| | JULY 20228CIOReviewScan any recent news articles or electric utility resource plans,and you may conclude that fossil-fired generation, particularly coal-based, may soon be extinct. Older, less efficient fossil plants are being retired for economic and environmental reasons. Unfortunately, their fate is similar to the dinosaurs that created the fuel sources now front and center in the climate change deliberations. Meanwhile, encouraged by favorable tax treatment and mandates (both corporate and governmental), the future is bright for renewable electric generation resources. While the olderfossil plants may not be as competitive as renewable resources from a marginal cost of energy standpoint, their locations and related infrastructure can be repurposed, providing needed ancillary services to mitigate the variability associated with renewable generating resources.Renewable RaceIn the U.S., many states have adopted renewable portfolio standards and goals, mandating that a certain percentage of the electricity generated in that state comes from renewable energy sources. In fact,California has announced that by 2045, all electricity (100 percent) in the state will come from renewable sources. The Golden State is on schedule to meet its target, with renewable generation sources already providing 30 percent of its total electricity needs as of 2020. Positive FeedbackAn increase in demand for renewable resources coupled with committed capital and favorable tax benefits has caused more proposed wind and solar generation to come online in the U.S. As the levelized cost of these renewable resources decreases, the effect of adding more renewable generation to the electric grid will continue to place a downward trend on the marginal price of electricity.This will make it even more difficult for the fossil-fired generation to compete on a merit-order basis. A virtuous cycle for renewables puts further pressure on older fossil plants to retire.Meanwhile, electric vehicles (E.V.s) are becoming more popular in the U.S. As the supply of E.V.s ramps up to meet demand, the relative cost of these vehicles compared to traditional combustion engine cars continues to improve, aided by the decreasing cost of E.V. batteries. It is predicted that by 2025 E.V.'s will cost less than combustion engine vehicles. In addition, the future price of batteries for cars and other uses is forecasted to decrease. Corporate/ESG MandatesSupporting renewable generation has been widely adopted by many leading U.S. technology companies, with some pledging to have all of their energy needs supplied by renewable resources. For example, Google, Apple, and Facebook are early adopters in this "green" movement and have announced that 100 percent of their energy needs are met with renewable power purchase agreements. Meanwhile,in response to investor needs, several leading infrastructure investment firm srequire investments to meet or REPURPOSING RESOURCES: INSTALLING NEW BATTERY ENERGY STORAGE UTILIZING EXISTING INFRASTRUCTUREBy Julian Kaufmann, Senior Vice President, CAMSJulian KaufmannIN MY OPINION
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