Transformation in the US distributed energy resource market
This article was originally posted by Wood Mackenzie on 20th June 2023.Opportunities, risks and the changing growth profile of distributed energy resources in the US
The distributed energy resource (DER) market is undergoing a transformation. The last five years shone for distributed solar, which grew 130% in capital investment. But the next five years will be a story of battery storage and electric vehicle (EV) charging infrastructure, whose growth will torpedo past that of solar. This is driven by factors that seem at odds: grid insecurity and the urgency to migrate the transportation sector onto the grid.
We recently published our US Distributed Energy Resource Outlook, an annual publication from our Grid Edge Service. It contains thorough analysis of installed capacity, market size, opportunities and risks, as well as sector-by-sector insights on the rapidly changing DER landscape. Fill out the form to download an extract, or read on for answers to a few key questions.
What’s the size of the opportunity?
Our analysis indicates the US DER market will nearly double between 2022 and 2027, to reach almost US$68 billion per year. Behind-the-meter capacity will grow 3.7 times more over this period than it did in the previous five years. EV charging infrastructure is responsible for the lion’s share of that growth, but distributed storage will see seven times the growth in the next five years that it did in the last five.
The DER transformation underway is as much about scale as it is about market share. The 262 gigawatts (GW) of new DER and demand flexibility capacity set to be installed from 2023 to 2027 will nearly match the 272 GW of utility-scale resources due to be put in place over the same period. (Demand flexibility refers to the typical amount of load a demand-based resource can shed when called upon under typical conditions, so represents capability and not necessarily capacity actively being bid into utility or market demand response programs).
This is a gigawatt-scale reminder that the investment and financing opportunities behind the meter are just as large as those in front of the meter. And significantly, these investments are not dependent on a rapid transmission build-out.
