Top Business or Technology predictions for 2021

• Cybersecurity for utilities will become even more important as more automation and data collection is needed to operate the transmission and distribution systems. The control of these systems must be protected against failure as well as malware and piracy of data.

• Software algorithms and technologies to forecast weather and the output of wind and solar generation more accurately will improve. Tools to optimize the operation of the power grid with these intermittent and uncertain resources combined with existing thermal generation and storage will also become available to maintain high reliability at a lower cost.

• The status of nuclear power plants remains a wild card, and depending on national and regional economic and environmental policies, we might see life extension for some of these plants as well as possible development of new technologies that are inherently safe.

As the generation mix gets dominated by renewables with marginal production cost close to zero, the locational marginal prices and the structure of these markets will evolve and regulators and policy makers need to help in improving these markets to meet the new challenges.

The power markets are evolving and the market development will vary by region; ERCOT is energy only, while all others in the US have both energy and capacity markets, with different portions of total market value coming from each market in different regions. Depending on the new policies, we will see a shift in the importance between these two markets and stabilize somewhere between or in one of the following two options.

• Energy only markets, with no capacity pricing, and the hourly energy price could be determined by the value of power to consumers combined with the cost of storing energy. This market design must allow for high volatility and caps (or no caps) of energy prices. When there is excess renewable energy the prices will be very low, and when there is little renewable generation the energy prices will go very high, determined and limited only by demand-side value for power. This allows storage technologies to come in to arbitrage the prices and balance the market, raising the prices during high renewable generation hours to the expected value during shortages (minus cost of storage) and lowering the prices during high renewable generation hours and setting the prices close to the cost of energy.

• Capacity-only markets, where the energy prices become very low and somewhat irrelevant, and the capacity market prices could become the dominant component and be driven by the capital cost of new projects and long-term energy contracts. This market design isolates the consumer from price volatility and diminishes their ability to respond to prices, thereby reducing the potential to optimize the short-term operation of the market and grid. The capacity markets will be more granular to capture the true capacity of renewable resources and storage (seasonal or monthly and correlation to load).

Also, on the negative side, there might be power plant closures, which means layoffs and reduced tax revenue for small communities, but that will be more than offset with new jobs and tax revenue created by these renewable projects. The difficulty is that these are different groups, so public policy needs to address this issue to help minimize the impact on the communities losing jobs.

Finally, the industry needs to start building recyclable blades, batteries and solar panels. This should help in reducing the impact on the environment once these projects are repowered or retired.