Leaders of manufacturing and power companies are faced with critical decisions on how to evaluate the best alternatives to fossil fuels and identify the pathways to make those alternatives a reality. So are electric vehicle manufacturers, battery manufacturers, and traditional original equipment manufacturers (OEMs). In addition to power and electrification companies, commercial, industrial, and retail owners will need to consider accommodating new technologies such as electric vehicle (EV) charging stations.
The massive shift from fossil fuels to cleaner-sourced energy is referred to as “energy transition,” and it is not a simple or linear path forward. No one knows this better than energy sector professionals, who are dealing with a convergence of regulatory, legislative, economic, environmental, and societal issues. Owners, utilities, and operators must develop plans that allow them to meet new sets of goals while meeting demand requirements. An element of these plans should be to work with engineering, construction, and technology providers during capital project planning. These professionals can help assess the company’s or facility’s current situation, help identify and evaluate alternatives, and develop recommendations and an approach. Specific services that can support owners as they implement changes include energy consulting, design, construction, and managed project delivery.
Energy projects that lead companies toward their carbon-reduction goals will be a combination of renewable generation and integration, back-up generation, energy storage, carbon capture and storage (CCS), and transmission and distribution (T&D) infrastructure. Some owners are utilizing natural gas as a “bridging strategy” on their journey to a complete transition to clean energy. Working with engineering and construction professionals, owners can combine a variety of components and technologies to create a customized project that will help them not only meet their carbon goals but fulfill ongoing demand.
Some sectors, especially heavy industrial, may find it very difficult to transition away from fossil fuels. Energy Transition Options
Some sectors, especially heavy industrial, may find it very difficult to transition away from fossil fuels. Carbon capture and storage (CCS) or carbon capture, utilization, and storage (CCUS) may provide a solution in these scenarios. Carbon capture can successfully divert the majority of CO2 emissions from power generating and industrial facilities. With CCUS, the captured carbon can be used in the production of manufactured goods or in industrial processes, or even in the creation of building materials. For CCS, storage of captured carbon within geologic formations provides deep-earth containment.
Types of alternative generation include:
- Renewable natural gas (RNG), which is primarily methane
- Hydrogen fuel cells
- Solar, wind, and hydroelectric
- Combined heat and power (CHP)
- Aeroderivative gas turbines (backup power)
- Localized energy generation, such as distributed generation (in which electricity is generated for use on-site rather than being transmitted over long distances from a centralized facility) or microgrids (small enough to power industrial sites, small communities or areas with critical infrastructure)
- Modernization, or strengthening, of the grid, often by incorporating digitalization and/or advanced analytics
- Updating substations with wireless technology
- Improving oil or gas pipelines by reducing emissions, strengthening the network, etc.
The electrification of vehicles is a major driver of the energy transition, principally because its effects — and its demands — are spread across a large segment of society. EV and battery manufacturers are investing billions in greenfield and expansions. So are manufacturers in the EV supply chain, such as suppliers of chemicals, materials, plastics, microchips, semiconductors, and more. Traditional OEMs and their suppliers are investing capital in retooling and expanding their production. But it is the consumer need for widely available charging infrastructure, and the production and support spaces for those charging stations, that makes EV adoption such a game-changer. As the ubiquitous corner gas station gives way to EV charging stations, energy transition becomes apparent at a very granular level.
The electrification of vehicles is a major driver of the energy transition, principally because its effects — and its demands — are spread across a large segment of society. Industry Adoption So Far
Most major utilities have committed to significant decarbonization in the near future. Many are aggressively retiring existing assets that depend on coal and investing in bridging strategies, particularly coal-to-gas conversion systems, natural gas peaking facilities, and natural gas distribution. Currently, many renewable projects are going to existing coal sites due to the availability of land, permitting, and the ability to directly tie into the T&D infrastructure. Most utilities are also engaged in pilot scale and demonstration projects to prove commercial viability, often supported by funding from government agencies such as the Department of Energy (DOE).
For utilities, the energy transition must account for reliability and resilience…yet this becomes more challenging in the face of extreme weather events. In some cases, new technologies such as artificial intelligence and machine learning may improve forecasting so that energy output can be more finely tuned. Many of the solutions that are being built to strengthen and diversify the system, such as strengthening the grid, building microgrids, or installing battery storage, will help offset the problems associated with extreme weather events, as well.
Many large industrial and commercial companies have committed to switch to 100 percent renewable energy, setting ambitious net-zero and decarbonization targets, some as part of the RE100 initiative. Similarly, more than 300 large companies are part of the Renewable Energy Buyers Alliance. Early action steps include investing in on-site renewable generation, battery storage, and EV charging for vehicles and equipment.
Many developers have also become involved in renewable energy projects. Typically, they work with energy companies or other owners to identify project opportunities and enter into power purchase agreements (PPAs). The developers take responsibility for identifying a location, securing financing, executing contracts, and arranging for construction. Commercial real estate owners, like large commercial and industrial companies, are investing in EV charging stations.
For utilities, the energy transition must account for reliability and resilience…yet this becomes more challenging in the face of extreme weather events. Engaging Partners and Evaluating Alternatives
Making changes on the scale demanded will require owners, utilities, operators, developers, technology providers, engineers, and contractors to work together from the conceptual phase of a project through to commercial operation and beyond. One thing to keep in mind is that contractors who have been in the power business for decades will have experience with other major historical transitions and will have strategies in place for rethinking processes from the ground up. They will be able to provide sophisticated, scalable estimating and construction and program management, general contracting, program management, and self-perform services. Computer modeling of the planned facility, along with simulations and other planning tools, can provide clarity on a project before ground is broken; with some modeling software, operations decisions can be integrated into the model.
Partnerships with contractors and subcontractors will play an important role in project success. Many of the current decision-makers in power and oil and gas companies have deep experience in all the requirements surrounding fossil fuel generation and distribution, but now expertise must be built as companies transition to renewables, so establishing relationships with knowledgeable partners will be vital.
It’s easy to feel overwhelmed by the scope of the impending changes. But some challenges are already being clearly identified and effectively addressed by owners, engineers, and contractors. In addition to the bridging strategies already noted, undertaking small projects to start with can help owners ease into the transition. Small projects keep planning and construction more manageable — although they will typically be executed on a tighter timeline, meaning they will still require sophisticated preplanning and preconstruction efforts. Also, because energy transition projects require technologies that are relatively new, plans should be built in from a project’s inception to track and monitor the system performance well into the operations stage.
The world is entering a new phase of energy production and consumption. While there are plenty of new challenges, the key to success will involve effective deployment of existing technical expertise, as well as reliance on industry relationships, to thoroughly assess the “knowns” of a given project and effectively tackle the “unknowns.”