND
40%
SD
18%
NE
64%
KS
85%
OK
75%
TX
19%
LA
30%
AR
31%
MO
11%
IA
17%
MN
28%
WI
78%
MI
60%
IL
21%
IN
32%
KY
57%
TN
37%
MS
74%
AL
89%
GA
59%
FL
26%
SC
32%
NC
20%
VA
1%
WV
19%
OH
60%
PA
99%
DC
72%
MD
1%
NJ
0%
NY
14%
CT
0%
RI
79%
VT
22%
NH
91%
ME
28%
AK
6%
HI
66%
DE
3%
MA
0%
PR
115 MW
5 MW
4 MW
0 MW
131 MW
5 MW
3 MW
0 MW
143 MW
5 MW
4 MW
0 MW
150 MW
5 MW
4 MW
1 MW
157 MW
5 MW
5 MW
1 MW
171 MW
5 MW
5 MW
1 MW
182 MW
5 MW
5 MW
1 MW
201 MW
0 MW
5 MW
5 MW
227 MW
5 MW
5 MW
0 MW
All States
03
02
01
Today, software controls and DERs, including rooftop and community solar, behind-the-meter energy storage, intelligent homes and grid integrated buildings, are giving grid operators a way to rethink their business and operational models that offer both new sources of revenue and increased resiliency.
Grid Edge Wheel
Utilities are increasingly focused on the
needs of their customers in areas that
represent a new role, and business
opportunity, for their organizations. The goals of various customer engagement initiative can be categorized in three groups: new revenue streams, increased program participation, and customer retention and management
Customer Engagement
While the Grid Edge is at the distribution
and customer level, its impact can
generate revenue throughout the power
sector. This revenue opportunity breaks down into three main areas: wholesale supply, transmission and distribution, and retail power sales
Revenue Area
Utilities have long-standing obligations to maintain power infrastructure and
operations. Grid Edge solutions can help
address these legacy operations in three
primary ways: optimizing assets and
infrastructure utilization, maintain a
reliable and resilient system, and
improving its ability to proactively detect
issues and deploy solutions
System Performance
Utility systems are grappling with a host
of new technologies that provide
challenges and opportunities for system
operations. These technologies can be
categorized in three groups: software &
analytics, distributed energy resources
(DERs), and connected hardware devices
Technology Segment
Distributed energy resources have set the stage for profound changes in the way power is produced, stored and used across power grids.
Market & business transformation
Distributed generation under 100 MW in ERCOT
A global snapshot of grid innovation
There are now more than 2 million solar installations in the U.S., with an additional 2 million coming by 2023. Distributed generation offers both opportunities and challenges for grid operators that have relied on one-way power flows for decades.
Falling costs for energy storage are providing opportunities for grid operators, businesses and homes to use these assets for load shifting, power when it's needed and grid balancing services.
Growth of U.S. distributed storage
Washington, DC
Nevada
Maine
Georgia
Oklahoma
California
Vermont
Michigan
Texas
Arizona
Connected home forecast
The combination of advanded metering infrastructure (AMI), connected devices such as smart thermostats and voice assistant devices are offering new opportunities for homes to be active participants in grid services.
99%
0%
Large power plants provided energy to homes and businesses and support services to the grid. While centralized generation will continue to play a major role in providing power, DERs are changing the picture.
Traditional power flows evolve
A changing grid
Among most utilities today, adaptation is the first step as DER penetration grows. Customer adoption of solar, smart devices and battery storage has occurred with little coordination with power providers.
Adapting to DERs
Utilities have added advanced metering infrastructure, distributed sensors and intelligent grid software, but mainly as a means to accommodate DERs without a clear line of sight to new revenues.
A brave new world
As DER costs continue to fall and penetration rises, these assets are reaching a point where they can be treated as a true grid resource, providing services that benefit both the customer and the utility.
As renewables continue to take market share away from the power market's centralization generation, intelligently managed DERs offer a vision of a world where demand may be as easily dispatchable as supply. Markets and regulations must be redesigned, but the technical capabilities for this new grid have arrived.
Renewable penetration across U.S. energy markets
In two years, DERs have more than doubled in the Texas power market ERCOT from Q4 2016 to Q4 2018.
Intermittent renewable generation penetration varies by region, but is growing across all markets, with distributed generation growing in CAISO, ERCOT and PJM due to market condidtions.
In the U.S., utilities and regulators are increasingly looking at distributed energy solutions, such as demand response and energy storage, instead of natural gas peaker plants. For example, in April, Southern California Edison selected a roster of energy storage projects to supply capacity needs instead of the 262-megawatt natural-gas peaker plant it had chosen previously.
Brazil
Brazil is the leader in distributed solar Latin America with more than capacity growing more than 10-fold since 2017 to 750 megawatts.
India
The consultancy Bridge to India expects utility-scale solar capacity additions to cross 10,000 megawatts for the first time in 2019 in India, and for rooftop solar capacity additions to rise nearly 50%.
Africa
Off-grid energy investment, which includes solar panels to power lights, cellphones and other household devices, up to microgrids that power entire communities, rose from nearly nothing prior to 2010 to a total of nearly $1.7 billion at the end of 2018, with about 80 percent of that investment going to Africa.
Australia
Australian utility Evoenergy is creating virtual power plants using a mix of residential and commercial demand response paired with distributed battery storage.
Japan
Japan’s most recent Big Energy Plan calls for 44 percent of its 2030 power mix to be zero-emission using a mix of renewables and nuclear. Since 2016, the country has also deregulated its electricity sector with more than 450 energy retailers competing to offer solar and energy storage.
Germany
Germany will effectively have to replace 47 percent of its baseload capacity with new forms of generation in the coming years as it phases out nuclear generation and coal entirely.
United Kingdom
UK has clocked more than a week without burning coal to fuel its power needs for the first time since the Industrial Revolution, instead relying primarily on wind and nuclear generation, followed by biomass, natural gas, solar and imported electricity.
DERs proliferate
New Mexico
10%
8%
Washington
Utah
Hawaii
Massachusetts
New Jersey
West Virginia
6%
6%
3%
1%
1%
New York
0%
0%
Rhode Island
Puerto Rico
0%
South Carolina
26%
26%
Wyoming
North Dakota
New Hampshire
Indiana
Colorado
Montana
25%
22%
21%
21%
20%
Virginia
20%
19%
Louisiana
Ohio
Nebraska
Minnesota
Connecticut
Iowa
19%
18%
17%
14%
11%
Kansas
64%
60%
Illinois
Pennsylvania
Florida
Tennessee
Oregon
South Dakota
60%
59%
57%
56%
40%
Mississippi
37%
32%
North Carolina
Kentucky
Missouri
Arkansas
Alaska
Wisconsin
32%
31%
30%
28%
28%
Alabama
Maryland
Idaho
Delaware
74%
72%
72%
66%
27%
21%
20%
8%
6%
5%
5%
Solar
Other Nonrenewable
Wind
Other Renewable
0
40
80
120
160
200
240
Q4 2016
Q1 2017
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
Q3 2018
Q4 2018
