To meet California’s RPS requirements, new generation is expected to come largely from solar photovoltaic due to abundant desert resources and few other options that can be built at scale. The main problem with solar energy generation is that the sun doesn’t shine all the time and demand for energy usage usually falls at times when the sun isn’t high enough in the sky to provide peak utilization.
Battery storage not only smooths the distribution of solar power distribution, but it can strengthen the grid and provide a number of revenue streams for an investment including resource adequacy fees, energy arbitrage and frequency regulation. Storage can also prevent or defer expensive transmission upgrades.
In June 2021 the California Public Utilities Commission (CPUC) approved the procurement of 11.5 GW of resource adequacy, a capacity product that will be filled largely from storage, exclusively from clean energy sources by 2026, evidencing the expected significant transformation of the power grid.
Southern California Edison, the largest in-state utility, estimates 80+ GW of new utility-scale clean generation and 30+ GW of utility-scale storage will be needed by 2045. This requires a development rate that is 2-3x higher than historical levels, representing $170bn of renewable energy investment, the SCE Pathway 2045 Report published in November 2019 highlights.
Through its investment in Terra-Gen, Igneo Infrastructure Partners has several projects in operation and under development that will play a part in transforming the state’s electric grid. These investments also place the company and Igneo at the forefront of battery energy storage and deployment.
Terra-Gen has approximately 1,300 MW (~3,100 MWh) of grid storage in operations or under construction. In 2022 the company anticipates initiating construction on another 600 MW (1,110 MWh) of storage, with significant additional buildout forecast for 2023 through 2025.
While California is a leader in renewable energy adoption, other states have made similarly impressive commitments over the last 5 years and the state-based transformation of the electricity sector is expected to continue elsewhere in the country.
The lucky country
Australia is an example of a country and region where the origination of large scale renewable energy projects has been slow to date but is expected to accelerate quickly.
Just five years ago, 17% of the country’s electricity came from renewable sources such as wind, water and sun. Fast forward to the end of 2020, as bush fires and floods have continued to ravage some of the country’s more heavily populated regions, more and more Australians have made the decision to turn to renewable energy sources, with more than 27% of the country’s electricity generated by clean sources. The majority of this energy was generated by individuals adding solar panels on their roofs.
Small-scale solar added more than 3 GW of new capacity in 2020 to record its fourth-straight record-breaking year, Clean Energy Australia has reported.
The large-scale sector contributed just 2 GW of new capacity with 32 projects completed around the country in 2020, however a further 76 large-scale wind and solar projects are currently under construction, representing more than 8 GW of new capacity, Clean Energy Australia’s latest report highlights.
Approximately 50GW of new renewable capacity and 20GW of storage capacity will be needed by 2050 to replace the existing fossil fuel fleet and reach Australian decarbonisation targets, according to forecasts by Aurora Energy Research.
Despite the lack of Federal Government support for the energy transition, an acceleration of the transition from fossil fuels to renewables is happening, as evidenced by recent major energy utility announcements in early 2022. Notable among these announcements was AGL Energy’s announcement to bring forward to closures of the Bayswater and Loy Yang A power stations, and Origin Energy’s call to close Eraring Power Plant, the country’s biggest coal-fired power plant, seven years earlier than previously planned.
Accelerating coal retirement will require a 40% increase in annual renewables deployment over the next 10 years Australian Energy Market Operator data shows.
Through its investment in Atmos Renewables, Igneo Infrastructure Partners is well positioned this year and beyond to deploy capital quickly into the region as the investment in renewable power generation accelerates.
Igneo will use its experience and deep knowledge in different regions to play an important role in the world’s renewable energy transition.