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September Power and Renewables Research Highlights
02 October 2020IHS Markit Energy Expert
Rolling blackouts return to California's power markets;
Evolution of the NEM: Navigating Australia's renewable energy
transition; India's new renewable trading platform; EV home
charging models; and more
Global wind turbine installation overview and announced
wind turbine order tracker
IHS Markit tracked 62.5 GW of new wind installations in 2019,
22% higher than the year before. While over 90% of this was in
onshore, the offshore sector also remained strong with annual
installations growing by 45%. However, the COVID-19 pandemic
resulted in a slow start to 2020 with only 23.5 GW of publicly
announced firm wind turbine orders recorded globally in the first
half.
Major OEMs have consolidated market share globally with the five
largest players comprising Vestas, SGRE, Goldwind, GE, and Envision
supplying nearly 70% of the global installations in 2019. In terms
of announced turbine contracts in first half 2020, Vestas retained
its lead position globally while mainland China's ongoing
installation rush resulted in local OEMs taking five of the top ten
spots.
In 2020, global wind installations are expected to be driven by
the United States and mainland China while significant growth in
ordering activity has also been observed in other markets including
the Nordics, Vietnam, Poland, and the United Kingdom in first half
2020.
While 2.X MW turbines were the most installed in 2019, announced
orders have indicated a growing share of low and medium wind speed
models with larger rotor diameters. IHS Markit has tracked orders
for onshore turbines rated up to 6.6 MW with rotor sizes of 170
meters across various markets but predominantly in the Nordics,
Brazil, Turkey, and Australia.
Read more in our
recent blog post, "Wind turbine manufacturers cash in on the
ongoing installations rush."
Evolution of the NEM: Navigating Australia's renewable
energy transition
The Australian Energy Market Operator (AEMO) released the
updated power system roadmap on 30 July 2020 to address future
power generation and transmission issues that the National
Electricity Market (NEM) is likely to face over the next 20 years.
The 2020 Integrated System Plan (ISP) reaffirms Australia's
intention to shift away from centralized coal-fired power
generation toward a diverse portfolio dominated by distributed
solar photovoltaic (PV) and utility-scale wind and solar, but lays
out a more aggressive path to achieving this goal compared with the
2018 ISP.
Coal-fired power is projected to lose its dominant position with
the phaseout of an aging fleet and the lack of new additions, owing
to reduced economic competitiveness and environmental concerns.
Despite various grid challenges, wind and solar are expected to
register strong growth, together projected to account for over 64%
of NEM's total installed capacity and generation in 2050. Pumped
storage and batteries would be preferred over gas-fired power to
firm the grid in the NEM.
Read more in our
recent blog post, "Evolution of the NEM: Navigating Australia's
renewable energy transition."
Ghosts from summers past: Rolling blackouts return to
California's power market
Friday, 14 August, the California Independent System Operator
(CAISO) declared a Stage 3 Emergency for the first time since the
2001 energy crisis, requiring electric utilities to shed 1,000 MW
of load between approximately 6:40 pm and 8:40 pm. More than
400,000 customers lost electricity for about an hour at a time.
Another Stage 3 Emergency was declared on Saturday, 15 August,
requiring nearly 500 MW of intentional blackouts, but it lasted for
only 20 minutes—between roughly 6:30 pm and 6:50 pm. CAISO
warns that that similar load-shedding events could occur again.
Hot weather pushed power demand to its highest point in 2020,
but not atypically so. Low wind generation on 14 August yielded the
highest level of net load so far in 2020. Generator outages
totaling 5 GW contributed to the supply shortfall on 14 August
2020. Batteries adjusted their performance during the system
emergency on 14 August in accordance with their role as capacity
resources. As a consequence of these events, a stronger resource
adequacy mechanism may emerge in the future.
Read more in our
recent blog post, "Ghosts from summers past: Rolling blackouts
return to California's power market."
Lowering the cost of charging at home with submetering:
One piece to the electric vehicle adoption puzzle
Mass electric vehicle (EV) adoption faces a variety of
challenges—consumer preferences, range anxiety, and cost of
ownership, to name a few. While automakers are addressing these
headwinds, electric power utilities can too by affecting the cost
of charging. To date, most utility initiatives have focused on
make-ready public charging investments even though more than 80% of
charging occurs at home. Xcel Energy's (Xcel) recently approved EV
Home Service program is an innovative exception. By enrolling, EV
owners can lower the cost of charging at home through time-of-use
(TOU) electricity prices and home-charging equipment leases. Xcel
will also use the home-charging equipment as the electricity meter
(i.e., a submetering scheme). The cost of owning an EV will be
lower under the EV Home Service program, making EVs more
competitive with internal combustion engines (ICEs). Thus, EV
adoption could accelerate relative to the status quo.
EV charging initiatives comply with and support state
decarbonization laws and goals. TOU rate structures unlock
lower-priced electricity for EVs and submetering with home EV
charging stations lowers the cost of implementing TOU rates by
avoiding a second utility meter. Submetering could be an effective
approach for implementing favorable off-peak EV charging rates at
many utilities.
Finding more ways to reduce the cost of owning an EV, like
centering submetering schemes around EVs instead of home EVSE,
could accelerate adoption relative to the status quo.
India launches an integrated platform for renewable
energy trading, offering a market-based alternative to long-term
PPAs
The Central Electricity Regulatory Commission (CERC) on 17
August 2020 approved the Indian Energy Exchange (IEX) petition for
the introduction of the Green Term-ahead Market (GTAM)—an
integrated platform for renewable energy (RE) contracts with a
transparent market-based price-discovery mechanism. Currently, RE
transactions are dominated by long-term power purchase agreements
(PPAs) backed by central and state-level auctions. To boost new
renewable additions, the GTAM offers an alternative market-based
solution to market participants focused on short-term
transactions.
An organized exclusive renewable energy market will facilitate
additional RE procurement options and is expected to stimulate new
investments in the short-term.
However, despite positive intent around the new framework, there
are a few questions that raise concern over GTAM implementation.
What is the future of the Renewable Energy Certificate (REC)
market? How will this new platform coexist with the existing
Term-Ahead Market (TAM)? And finally, an additional market price
contradicts recent efforts to create a uniform market-clearing
price in the short-term market.
Other hot topics from IHS Markit's September research
include:
Unlocking potential of the offshore wind market in South
Korea
Market Briefing: Global geothermal energy (see our
infographic)
North American microgrids: Market activity and drivers
