From electric vehicle investment to virtual power plants: key themes shaping the US grid edge
Highlights from our Q4 2021 grid edge quarterly briefing
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Ben Hertz-Shargel
Global Head of Grid Edge
Ben Hertz-Shargel
Global Head of Grid Edge
Ben leads research across electrification and grid technologies, drawing on a decade of executive experience.
View Ben Hertz-Shargel's full profileThe growth of distributed energy resources on the grid edge continues to influence many sectors of the energy industry. In the last few months, we’ve seen this play out in the automotive industry’s increasing investment in downstream energy services and virtual power plants becoming more commonplace.
Each quarter, our Grid Edge team provides a comprehensive briefing, including updates and analysis of the key themes and developments in the grid edge ecosystem. Fill in the form to access a complimentary extract from the latest briefing or read on for three key themes to watch.
Automakers invest in downstream energy services and commit to EVs
General Motors (GM) is committing to electric vehicles (EVs) in a big way. This quarter, it has announced it would be upping its investment in EVs by 30%, has formed new partnerships and launched a new service that demonstrates its capabilities in the sector.
The automaker plans to partner with Shell to offer free overnight charging for EVs from renewables in Texas. Charging vehicles overnight using renewables can reduce grid strain and soak up excess wind capacity, reducing transportation emissions. Ultium Charge 360, GM’s new fleet advisory service, will help customers identify ways to plan, finance, construct and operate charging infrastructure. GM’s move follows a broader trend as the automaker, network operator and utility industries invest in fleet charging solutions.
Like GM, Ford is developing expertise in battery manufacturing, fleet management and, more recently, residential charging solutions. Ford’s partnership with SunRun on residential charging for its backup home energy system F-150 Lightning provides a foothold for post-purchase energy services.
Other automakers are making moves into downstream energy services, laying the groundwork for those in the sector to become energy providers. Most recently, Tesla has applied to become a retail electric provider in Texas. It’s not clear yet whether other car manufacturers will follow suit and, more generally, if their plans will extend beyond EV charging to retail electricity sales.
Storage markets are expanding
Storage is beginning to feature more prominently in microgrids.
There is now more energy storage capacity in the project pipeline in the next two years than either natural gas generators or combined heat and power (CHP) systems. Just over 80% of systems with energy storage also include solar.
Storage is also increasingly being aggregated.
Since initial announcements in 2016, virtual power plants (VPPs) using energy storage in the US have become more common as residential, commercial and industrial (C&I) customers install batteries. Now, capacity in VPPs is approaching 1GW in the US.
The primary opportunities for VPPs are concentrated in four key markets with state battery incentives – New England, New York, California and Hawaii – but growth is likely to be national as utility pilots expand and new incentives emerge.
We expect competition for storage customers to increase as platform providers, such as Tesla, compete with pure-play aggregators to monetize their assets.
Joint ventures between developers and investors on the rise
In the last few years there has been a slew of joint ventures (JVs) between developers and investors, signaling the more active role that investors are seeking in projects.
The newest of these is Levo, a transportation-as-a-service JV between Nuvve and private equity firm Stonepeak. Levo will provide services to commercial fleets and develop vehicle-to-grid (V2G) hubs throughout the country. School buses will be Levo’s first target, but the company also plans to work with commercial fleets such as last mile delivery, ride sharing and municipal fleets.
Nuvve has been developing V2G hubs for several months. These hubs, from two to 50 MW, will co-locate renewable generation with chargers behind a single point of interconnection. This model reduces interconnection costs and complexity while improving the facility’s load factor, reducing energy costs.
Stonepeak plans to commit US$750 million to the joint venture.