July 19, 2022
The “electrify everything” decarbonization strategy has gained serious momentum in recent years for multiple and powerful reasons. A big one is that the electric power sector itself can already point to a meaningful track record of decarbonization success. According to the Electric Power Research Institute (EPRI), the industry cut emissions 35 percent between 2005 and 2020. Importantly, the ongoing decarbonization of the electric sector and the expansion of end-use technologies that tap electricity for fuel are supported by both public policy and customer demand.
Last spring, for example, the Biden administration set a goal of fully decarbonizing the American electric grid by 2035. At the local level, 21 states plus the District of Columbia and Puerto Rico have pledged to achieve some version of 100 percent clean energy, with a number of states committing to 100 percent carbon-free electricity.
The demand for electrified building and transportation technologies by both individual consumers and large corporations is increasing as well. According to the market research firm Gartner, for example, six million EVs will be shipped globally in 2022. A survey late last year found that the average estimate among auto executives is that EVs will constitute over 50 percent of their new vehicle sales by 2030. Home and commercial building adoption of smart energy technologies, such as HVAC systems, smart thermostats and heat pumps is also rapidly accelerating.
Challenges of mass electrification
Widespread electrification can benefit the climate, local air quality and customers’ finances. But it’s also critical to be clear-eyed about the very real challenges that must be overcome as a power system dominated by large, centralized fossil fuel power plants transitions to one that is decarbonized, decentralized, connected by communication technology and full of assets capable of producing and consuming electricity.
An increased reliance on end-use technologies fueled by electricity means that demand for electrons will increase significantly. A recent report by EPRI shows how electricity’s share of end-use energy could climb from around 21 percent today to 33 percent in 2030. And, as the power system evolves to include larger and larger amounts of variable generation from wind and solar, the grid will also need to become vastly more flexible.
How demand flexibility supports electrification
Embracing the full potential of demand-side flexibility will help us meet the needs of an “electrified everything.” Many of the electrified end-use technologies contributing to rising electricity demand can also serve as grid flexibility resources. Smart energy devices can respond to signals to reduce or shift energy usage when the grid is strained. By lowering demand for electricity in response to the real-time needs of the grid, these flexible resources help grid operators avoid the need to fire up more polluting backup power plants. As distributed energy resources (DERs) of all types proliferate, they can take on a more active role in ensuring that electricity supply and demand remain in balance on the grid.
Platforms like Leap connect smart devices to energy markets, enabling the developers and operators of these assets to earn revenue by providing flexible support to the grid. Venture capital firm Energize VC recently recognized Leap on its list of “Top 30 Software Companies in Electrify Everything” for our role in enabling connected energy technologies to maximize their potential as grid resources.
An evolving landscape for demand-side resources
There are more and more opportunities for DERs to participate in wholesale markets in ways that benefit the grid and deliver financial benefits to asset owners and managers. In 2020 the Federal Energy Regulatory Commission (FERC) issued Order 2222 as a way to open up full DER participation in wholesale capacity, energy and ancillary services markets run by Independent System Operators (ISOs). It was enough of a shift in the traditional power system marketplace paradigm that the usually conservative regulators at FERC declared the change “a new day for distributed energy resources.”
The large influx of DERs – from connected thermostats and HVAC systems to fleets of electric buses to solar+storage systems – should be tapped to improve grid reliability and resilience. And, this should be done in a way that also incentivizes homeowners and businesses to invest in flexible resources. Working to make it easy and attractive for energy users to provide much-needed flexibility to the grid can help accelerate electrification in a way that benefits energy asset owners and operators, the power system and society as a whole.
Leap at VERGE Electrify
On July 27th, Leap’s Head of Partner Success Christie Dodge will join leaders from GridPoint and Walgreens at the GreenBiz VERGE Electrify virtual conference to talk about leveraging smart energy technologies to support building electrification and meet climate goals. Learn more here.