We see that many utilities have set targets to reach net zero emissions by 2050. To achieve this goal, they are adding substantial renewable generation resources to their fleets every year. We expect the CAGR (compound annual growth rate) for wind and solar generation to be on the order of 10-15% for at least the next 10 years.
As these utilities add renewable generation, they are also retiring older conventional, dispatchable assets like coal. Furthermore, distributed energy resources – rooftop solar as an example – are growing as well. Weather models are much better than they used to be, but the effects of small changes in cloud cover or wind speed/direction significantly impact the dynamics of renewable generation.
All this together creates much more uncertainty day-to-day, hour-to-hour, minute-to-minute than has ever been encountered in the past. If we don’t improve upon the technology used to optimally dispatch the non-renewable resources, we will risk reliability, overcompensate backstopping of renewable generation with more carbon-producing resources, require building excess renewable resources to be certain to meet demand, or all the above.