| | SEPTEMBER 20249CIOReviewlocations 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%) 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% 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% of their energy needs are met with renewable power purchase agreements. Meanwhile, in response to investor needs, several leading infrastructure investment firms require investments to meet or exceed certain environmental, social and governance (ESG) requirements. Notably, Blackrock, one of the world's largest infrastructure investors, made news in 2020 when it said it would no longer support new coal-fired investments in its portfolio. Best with BESSWhile renewable generation often offers lower costs and desirable environmental attributes, its output is inherently variable, thus creating challenges for grid operators who have to balance electrical generation supply with demand continuously. To provide dependable electrical supply, battery energy storage systems (BESS) capture low-cost energy and discharge it during higher-demand (higher-price) periods when renewable energy supply is otherwise reduced. These BESS modular systems can be quickly designed, configured and constructed utilizing excess space adjacent to or replacing existing fossil-fuel electrical generators. Location, Location, LocationLarger, utility-scale renewable projects are typically located where land is plentiful and often have to rely on ever more constrained electric transmission systems to deliver energy to demand centers. However, existing fossil fuel plants are likely to enjoy electrical interconnections that could be preserved, allowing the new BESS at "old" plants to deliver electricity while maintaining their existing point of interconnection. By preserving their spot in the electrical interconnection queue, existing generating resources can take advantage of reduced transmission-related charges and shorten the amount of time needed to deliver power to the grid. Everything Old Is New AgainRenewable generation is projected to be the dominant form of new electric generation resources. BESS systems installed at existing fossil sites provide a responsive, cost-effective solution that supports ESG goals while enhancing grid reliability. Supporting 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
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