Is our infrastructure ready? – The energy transition has come a long way in just a few years. According to the International Energy Agency (IEA), in 2020, net installed global renewable capacity grew by nearly 4%. Consequently, this growth led to a 7% increase in renewables use for generating electricity; in contrast, fossil fuels plunged to a low record demand of -6.1%.
Besides, renewable energy costs have experienced a substantial and sustained decline globally since 2010, driven mainly by increasing infrastructure additions and technological upgrades. As a result, in 2020, clean energy sources such as solar were labeled as the cheapest forms of electricity in human history by IEA. Therefore, they are projected to supply 90 percent of global electricity demand growth over the next 20 years.
Despite this advance, the challenges are significant. In North America, for instance, the political view upon renewables in terms of generation, transmission/distribution, and storage is not homogeneous; administrations can revoke permits, terminate projects, or cease investments.
Despite the rising awareness of the energy transition several companies and stakeholders are having to constantly deal with uncertainty. While the transformation is happening, its speed and effectiveness will depend on each country’s willingness to reinforce its clean infrastructure further.
The players in generation
Even in the face of the Covid-19 pandemic, 2020 was a good year for renewables in the United States. Therefore, according to IEA, the country outpaced its new renewable energy additions, with an expected additional increase of 30% by 2021.
Data from the Federal Energy Regulatory Commission (FERC) shows that, in 2020, renewable energy accounted for 71% of all new utility-scale capacity (14,734 megawatts out of the total 20,803 MW added). Furthermore, wind energy had a major contribution with 8,042 MW, and solar, with 6,485 MW.
Last year was also strong for renewables in Canada. For instance, the country ended with a total wind capacity of 13,588 MW, meaning that users covered 67 percent of their electricity demand through renewable energy. According to the Canadian Renewables Association (CanRea), the nation also had 3,000 MW of solar capacity added and significant storage growth.
As a result, projections for 2021 are optimistic. There are currently at least 240 MW of large-scale solar projects under development and 745 MW of wind projects under construction in Canada. Overall, CanREA expects a total of 2 GW of capacity to be installed in 2021.
In Mexico, according to data from the Energy Secretariat (SENER by its Spanish acronym), the installed capacity is already prepared to generate energy through renewable sources by 31%, spanned between geothermal (1.2%), nuclear (2%), solar (4.3%), wind (7.5%), and hydro (16%).
Some of the projects under development or about to enter commercial operations in the North America region, are:
- Pecan Prairie Solar Project by ConnectGen
Location: Leon County, Southwestern Texas. Expected capacity: 500 MW. Construction date: 2021. Expected operational date: early 2022.
- Sunflower Solar PV Farm by Recurrent Energy
Location: Sunflower County, Mississippi. Expected capacity: 100 MW. Status: currently under construction. Expected operational date: mid-2022.
- Ocean Wind Project by Orsted
Location: off the coasts of Atlantic City, in New Jersey. Expected capacity: 2,3 GW. Expected operational date: 2024.
- Vineyard Wind project by Avangrid
Location: Massachusetts. Expected capacity: 800 MW. It will be the U.S.’s first utility-scale offshore wind farm. Expected operational date: 2022.
- Muskrat Falls Hydro Project by Nalcor Energy
Location: Newfoundland and Labrador provinces, Canada. Expected capacity: 3000 MW. Operational date: August 2021.
- Wind Farm Mesa de Morenos, by BAS Corporation
Location: Pinos, Zacatecas, Mexico. Expected capacity: 76 MW. Operational date: June 2021 (to be confirmed).
Transmission, essential to a broader connection
Since the 1990s, first through NAFTA and now under the USMCA, North America has developed a deep business relationship regarding energy. Accordingly, transmission has not been the exception. To illustrate, there are currently 34 international transmission lines between the US and Canada that transport and supply electricity on both sides of the border.
Similarly, US-Mexico cross-border transmission efforts have been possible since 1993 through the Western Electricity Coordinating Council (WECC) and the Texas Electric Reliability Council (ERCOT). Moreover, these institutions have facilitated the regional coordination of electrical energy exchanges between utility companies in the US and the Federal Electricity Commission (CFE) in Mexico, now covering about 2,510 km (1560 miles).
