A multi-trillion-dollar marketplace is emerging and it is coming at warp speed. It’s a result of major changes, aging infrastructure and increased demand in the U.S. energy sector.
New technology and increased demand for renewable energy are just two of the drivers that are now shaking the very foundation of the energy sector. Another huge driver is the age of America’s power grids and their vulnerability to cyberattacks.
While change is positive, it does not come without its challenges. Increases in power production, particularly in renewable energy segments, significantly strain the nation’s power grids. One estimate of what will be spent to revamp, expand and repair the country’s system of grids over the next decade is as high as $5 trillion. Most grids were not constructed with the capacity to accommodate wind and solar generation. And storage options are minimal currently. Technology advances with the potential to lower costs and ward off cyber dangers are considered critical.
Local and state governments are responding in a variety of ways to improve their grids, create more storage capacity and increase their reliance on clean renewable energy sources. Officials at almost every level of government are establishing mandates for renewable energy. Many are engaging in public private partnerships because of the need for private sector investments of capital.
Traverse City recently became the first city in Michigan to commit to 100 percent renewable energy community-wide, not just in municipal facilities. City commissioners are discussing steps that will help them reach this goal by 2020. Under consideration is a potential partnership with the Michigan Public Power Agency on a large-scale solar project in Shiawassee County.
In the aftermath of Hurricane Maria, which resulted in the largest blackout in American history, the U.S. territory of Puerto Rico in April passed legislation that will have the island powered by 100% renewable energy by 2050. Puerto Rico has joined more than 100 local and state governments that have now set 100 percent clean energy goals. Contracting opportunities in each of those government entities will be plentiful, as will opportunities for public-private partnerships.
In New York, a coalition has been formed that includes the University of Buffalo, SUNY Buffalo State, SUNY Erie, the city of Buffalo and Erie County. These entities are collaborating to meet sustainability goals by generating at least half the electricity they use. The partners say that the savings realized will offset all upfront capital investment.
Renewable projects are becoming ever more frequent in New York City. In March, a new solar project was announced. A contract was awarded for a solar rooftop installation on the Jacob K. Javits Center, the single largest rooftop solar installation in New York City. The city of New York has been a leader in the use of renewable energy and has mandates established to eventually get 100% of its power from renewables.
Other examples of upcoming energy projects that merit monitoring include the following:
- The state of New York and the New York State Energy Research and Development Authority have opened the third annual solicitation for large-scale renewable energy projects that will add to renewable electricity production. Two previous solicitations included 46 onshore wind and solar projects. The cost of contracts was approximately $2.9 billion. That partnership resulted in $7 billion in direct investments to the clean energy sector and the ability to power the equivalent of 1 million homes.
- The BENCO Electric Cooperative in Minnesota will use a $25 million U.S. Department of Agriculture Rural Development loan to build or improve more than 150 miles of power lines and invest $2.7 million in smart grid technologies. The objective is to increase electric system efficiencies and grid security.
- Electric vehicles will eventually require thousands, of additional power sources. In New Mexico, the governor has approved millions of dollars to purchase electric vehicles for state workers. Additionally, $1.5 million will be used to construct solar-powered vehicle charging stations in parking state lots. Many college campuses are also converting fleets to electric vehicles and that will also necessitate recharging stations. Florida State University is transitioning to an all-electric fleet of buses and officials say the switch will result in savings of more than $10 million.
- Public school officials are also seeking ways to become more energy efficient. They are seeking energy audits, lighting upgrades, HVAC improvements and window replacements. In the Wood County Public Schools in West Virginia, officials are considering an energy savings project that could save the school district $16.5 million over the next 15 years.
Big changes always result in opportunities for well positioned contractors. This is a marketplace that deserves watching.
Mary Scott Nabers is president and CEO of Strategic Partnerships Inc., a business development company specializing in government contracting and procurement consulting throughout the U.S. Her recently released book, Inside the Infrastructure Revolution: A Roadmap for Building America, is a handbook for contractors, investors and the public at large seeking to explore how public-private partnerships or joint ventures can help finance their infrastructure projects