Outside forces — from the weather to electric vehicle sales — influence the growth of microgrids. So it’s valuable to step back and consider some of the larger energy trends.
The Sustainable Energy in America 2023 Factbook, published today by BloombergNEF and the Business Council of Sustainability (BCSE), affords an opportunity to do so by offering some intriguing insights into the last 12 months.
If you heard a lot last year about microgrids keeping the lights on during storms, earthquakes and wildfires, that’s not surprising. It turns out that 2022 was the third most costly climate disaster year on record causing at least $1 billion in damage and causing about 3.4 million Americans to evacuate their homes.
“In response, citizens and communities are installing a growing number of residential back-up power storage systems and minigrids [microgrids],” said the report.
Another big takeaway from the report is the idea that decarbonization investment has become “hard-wired” into the economy. Last year energy transition investment rose 11% year-on-year to $141 billion and the amount of renewable energy produced broke all-time records. Among the major energy sectors, renewable energy generation grew the fastest — a 13% year-on-year rise. It provided 27% of total US power in 2022.
The push for renewables influences microgrid growth. Companies and communities are installing renewable microgrids to achieve dual goals: both resilience and sustainability. A microgrid provides on-site energy — so the customer knows for certain the power is renewable, something not always assured if it comes via a contract for off-site power or renewable energy credits.
In addition, microgrids are increasingly viewed as a way to help stabilize the grid as it comes to depend more and more on wind and solar energy, which are variable resources. As wind or solar ebbs and flows during the day, microgrids can quickly ramp up or down to help balance supply and demand on the grid.
Another important trend to watch is electric vehicle sales (EVs), which rose nearly 50% last year, according to the report. EVs are creating demand for power where it did not exist before — such as in remote areas or congested cities where it’s difficult to build additional utility infrastructure. This, combined with concern among businesses that they won’t be able to dispatch their fleets during power outages, opens the door for more microgrids.
EV growth is expected to accelerate because of the Inflation Reduction Act signed last year by President Joe Biden. The new law extends and modifies credits for clean cars. States also are doing their part, according to the report. California finalized a policy last year that calls for 100% zero-emission vehicle sales starting in 2035. New York, Massachusetts, Washington and Oregon are expected to follow with similar policies.
Finally, the report finds growing investment in renewable natural gas, a fuel that microgrid developers are beginning to embrace.
“There’s no turning back,” said Lisa Jacobson. BCSE president. “Despite the many challenges of the past year, the US economy is primed for clean, sustainable growth that will reduce emissions and increase employment opportunities while ensuring that we have the sustainable energy we need to continue growing the economy. The lesson of 2022 is that we have to continue to make the policy and regulatory choices necessary to keep the momentum going."
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