Full Title: U.S. Power Sector Outlook 2021: Rapid Transition Continues to Reshape Country’s Electricity Generation
Author(s): Dennis Wamsted, Seth Feaster, David Schlissel
Publisher(s): Institute for Energy Economics and Financial Analysis (IEEFA)
Publication Date: April 1, 2021
Full Text: Download Resource
The scope and speed of the transition away from fossil fuels, particularly coal, has been building for the past decade. That transition, driven by the increasing adoption of renewable energy and battery storage, is now nearing exponential growth, particularly for solar. The impact in the next two to three years is going to be transformative.
This year’s outlook also includes a section on the significant expansion in power sector applications of battery storage. Little more than a demonstration-scale technology four years ago, utility scale storage installations topped the 1 gigawatt mark this year and are pegged to jump to almost 6 GW annually by 2025. These developments, currently largely using four-hour duration lithium batteries, give utilities the ability to store wind and solar generation when it is not needed and use it during periods of peak demand. As one utility executive has described it, this enables “solar after sunset.” IEEFA expects the coming surge in battery storage deployment to further undercut the economics of both coal and gas-fired generation, speeding future fossil retirements.
On top of these market-driven changes, it is clear the new Biden administration is going to take a much more aggressive policy approach over the next four years to quickly push the U.S. electricity sector to be less carbon-intensive. In her first speech, Energy Secretary Jennifer Granholm said: “The Department of Energy is one of our government’s most fighting forces as we pursue the goal of a carbon-pollution free country. We have to add hundreds of gigawatts to the grid over the next four years. It’s a huge amount. And there’s so little time.”