Ninety-five percent of utilities executives agree that the risk of electricity consumers going largely off the grid and only using it as occasional backup will increase significantly in the next two years, according to a study from Accenture, conducted as part of the company’s Digitally Enabled Grid research program.
The deployment of distributed generation (DG) technologies like rooftop solar is increasing faster than utilities can build new grid capacity to handle it in high-demand areas, according to the vast majority (95 per cent) of the 150 executives surveyed across 25 countries. In fact, almost half (48 per cent) of the respondents said that parts of their grid will reach maximum capacity in three years or less, with only one per cent believing it will take longer than five years.
The proportion of both residential and commercial consumers with rooftop solar photovoltaics in the markets modelled could even exceed 15 per cent by 2036 in some markets, such as California. This trend will likely continue to affect net electricity demand growth for the foreseeable future.
The study also notes that increased deployment of DG will complicate utilities’ operations, requiring distribution utilities to act now to avoid the excessive grid-reinforcement spending required to host new DG energy flows.
According to Accenture modelling, some markets could generate substantial capital reinforcement cost savings simply through better identification of local constraints on the distribution network. A 10 per cent improved accuracy in DG forecasts, resulted in projected savings of 15-28 perc ent in New York, 14-18 pe rcent in California, 14-15 percent in Australia, and 11-12 per cent in both the United Kingdom and the Netherlands.
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In fact, DG integration was ranked as the second-highest priority area as a cost-saving opportunity, selected by 59 per cent of respondents as one of their top five choices. The top priority, chosen by 61 per cent of respondents, was reducing supply chain unit costs through improved forecasting of materials and service requirements.
“Distribution businesses have had a tough time in recent years with more justification required for new capital expenditure than ever before” said Accenture’s utilities lead for Australia and New Zealand Simon Vardy.
“The proliferation of distributed generation changes electricity demand profiles, potentially diminishing total demand without necessarily reducing peak demand.
“Successful integration will require substantial investments in new connections and grid reinforcement to modernise the network and sustain the same level of reliability and safety and secure operations.”
While DG presents a challenge to distribution utilities, it’s also an opportunity, with 95 per cent of respondents saying that DG and storage-services provision will be a major profit growth area for distribution companies beyond 2025. More than half of respondents globally also identified owning each of the following assets as an opportunity for their business going forward: large-scale DG; grid-connected storage; small-scale prosumer DG; and community storage.
Electrification of transport and buildings will bolster electricity demand growth after 2026
Accenture modelling predicts that, following a period of stagnation, electricity demand could grow by 31 per cent between 2026 and 2036. The study and modelling partly attribute the growth to the meaningful impact that electric vehicles (EVs) and building heating electrification will have on demand growth starting around 2025.
The modelling revealed that the total percentage of plug-in electric vehicles in the overall vehicle stock is forecast to grow relatively slowly, from one per cent this year to three per cent by 2025, but could rise to 37 per cent by 2040, led by municipal buses, scooters and small commercial vehicles.
This trend could translate to substantial new electricity demand. Indeed, while the electricity consumption of EVs is expected to represent just over one per cent of the annual peak demand hour by 2025, it is forecast to rise almost fourfold in the markets modelled by 2040, to four per cent. In some markets like France and California, forecasts are even higher by that year (10 per cent and eight per cent, respectively).
The decarbonisation of buildings is also likely to push up electricity demand in the long term, with 96 per cent of utilities executives agreeing that decarbonisation efforts will substantially reduce residential and commercial natural gas demand by 2040.
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Just the combined effects of transport and heating electrification could push peak demand up significantly, with Accenture modelling suggesting that the average electricity consumption during the peak demand hour could rise by around 63 per cent from 2016 in 2040.
“Mass adoption of electric vehicles and the electrification of building heating is poised to alter demand growth and load shape in the longer term,” Vardy said.
“This suggests new potential for utility distributors, but it will also put pressure on grid stability. The key will be to navigate this disruption by making the grid more resilient through greater use of smart technologies and utilising all sources of flexibility including on the demand side, adopting a more customer-centric approach.”