Top 8 Decentralised Energy Trends for 2022
Source: Rachael Gradeen & Anouk Kendall · Decentralised Energy Canada · | January 5, 2022
2021 was a rollercoaster of a year. A number of remarkable events impacted the nearly 8 billion people populating the planet. From the storming of the USA Capitol, to a cargo ship getting stuck in the Suez Canal, to sending civilians (and the world’s wealthiest) to space, to a renewal of climate commitments at COP26. Not to mention the sweeping global phenomenon that shall not be named here.
Through it all, the last year has taught us a new set of lessons that will bring us into a brighter 2022. And some of these lessons hint at the rising importance of decentralised energy. In this article, we are diving into DEC’s forecast of what’s to come for the industry in 2022.
Facing Extreme Weather
Canada faced a battle against the elements last year - heat domes, heat waves, atmospheric rivers, a flood of floods, wildfires, and EF2 tornadoes. Despite it all, Canadians have risen up with profound strength facing these disasters. Decentralised energy projects help increase resilience in times of disaster or unforeseen power outages, and the term “decentralised energy” saw a rise in Google searches in 2021, after a few years of stability. Interest in alternative, decentralised energy solutions is expected to continue into 2022.
Rebuilding with Resiliency
Rebuilding infrastructure with resilient design principles is key to ensuring that future natural disasters will not further hinder a community. Resilient rebuilding is something that we expect to see permeating throughout Canada in 2022. This theme was emphasized during DEC’s virtual trade event with the Caribbean - where speakers highlighted the importance of building resilient local infrastructure following Hurricane Irma in 2017.
A New Era of Insurance Coverage
Given the wreckage that extreme weather events can cause, insurance coverage is, unsurprisingly, becoming more expensive. This brings us to the next DEC forecast for 2022 - the dawn of a new era of insurance coverage and reinsurance business models. It is expected that insurance companies will begin to adapt their policies to accommodate resilient rebuilding strategies. For example, a solar farm that has been built to withstand a high degree of hail damage or wind loading will benefit from a lower insurance premium than one without.
Communities Going Net-Zero
Climate action is in the air. At COP26, Canada pledged to reduce methane emissions, cap oil and gas emissions, reduce vehicle emissions, and set a global price on carbon. DEC anticipates to see an increasing number of Canadian communities and municipalities adopt net-zero targets to support these commitments.
Microgrids Abound
In tandem with these goals, DEC expects to see a rise in integration of microgrids into communities. Microgrids are used to increase energy efficiency, reduce power disruptions, and to mitigate the consequences of outages when they do occur. They also make economic sense, particularly when supported by the right policies and technology, and can defer capital costs for transmission infrastructure. The benefits of microgrids, along with the challenges facing power infrastructure, have prompted government support mechanisms, making microgrids much more affordable in the long run. DEC expects to see more communities showing interest and adopting microgrid technology this year to supplement their climate action targets.
Growth in Energy Storage
During power outages, energy storage can greatly increase the welfare and resiliency of a community. DEC expects to see more communities adopting energy storage options in 2022 - for example, by integrating batteries into EV charging infrastructure to enable emergency and essential travel when grid power is disrupted. Alternative forms of energy storage are also expected to grow in 2022. Energy storage options that demonstrate the lowest ecological footprint and net-zero emissions will be the focus of investor interest. For example, thermal energy storage systems are one whose market value is expected to triple in size by 2030. Industry standards will look to the responsible use and re-use of rare earth elements to improve the sustainability of energy storage solutions.
Harnessing Digitalisation
Currently, energy efficiency holds a very heavy weight in the industry. Digital technologies can gather data and offer real-world solutions that help to optimise systems interoperability and increase energy efficiency. Digital transformation has immense potential to unlock $1.3 trillion of value for the electricity sector. DEC expects to see continued growth in digitalisation, automation and advanced controls in the industry throughout 2022.
From Linear to Circular
We live in a linear take-make-waste system, where virgin materials are often cheaper than the cost of repair and reuse, which creates an inordinate amount of waste. However the costs and associated impacts of waste disposal, as well as the global commitments towards responsible production and consumption, are driving factors towards a different kind of system - one where circular economic principles take the stage. Wholly sourcing from recycling is an ambitious goal in an electrified society, but the IEA forecasts that there will be 145 million electric vehicles on the road by 2030. With the right policies and standards in place, the scrapping of internal combustion vehicles will be a substantial source of recoverable metals. DEC expects to see the emergence of industry standards that support the circular economy throughout Canada in 2022.
Generally, the energy sector is meant to see an uptick throughout 2022. The Canadian Association of Energy Contractors is predicting a 26% increase in productivity in Canada’s oil and gas sector this year. Renewable energy is also expected to grow significantly in 2022. Interest in next-generation clean technologies, new business models, and infrastructure development are all predicted for 2022. Supply chains will also continue evolving following trade disputes between the US and China, meaning more domestic manufacturing of renewable energy technologies is likely. And finally, sustainable growth is predicted to be a hot topic throughout 2022, where end-of-life management strategies will take focus, due to many early renewable energy installations approaching the end of their useful life.
Finally, Canada made some important commitments this year at COP26. To support and track these, we can expect to see a better standardisation of climate and sustainability reporting take hold in 2022. We can also expect to see more support for workers in the energy transition, as one of Canada’s commitments - an international carbon price floor - could impact 800,000 jobs across Canada, including 9% of all jobs in Alberta.
Overall, the ups and downs of the past 2 years hint that 2022 will likely follow a similar course. However, if we have learned anything, it’s that longer-term thinking, and being cognisant of the health and safety of our communities is a red thread that connects us all. 2022 is set to become a year of resilient thinking, community-focused ambition, and bouncing back from challenges.
DEC wishes our industry partners the best with achieving their goals this new year! To learn more about how DEC can help you or your company best leverage these trends, contact us.