Energy powers our lives every day. When you wake up you check your phone. You go to the grocery store in your car that is powered with gasoline. To relax you watch Netflix on the TV. Without energy and without electricity we need to significantly change our current way of life. Maybe some of you have experienced life without energy in severe power outage events like winter storm uri and the US Northeast winter snow storm that took out power for more than 50,000 in 2022. It is important to consider where the future of energy might go to prepare ourselves with the right tools, policies, and systems.
History of energy
Energy has made significant changes in the past decades. Since the beginning of 20th century there have been groundbreaking innovations in power generation. Energy in the form of electricity started to be produced by coal and wood. Coal fueled fire that boiled water and turned steam that turned a turbine. The turbine turned an electromagnetic generator. This process was refined, made more efficient, and is used in various methods substituting the fuel source with natural gas or oil.
Then, other methods started to develop. Solar could power photovoltaic cells to produce electricity. Wind could be used to move turbine blades that could turn to power an electric generator. Even in recent decades power started to be stored. This is a significant change in how we have created, used, and even stored energy.
How we produce energy has historically been chosen by the most convenient and cost affordable solutions. But now we are adding more criteria to the evaluation. Increasing evaluation criteria increases the difficulty of decisions.
In the early 1900’s, deciding what to build to meet power demand was easier because there were only a few options. In the 1950’s nuclear came into the mix and promised reliable clean energy, at scale. However, nuclear disasters in 1980’s and early 2010’s spooked the public into a sharp drift away from going all in on nuclear. Wind power and solar power have come into the mix as costs decline and organizations set clean energy goals.
Market deregulation has also increased the complexity in what power production proposals to consider. With deregulation in electricity markets like CAISO in California, MISO and SPP in the Midwest, and PJM in the Northeast have opened the gates for individual power producers to join the electricity production game. This gives electricity buyers – namely Utilities and Corporations, more options. Electricity buyers can choose from a plethora of individual power producers. In some Request for Proposal processes, Utilities have to choose from 30-40 companies offering over 150+ proposal variations.
Three trends raise the bar for proposal evaluation difficulty.
- Public eye: As cities and states set clean energy goals, the public is participating ever more in Utility’s resource selection processes.
- Often competing evaluation criteria: Balancing clean, low cost, and reliable power does not always agree.
- The complexity of the selection decision and amount of data to evaluate.
3 Key Trends in Energy
Here are 3 key trends in power production over the decades that has redefined how we power our lives.
1. Sustainability
One trend that has developed in how we create energy is to be more sustainable. Finding a path to transition away from Fossil Fuel dependency has been a goal set by many governments and organizations. This is no easy task. The goal for more sustainable energy has increased investment in renewable energy technologies, energy storage, and more research and development to solve sustainable energy production challenges.
2. Deregulation
Over the past 30-40 years, energy markets have become more deregulated. What does that mean? Instead of the Utility controlling where and how energy is produced, a separate neutral organization is formed that manages energy and says who is allowed to produce energy. This allowed independent power producers to participate in the electricity economy, increased competition, and lowered energy prices.
Developer participation came in the form of renewable energy producers building more wind and solar farms and participating in the market. This also opened pricing, so energy was scheduled based on a pricing model to incentivize lower cost generation. This method is called the generation dispatch curve.
Energy market deregulation has saved millions of dollars. In some cases, deregulation can be costly. With the Russian and Ukraine war, natural gas prices spiked around the world. This caused energy prices to spike, and electricity prices to reach new highs across energy markets. Europe has long been a proponent of deregulated energy markets, but some countries have taken back more control to protect consumers from high energy prices.
3. Diversity
Energy resources have become increasingly more diverse over the past decades. Decreasing costs of renewable energy and the increasing demand for clean energy have pushed more diversity into the mix. Historically we haven’t included solar, wind, or battery storage in the mix. These three technologies and more are now being considered in the evaluation.
The benefits of a diverse portfolio allow you to minimize risk of price increases and energy shortages. We can’t predict the future. Our forecasts used to help determine what types of energy resources we should invest in have been and can be far from actual.
Conclusion
Energy has had a rapidly evolving history in the past few decades. Energy has become more sustainable, deregulated, and diverse. It is important to consider where the future of energy might go to prepare ourselves with the right tools, policies, and systems.
Energy Adepto provides resources to help Utilities and businesses in their energy procurement process. We provide software that helps manage RFPs, automate RFPs, and evaluate energy projects.
