Smart Contractors Will Adapt To Serve Evolving Energy Market
The energy market last year fell as if swallowed by a Florida sinkhole, and a report from Moody’s Investor Service says the oil and gas price outlook will remain negative until well into 2016. While engineers and contractors serving the energy industry wait for the market’s mojo to come back, they need to find work, not just to save their companies today but to ensure that their workforce keeps its edge to be prepared when the market returns.
Even in a down market like this one, there are bright spots, like green shoots in a burnt-over forest. E&Cs who wonder where their next contract is coming from need to look smarter, not harder. Technological advances helped create the glut that the market is choking on, but other technological advances are creating opportunities for E&Cs to stay engaged for the duration. The U.S. energy storage market, for example, had its best quarter in two and a half years in Q2/2015, when 40.7 MW of storage was deployed, according to GTM Research and the Energy Storage Association. Plug-in electric vehicles will drive another growth market: EV charging stations. In May, Navigant Research reported 2014 PEV sales in North America of more than 133,000 and forecast that PEV sales in the U.S. alone will be between 860,000 and 1.2 million annually in 2024.
The bulk of the Q2 energy storage growth consisted in the interconnection of a 31.5-MW project in the PJM region. One of the principal drivers of energy storage demand is the growth of wind and solar installations, which require either spinning reserves such as gas-turbine plants or large-scale storage. Tesla Motors’ battery gigafactory is one construction-related result of this trend. In Pennsylvania, Beacon Power LLC’s new flywheel plant provides 20 MW of frequency regulation to PJM Interconnection. And in 2013, the California Public Utilities Commission ordered the state’s three investor-owned utilities to procure 1,325 MW of energy storage by 2020 and complete installations by 2024. The utilities are now acquiring the requisite storage.
The 31.5-MW PJM project and Duke Energy’s 36-MW Notrees Battery Storage Project highlight two trends that could suggest directions to the future of the energy construction market. One trend is storage growth to serve the renewable-energy market. Duke built the battery storage for the 153-MW Notrees wind farm in Texas with $22 million of federal matching funds intended to enhance expertise in the integration of renewable energy with storage, thus promoting further expansion of both of those technologies. The other trend is the siting of the storage: The utility-scale (front-of-meter) segment accounted for 87% of total Q2 deployments. Since Q1/2013, PJM Interconnection, excluding New Jersey, has deployed 100.2 MW of energy storage; California, with 23.7 MW for the period, is a distant second, but both far outstrip the rest of the country, where just 8.7 MW of storage has been deployed.
Public opinion about carbon emissions is evolving in favor of carbon-free energy for power generation, transportation and other staples of industrial society. Prophets of economic apocalypse see only the half-empty glass cracked and rapidly leaking. But the market still works, and it is drawing opportunity into the vacuum created as the space filled by oil, gas and coal shrinks. Storage, EV charging stations and other energy innovations are emerging to keep workforces sharp till the market comes back. And when it comes back, it probably won’t look like the old one. Now is the time to begin serving the new one.
Tom Armistead was ENR’s energy editor for 12 years and now is a consulting editor for the ENR Energy eNewsletter.