Recently, Camus’ CEO Astrid Atkinson spoke to solar and storage project developers at one of the world’s largest conferences of its kind: Intersolar / Energy Storage North America. Her message: electrification is the largest business opportunity that the world has ever seen, and American rural communities stand to reap considerable long-term benefits from the clean energy transition.
In particular, Astrid pointed out that rural electricity providers have a unique opportunity to drive massive renewable adoption and electrification at scale, which can significantly reduce energy costs and bolster grid reliability while stimulating local economies and bolstering energy resilience in the communities they serve. For solar and storage project developers, rural utilities can be effective and valued partners.
In case you missed it, here are a few of the key takeaways from Astrid’s presentation:
It’s no secret that America’s renewable energy capacity has grown immensely, driven by federal and local incentives, technology advancements, and significant cost reductions. In the last decade, U.S. solar has achieved an annual growth rate of 33%, reaching more than 135 gigawatts (GW) of installed capacity across the country. Installed wind capacity tops solar at 138 GW of operating capacity, roughly 10% of which was installed in the last year. And with the recently-passed Inflation Reduction Act (IRA), billions of dollars in clean energy tax credits and other incentives will help the industry sustain rapid growth for years to come.
Adapting the electric grid to manage this transition to clean generation is expensive. Total costs for grid adaptation are expected to approach ~$4 trillion by 2040, according to WoodMackenzie. But when compared with the $23 trillion price tag for continuing with fossil fuels extraction and generation, the clean energy path is a clear and obvious winner.
For rural communities, the large-scale investment in renewable generation provides a huge opportunity for local economic development. Why? Because rural communities are where renewable resources are most ample and where there’s sufficient space to develop them. For example, 99% of America’s on-shore wind capacity operates in rural areas.
It’s true that transmission constraints and land use concerns will serve as barriers to unfettered renewable development, but even so, by 2030 wind and solar are set to outpace the annual revenue of the top three rural economic products: cattle, corn, and soy. And from 2020 to 2030, RMI projects that renewables will generate more than $200 billion in direct benefits for rural communities - including wages, land lease payments, and tax income.
That’s good news for rural utilities who are well-positioned to play a critical role in accelerating renewable energy adoption and delivering a myriad of financial and economic benefits to the grid and their local communities. And it's good news for the renewables developers who have allied with rural utilities.
Renewables development is also closely tied to electrification, as low marginal cost generation strengthens the economic case for moving from fossil fuels to electricity. And electrification offers its own opportunities for rural communities to benefit from the energy transition:
Together, renewable development and electrification are driving billions of dollars in local economic development and energy cost savings for rural communities.
Today, many local utilities are already taking action to provide their members with the benefits of renewable energy.
Each of these utilities is working alongside teams of renewables developers, engineers, and installers to safely and reliably incorporate local resources into the grid. These are just a handful of the many rural utilities who are leading by example – leveraging local renewable development and electrification to increase affordability, reliability, and sustainability.
The transition to 100% zero-carbon energy and a 100% electrification-ready grid is not without challenges. The most direct is the need to evolve the physical capacity and operating model of the grid itself.
Today, utilities rely on smart inverters to help manage local (and grid-wide) voltage concerns from small-scale resources – like residential solar. For large-scale renewable generation and electrification projects, potential grid impacts are assessed during the development phase. Often constraints will emerge at the upline distribution transformer, conductor, feeder, or substation. Identifying a single hour of the year during which a new project pushes local grid conditions out of bounds can be enough to stop a project – or at least add significant cost for grid upgrades. Looking forward, flexible interconnections – where generation and load is managed for dynamic grid constraints via real-time operations – can help address reliability concerns while increasing hosting capacity.
In addition to the physical grid infrastructure and operating model, contractual constraints often slow progress. A common barrier for distribution cooperatives is an “all-requirements” contract with their Generation & Transmission (G&T) supplier. These contracts limit local development in an effort to fairly allocate historic and fixed power supply costs across G&T members. Moving forward, distribution co-ops and their G&T providers need to work together to enable the transition without leaving folks stranded with expensive, dirty fossil generation. Doing so will require many uncomfortable conversations, but it’s better to take action today than to wait for the problem to worsen.
Fortunately it’s not all challenges. With widespread electrification and deployment of local renewable generation, new opportunities emerge. The flexibility of new electric loads and growing renewable supply makes it possible for utilities (or individual consumers) to optimize energy usage for minimizing carbon footprint – in accordance with 24x7 carbon optimization models. Community utilities can also harness the increased flexibility of loads and generation to create local markets for flexibility & generation services – lowering total costs and increasing the efficiency of their grid.
Ultimately, our team at Camus believes that the future is bright for rural communities. We're excited to be partnering with the rural utilities who are leading the transition to 100% clean energy and electrification, and we look forward to collaborating with the solar and storage developers who are building the next generation of energy infrastructure in rural America.