Bicoastal September Weather Sets the Pace for US Distributed Energy Market

Late summer has always been the time when the Atlantic hurricane season ramps up, typically causing a spike in sales of emergency backup generators as electricity customers prepare for (or react to) storm-related outages. But as hurricanes intensify and the threat of other major weather-related public safety power shutoffs (PSPSs) looms in California, September and early autumn will be a pivotal season, setting the nationwide tone for distributed energy resources (DER) deployments.

Weather Outages Drive Demand for Resilient Power

Diesel generator sales historically spiked in the wake of hurricanes as homeowners and businesses grappled with major outages. In 2012, Hurricane Sandy marked a turning point where longer-term plans began to take shape. In that storm, several microgrids and campus natural gas CHP systems that kept running in the storm’s aftermath. Thereafter, natural gas generation enjoyed more attention, and many states launched microgrid programs that continue to fund new microgrids in 2019.

California had some of the most devastating wildfires in its history in 2017 and 2018. In the ongoing flurry of regulatory activity over the past year, it became clear that PSPSs may be a major phenomenon causing lengthy outages for thousands of customers. PSPSs are pre-emptive shutdowns by utilities, typically during dry windy times where the threat of electrical-infrastructure-caused wildfires is highest. Guidehouse Insights has covered them in the past. The figure below shows the trend of recent disasters in terms of total value of damages.

Billion-Dollar Natural Disasters, US: 1985-2018

(Source: Guidehouse Research, National Oceanic and Atmospheric Association,
US Geological Survey)

Beyond Diesel Generators

The Gulf states, Atlantic states, and California—which combined account for more than half the country’s population, GDP, and energy consumption—represent a huge market for DER. The most-deployed DER by capacity (by far) remains reciprocating gensets, but 2019’s market offers a growing array of options from solar PV plus battery energy storage systems to microgrids that use many different DER and controllable loads to island seamlessly from the grid. Guidehouse Insights forecasts significant growth in the microgrid market, a trend borne out in Guidehouse Insights' recent Microgrid Deployment Tracker.

In addition to (and partly because of) resiliency challenges, the states and regions named above have significant policies encouraging DER and microgrids. These areas are the proving grounds for the distributed energy revolution. Though it’s unfortunate that seasonal natural disasters are needed to drive deployments forward, today’s changes are paving the way toward the resilient energy system of the future.