In the United States, energy and utility enterprises are central to the national decarbonization agenda. Industry leaders are well aware of that, having primed their energy transition strategies for several decades. As a result, the U.S. currently has the world’s second-largest renewables market, and in the first half of 2022, 24% of U.S. electricity generation came from renewable sources. The public sector is also aware of the pivotal role renewables will play in propelling nationwide decarbonization, investing billions in energy and climate change programs through the Inflation Reduction Act and the Bipartisan Infrastructure Bill.
That’s not to say the work is done—or all the necessary investments have been made. Experts predict that annual clean energy investments must triple by 2030 to reach net zero carbon emissions by 2050. To meet the growing demand for renewable energy, industry leaders must prepare for a new wave of business transformation challenges and a period of hypergrowth the industry has arguably never seen before.
With so much movement in the market, what sources are business leaders prioritizing—and how are they ensuring they successfully scale these initiatives considering federal and state funding opportunities?
According to Capgemini’s World Energy Markets Observatory report, these four renewable energy sources are at the forefront of American energy transition strategies:
As one of the most readily available, and cheapest, clean energy sources, solar power plays a large role in the American electricity mix. According to 2021 research from the Solar Energy Industries Association, solar power has experienced an annual average growth rate of 33% over the last decade—across residential, commercial, community, and utility installations.
Globally, solar technologies are amongst the most mature renewable solutions, and many countries—including the United States—plan to increase solar generation to safeguard domestic energy supply, create jobs, and decrease carbon emissions. Despite the plethora of funding opportunities, the relatively inexpensive nature of solar energy, and years-long public acceptance of solar power, there’s still much work to be done by energy and utility leaders. To effectively expand their solar programs and see a return on their investments, leaders must identify and deploy digital enablers that will accelerate their solar programs. And before they deploy these digital enablers, energy and utility players must rethink their approach to operations, project development, procurement, and a variety of other business functions.
Much like solar, the United States is also prioritizing another well-known renewable, wind power, to propel nationwide clean electricity goals—particularly onshore and offshore wind. The U.S. Department of Energy (DOE) estimated onshore wind investments totaled $20 billion in 2021, providing 9% of nationwide electricity. The DOE also noted the national offshore wind pipeline grew 14% over the previous year—and with 19 projects at the permitting stage and 8 states setting offshore wind goals by 2040, this growth should continue.
With support at the federal and state levels, industry players should expect to expand their wind initiatives. AI for predictive maintenance heightened cybersecurity solutions, and improved supervisory control and data acquisition architectures are just a few of the digital capabilities that leaders must consider when expanding their wind power portfolios.
2022 marked a significant milestone for clean hydrogen in the United States. In September, the federal government announced the DOE National Clean Hydrogen Strategy and Roadmap, setting aside $7 billion for up to 10 regional hydrogen hubs. And in December, the government announced its goal to issue $750 million in funding to reduce the cost of clean hydrogen technology. Both measures are aimed at providing commercial-scale deployment to decarbonize key industrial sectors and help ensure the country achieves a completely clean electrical grid by 2035.
These funds offer industry players an opportunity to expand their hydrogen programs—which are in fairly nascent stages across the board. Globally, just 11% of energy and utilities organizations have scaled low-carbon hydrogen projects. However, BloombergNEF’s New Energy Outlook 2022 report projects that hydrogen will be the “single biggest source of power demand globally by 2050,” and estimates that 88% of hydrogen production will occur thanks to grid-connected electrolyzers.
For energy and utility organizations to prepare for this wave of demand, they must develop a sharpened market view, based on both current and anticipated market trends. This includes having a crystal clear, in-depth understanding of the inventive structure that is in place in their respective markets, as well as of the various regulatory and eligibility obligations and supply chain challenges. One of the many tools they should leverage to achieve this is an evolving, scalable digital support system. This could include AI and predictive analytics, along with the traditional analysis of market fundamentals.
Although it may be categorized as a form of “climate tech,” and not a source of renewable energy, battery storage will play an increasingly important role as the United States looks to transform the national electricity mix and scale renewable energy initiatives. After all, what’s the point of harnessing clean energy sources if we can’t adequately store them?
Battery storage encapsulates EV battery technology as well as utility-scale and behind-the-meter batteries connected to electricity grids to store and distribute energy. Compared to generative energy sources, battery storage is arguably an overlooked field in energy transformation, but it’s finally gaining momentum in the U.S. The DOE is projected to invest $27 million in battery storage technology. And with EV sales forecasted to reach approximately 29.5% of all new American car sales by 2030, battery gigafactories are rapidly popping up in the United States.
As American energy and utility organizations, and the broader ecosystem of their partners and clients, look to renewable power sources and EVs to decarbonize, these business leaders must also develop battery storage initiatives to support these plans. Every investment project in solar, wind, hydrogen, and any other form of clean energy should have corresponding tactics to develop battery storage and distribution capabilities.
With billions of dollars in government funding becoming widely available to scale renewables and climate tech solutions, the American energy and utility market will undergo extreme changes for years to come. Decades-long, digitally-driven business transformation strategies are already underway, but industry leaders must take the time to rethink those strategies and restructure their investments now to truly cash in on renewables in the long term.
Claire is a Vice President in Capgemini Americas’ Energy, Utilities and Chemicals business unit, focused on power, utilities and renewables. She is a leader in retail and wholesale energy, trading and risk management and digital transformation. In her role, Claire draws upon over 25 years’ experience in consulting and business development, tackling complex projects, leading diverse teams of project staff, technology specialists and consultants and advising C-level executives, Board of Directors and PMO boards to deliver excellent results. Claire’s deep experience working with various public and private companies makes her a unique leader in the energy industry.
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