Since our last edition of Electrify Everything, electrification has continued to see robust growth, driven by supportive policies, ballooning electricity demand, expanding renewables capacity, and maturing hardware and software technologies. Even though high interest rates, EV adoption hurdles, and wind energy disruptions presented potential setbacks, we arrive at this year’s report confident that the electrification of everything through zero-carbon clean energy is still the fastest and most efficient way to achieve a decarbonized, durable and dynamic energy landscape.
The 2024 electrification ecosystem is anchored by one major theme: an exploding grid. Electricity providers anticipate that demand will increase by as much as three times by 2050, driven by the proliferation of AI-powering data centers. This is coupled with huge investments in capacity generation; the U.S. is expected to build 55% more power capacity in 2024 than it did in 2023, with a projection of 62.8 gigawatts (GW) added to the grid. That is enough to power 20 million homes – and also marks the most capacity built in a single year since 2003. The good news? Ninety-six percent of all new large power plant capacity is expected to be carbon-free, leveraging both solar construction (the U.S. is on track to double its large-scale solar construction in 2024 over 2023), as well as major advancements in battery storage, to achieve unprecedented scale and reliability.
As we look ahead, we have our eyes on five top themes in electrification. These are areas that we expect to disproportionately attract capital, drive innovation and expand impact this year.
Find out Energize's selections for the Top 30 Electrification Software Innovators of 2024.
Read the Electrify Everything 2024 Deep Dive Report
In 2024, the electric grid became larger and more complex than ever. Where in 2015, there were only about 5,000 entities interfacing with the U.S. grid, by 2025, there will be over 100,000 energy companies, utilities providers, data centers and other firms affecting U.S. electrical supply and demand(1). Additionally, digital energy assets are connecting to the grid at unprecedented rates with over 200 million assets online today(2). This increase in grid scale and complexity results in, among other things, a huge amount of data that needs to be aggregated, interpreted, and utilized. We believe software will play a key role in leveraging data to meet a variety of modern energy needs from forecasting energy use and production to improving grid efficiency and optimizing assets.
Technologies We’re Watching: AI-enabled Load and Supply Forecasting, Grid Data Acquisition & APIs, Smart Grid Sensors & Computing
As energy generation and use increase in scale and variability, virtual power plants (VPPs) are stepping in to optimize and decentralize the grid. These VPPs will serve as intelligent orchestrators of distributed energy resources (DERs) like smart appliances, rooftop solar panels, batteries, and EV chargers, balancing electricity demand and supply to flatten the energy load on the grid and curb outages or disruptions. Currently, VPP capacity stands at about 30 to 60 GW (4% to 8% of peak demand), but it is expected to grow significantly as DER capacity surges to a projected increase of 22 times between 2018 and 2027(3). As top-down interconnection and permitting challenges persist in large-scale infrastructure, we see VPPs expanding as dynamic revenue opportunities within the energy landscape.
Technologies We’re Watching: Next-Gen DER Aggregation, Large Device Network Management, Battery and EV Charging-Centric VPPs
In 2017, BloombergNEF estimated that Global Battery Energy Storage Systems (BESS) Annual Deployments would reach 5.3 GW by 2023(4). Deployments beat expectations by almost 10 times at 42 GW, in a growth pattern that echoes the explosion of the solar industry. With declines in battery costs, favorable policies, and improvements in the supply chain, the battery market has taken an essential position within the renewables landscape, constituting 7.5 of the 42 GW of renewable power generating capacity added to the U.S. grid last year. The opportunities for software applications in the battery space are wide and continuing to evolve, opening the door to a new pool of software customers who are searching for ways to cut soft costs through AI-driven optimization, streamlined permitting, and modeling platforms.
Technologies We’re Watching: Battery Permitting Platforms, Battery Performance Monitoring, Battery Commercial Modeling and Optimization Platforms.
Amid the rise of AI, data center energy demand remains a top story across the electrification space. After years of flat grid load forecasts, energy consumption is growing, with most energy providers citing data centers as a primary driver. By 2027, data centers are expected to multiply across the American West, Midwest, and Southeast by 120% to 130%, increasing data center energy demand from 17GW to 45GW. This expansion is estimated to cost $150 billion through 2028 and will require a developing ecosystem of software, services, and hardware innovation. In addition to investments in clean energy production, we’re expecting to see software and technology cross-pollination from the renewables space to address challenges in siting, permitting, connectivity and more.
Technologies We’re Watching: Data Center Planning, Site Selection and Permitting Tools, On-Site & Virtualized 24/7 Clean Power Matching, Data Center Efficiency Optimization Software
As the renewables industry matures, the aging base of renewable assets increasingly requires a robust posture for operations and maintenance (O&M). The TAM (Total Addressable Market) for this space is broadening by the day as the global cumulative renewable electricity capacity expands from 2023’s 4,087 GW to a projected 6,740 GW by 2027, driving the current $40-$61 billion O&M annual spend to a projected $67-$101 billion(5). We also expect the ecosystem to evolve away from incumbent O&M tools to more software-defined solutions that can handle the dynamics of increasingly complex, multi-asset renewables projects. Resilience, hybridization, and automation will be key words for customers in this space.
Technologies We’re Watching: Multi-Asset Site Optimization Software (e.g., Solar + Storage), Integration of Edge Data and Control to Enable Automated Decision-Making, Software-defined Renewables O&M
The electrification landscape continues to evolve and thrive, driven by significant technological advancements and sustained demand. Despite adoption and funding challenges, the technologies needed for decarbonization are already here. The key to their success lies in their ability to scale dynamically and operate efficiently. From AI-enabled forecasting and virtual power plant platforms to battery optimization and smart renewable asset management, software will be essential to unlocking the next phase of growth.
Read past editions of Electrify Everything: 2023, 2022, 2021
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