North America power & renewables long-term outlook H1 2019: Who's the greenest? Accelerated state plans for renewables pressure prices

Table of contents

• North American power demand finished 2018 as the strongest year for growth in a decade. This is largely attributed to a number of things such as strong economic growth, a wave of new energy intensive projects beginning operation and more extreme weather. However, demand this year has been more contained as most markets are now trending negative YOY due to much milder weather.
• Future demand trends remain heavily leveraged to new energies like energy efficiency, distributed generation and electric vehicles which are expected to account for a fifth of electric demand in 2040. As step function efficiency gains begin to moderate, early signs of an expected demand recovery are now emerging.
• Still, the days of 1% p.a. plus growth are not likely to return on a countrywide basis. At least until new end use electrification starts to take off.
• Natural gas market shows resilience in the face of associated gas although price forecast projects lower overall vs H2 2018 in the long term
• This outlook continues to assume a federal carbon price in the US starting 2028. This will also serve as a backstop floor price for all states under regional programs in the future.
• More regions and states are looking to price carbon or increase carbon targets in the absence of federal legislation including New Jersey into RGGI. All Canadian provinces are subject to a carbon price starting 2019 based on provincial policies or federal backstop prices.
• Renewables, storage & hybrid technologies
  • (Renewables include utility scale and distributed solar + onshore and offshore wind)
  • While utility scale solar and wind are expected to dominate renewable generation, emerging technologies are set to radically increase their market share. Residential and commercial solar is expected to account for 30% of all solar generation in 2040, doubling from today's level. Offshore wind accounts for 20% of wind generation by 2040, up from negligible levels today.
• Utility scale solar
• Residential Solar
• Non-Residential Solar
• Onshore Wind
• Offshore Wind
• Battery Storage (Grid scale)
  • 150 GW of battery storage capacity by 2040, from negligible levels.
• Hybrid Systems (Solar plus storage, Wind plus storage)
  • Technology LCOEs (levelized cost of energy):Cost of mature solar and wind technologies now below gas technologies across geographies in NA; expected to stay that way despite phase down of subsidies.
• Battery Cost
  • 2019 has already begun to deliver hints as to which regions may be at risk to reliability and resiliency events in the near to mid-term. In ERCOT and California intra-day price volatility is pointing to need for more reserves sooner rather than later. While in MISO and PJM, baseload generation failed to see significant prices this winter, despite renewables only able to contribute little to peak hours.
  • Renewable build out continues to supress prices. Northeastern markets are at more risk to lower pricing as mandates look to leverage off shore wind development. Combined wind and solar development will constrain prices in many markets.

Tables and charts

This report includes 3 images and tables including:

• Figure 1: H1 2019 vs H2 2018 forecast henry hub price
• Figure 3: Battery Cost Forecast
• Figure 2: LCOE ($/MWh) forecast for various technologies

What's included

This report contains:

• North America power & renewables long-term outlook H1 2019: Who's the greenest? Accelerated state plans for renewables pressure prices

  PDF 971.61 KB

• NAPRS_LTO_Base_Case_Prices_Sparks_IHR_Darks_Real_7_31_2019.xlsx

  XLSX 14.07 MB

• NAPRS_LTO_Base Case_Coal_Retirements_7_31_2019.xlsx

  XLSX 153.33 KB