However, the new renewable infrastructure also needs transmission lines to allow for a broader connection between the three countries. Therefore, investment and development of continental transmission lines are crucial issues in the energy transition.
For instance, a great project is Avangrid’s New England Clean Energy Connect (NECEC), which will create a connection with Canada to bring clean hydropower from Quebec to Maine and New England. Accordingly, Avangrid will install a 145-mile transmission line that, in partnership with Hydro-Quebec, will deliver up to 1,200 MW to Lewiston’s grid.
New York State is also making progress in renewable transmission infrastructure, with the Green Energy Superhighway project. Another significant effort is the North American Supergrid, first proposed in 2019. Consequently, NAS would be a 48-state network intended to transport renewable energy to demand centers.
Storage boom: to reshape the energy transition
Battery storage solutions are currently booming in the US. For instance, in the third quarter of 2020 alone, the country added 476 MW of storage capacity. Therefore, according to the latest Wood Mackenzie US Energy Storage Monitor report, these solutions increased 240% over the second quarter of 2020.
Moreover, in 2021, projects in this regard are expected to triple. By 2025 the U.S. market will have 7,5 GW of battery storage capacity newly added, mainly because of 2020’s sixfold growth. Besides, according to the EIA, utility-scale battery storage’s costs have decreased 70 percent over the last three years.
Energy storage solutions also grew rapidly during 2020 in Canada; for instance, the country currently has 130 MW / 250 MW hours in operation; 10% came online during 2020. With prices declining rapidly and regulatory frameworks advancing, storage solutions will continue to expand in 2021, particularly in Ontario, Alberta, Quebec, and Saskatchewan.
In Mexico, the road is still long as the country first needs to increase its clean energy use. However, the National Institute for Clean Energy and Energy (INEEL by its Spanish acronym) and the University of Birmingham are conducting a study to show the benefits of implementing energy storage technologies in Mexican communities.
Some projects secured during 2021’s first two months.
- Sungrow Energy, Chisholm Grid project
Location: Fort Worth, Texas. Expected storage capacity: 100 MW. Expected completion date: June 2021. Note: Once completed, it will be the largest battery storage facility in Texas.
- Wärtsilä Group, Eolica Coromuel Wind Farm.
Location: La Paz, Baja California, Mexico. Expected storage capacity: 10 MW. Expected Completion Date: Not disclosed. Note: first energy storage project of Wärtsilä in Mexico.
- PG&E and its expanded battery storage portfolio in California
The Pacific Gas & Electric Company expanded its battery storage portfolio for 2022 and 2023. Expected Storage Capacity: 1000 MW (through six initial projects). Expected completion dates: 2022-2023.
- NRStor, Oneida Energy Storage project
Location: Ontario, Canada. Expected storage capacity: 250 MW. Expected construction date: 2022. Note: Upon completion by 2024, it will be the largest complex of its kind in Canada.
An energy transition or a revolution?
The energy transition is taking place with different approaches across the region, not only on a material basis but also in each country’s regulatory realms.
In the US, for instance, federal, state, and local governments and electric utilities encourage programs such as the Renewable Electricity Production Tax Credit (PTC), the Investment Tax Credit (ITC), the Residential Energy Credit, and the renewable energy certificates or credits (RECs). Besides, most states have some financial incentives available to subsidize the installation of renewable energy equipment and the energy transition.
In Canada, the government manages funding, grants, and incentive programs to encourage renewable energy transition research, development, and demonstration. Therefore, some efforts include the Energy Innovation and the Green Infrastructure programs, among several others. The administration is also helping oil & gas companies transition through the Oil and Gas Clean Tech Program.
On the other hand, for Mexico, the scenario is very different. Consequently, according to a Wood Mackenzie report released in 2020, the country won’t reach its 35% clean energy target or the energy transition by 2024. Core reasons behind this situation are the non-definite cancellation of new electricity auctions due to the Covid-19 crisis, the increasing centralization of the electric market, and the announcement of new Federal Electricity Commission’s (CFE) combined-cycle gas plants additions.
In conclusion, different speeds and paces are evident within the US as a whole. In Canada, this energy transition is also expanding and evolving with a sense of urgency. On Mexico’s side, the country is currently facing its government’s reluctance to reinforce its existing renewable infrastructure further. While the transition is impending, it will highly depend on the vision its players acquire upon infrastructure to be remembered as a real revolution.