Utility bosses believe that the risk of electricity consumers going off-grid and using it only as occasional backup will increase significantly in the next two years.
That’s according to a new study from Accenture, in which 95 per cent of utilities agreed that the deployment of distributed generation technologies like rooftop solar is increasing faster than utilities can build new grid capacity to handle it in high-demand areas.
The proportion of both residential and commercial consumers with rooftop solar PV in the markets modelled in the report could exceed 15 per cent by 2036 in some parts of the world, such as California in the US.
And Accenture says that this trend is likely to continue to affect net electricity demand growth for the foreseeable future.
“Distribution businesses have had a tough time in recent years with weak demand, which is one reason why grid operators’ profits have been squeezed,” said Stephanie Jamison, a managing director at Accenture who leads its Transmission and Distribution business.
“The proliferation of distributed generation changes electricity demand profiles, potentially diminishing total demand without necessarily reducing peak demand. Successful distributed generation 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.”
The study surveyed 150 executives across 25 countries as part of Accenture’s Digitally Enabled Grid research programme.
It found that increased deployment of distributed generation will “complicate utilities’ operations, requiring distribution utilities to act now to avoid the excessive grid-reinforcement spending required to host new distributed generation 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 distributed generation forecasts, resulted in projected savings of 15-28 per cent in New York, 14-18 per cent in California, 14-15 per cent in Australia, and 11-12 per cent in both the UK and The Netherlands.
Indeed, distributed generation 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.
Accenture modelling predicted 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 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 1 per cent this year to 3 per cent by 2025, but could rise to 37 per cent by 2040, led by municipal buses, scooters and small commercial vehicles.
This trend, says Accenture, could translate to substantial new electricity demand. In fact, while the electricity consumption of EVs is expected to represent just over 1 per cent of the annual peak demand hour by 2025, it is forecast to rise to 6.9 per cent in the UK by 2040. In some markets like France and California, forecasts are even higher by that year – 10 per cent and 8 per cent, respectively).
The decarbonization of buildings is also likely to push up electricity demand in the long term, according to the study, with 96 per cent of utilities executives agreeing that decarbonization efforts will substantially reduce residential and commercial natural gas demand by 2040.
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,” Jamison said. “This suggests high growth 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.”