Ready or not, 2021 is finally here. And while the changeover of the calendar is not itself the cause of new trends, it does serve as a notable signpost where we can and should evaluate goals and anticipated developments for the coming year. In our last article, we gave a look back at what were the three biggest stories in the energy sector from 2020, no simple task given how tumultuous and unprecedented the year was. But now we’re brushing off the struggles of 2020 and looking forward wide-eyed at the potential that this new year is likely to bring us. To celebrate this new year, we’re peering into our crystal balls and sharing our picks for the three most anticipated energy industry stories that will be taking up your attention in 2021.
As noted in the article about biggest stories in 2020, the story of this past year couldn’t even begin to be told without starting with the COVID-19 pandemic. The other topic that impacted almost every facet of the year was the 2020 U.S. Presidential Election, and as the energy industry looks to 2021 there’s no doubt that the upcoming change in Presidential Administration from Donald Trump to Joe Biden will set the tone for the entire year. The energy difference between these two candidates was quite stark (a topic BrokerX covered in depth in the leadup to the November elections), with President Trump acting as a cheerleader for the coal industry and an advocate for opening up further lands for oil and gas drilling, while Biden campaigned on the promise to bring forth a new era of clean energy and integrate green jobs into the recovery process from the COVID-related economic crisis.
As Biden prepares to be sworn in later this month, the incoming Biden Administration and its pivots from the past four years of Trump policies on energy will set the foundation of a huge year for the sector. By selecting clean energy advocate Jennifer Granholm as Secretary of Energy, seasoned environmental regulator Michael Regan as head of the Environmental Protection Agency, creating the first-ever domestic climate adviser, and the rest of his well-respected Climate Team, President-Elect Biden has already demonstrated that he’ll stay true to his promise to put climate and clean energy at the center of his agenda. In his first 100 days in office, a traditional time of aggressive executive action for incoming Presidents, Biden is expected to rejoin the Paris climate accord and hold a climate summit. Some industry and political insiders also expect this 100-day period could come with banning fracking for gas on federal lands, implementing stricter fuel-economy standards for the nation’s vehicles, and tackling the issue of methane leakage in the gas industry. Given that many of the Trump Administration’s hallmark energy impacts came via executive order, Biden has already stated an intent to use executive orders of his own to undo those actions. Early 2021 for the energy industry will no doubt be dictated by these potentially aggressive and wide-reaching actions from the new President and his climate and energy advisers looking to make a difference right away. Expect those quick actions to be followed with some of the longer-term campaign promises regarding his energy plan, including putting the U.S. on the path towards carbon-free power by 2035, tax incentives for clean energy, finance mechanisms for renewable projects, investment in grid modernization and R&D, and more.
Each of the past five or so years can rightfully be called a banner year in the world of electric vehicles, but 2021 really may become a pivot point for the EV market, particularly if the economy is able to get back into full swing. From a policy standpoint, the aforementioned Energy Secretary in the new Biden Administration is most known in energy circles for her advocacy for electric vehicles, which means a lot coming from a former governor of Michigan, automaker capital of the United States. Just this past November she wrote in the Detroit News that “A low-carbon recovery plan could create 1.7 million new jobs in the US. State automakers like Ford and General Motors are producing a greater number of EVs, but policy incentives are needed to ensure that the cost-saving and environmental benefits are available to everyone.” This posturing could be key for 2021 to be the year that electric vehicles hit the inflection point and become more common. Especially as two of the biggest deterrents to people buying EVs today are the range anxiety that come from lack of charging infrastructure and the upfront cost associated with an EV purchase, federal, state, and local policies can and will all play a key role in overcoming those hurdles. Every week, EV charging infrastructure comes along that will make the availability and ease of charging more visible and tangible to Americans, from the announced largest in the Northeast EV fast-charging station at JFK Airport to GM installing nearly 3,000 EV charging stations publicly across the country to California Governor Newsome putting $400 million towards EV charging infrastructure to aid in the state’s target of no gasoline-powered car sales in 2035. EVs and the supporting infrastructure are becoming more common, affordable, and accepted, meaning more Americans looking to buy their next vehicle will be more likely to consider going electric.
And that charging infrastructure expansion is coming at a perfect time, as the COVID-19 economic crisis resulting in stagnant EV purchases (along with all auto sales) and some automakers that have had to push out and delay the release of their planned EV models, but the potential economic recovery will see more households who had delayed car purchases looking to make these new investments all at once. And if in the meantime, they’ve noticed more EV chargers where they shop and drive, they’ll consider at least test driving the latest model. Meanwhile, EVs are increasingly become accessible to those who couldn’t foot the price tag of a Tesla. Electric models from Mazda, Nissan, Volkswagen may still be out of reach for certain budgets, but every passing year sees those prices drop. Meanwhile, 2021 is also the year you’ll finally start seeing electric versions of pickup trucks, SUVs, and luxury brands like Porsche and Mercedes, meaning that the EV market is tapping into more customer preferences and needs, so you’ll likely be seeing more EVs than ever in the parking garage with you throughout 2021. As that happens, energy providers and grid operators will continually begin to assess what that means for power systems that must provide that necessary power, which will persist as another high priority for energy thought leaders into the new year.
A common truism of the energy industry as decarbonization continues to take hold is the fact that there are no silver bullets in the energy transition. Renewable energy can be great, but their intermittency is problematic. Battery storage is key, but the materials can be costly, and the footprints are large. Nuclear power is carbon neutral, but now generation is expensive and it’s politically challenging to get public support for it. However, when looking forward to potentially transformative technologies that have not yet been tapped into to change the energy systems as we know it, hydrogen is one of the hottest prospects and 2021 is poised to be a huge year for the industry. As defined by the U.S. Department of Energy, hydrogen is “a clean fuel that, when consumed in a fuel cell, produces only water.” As such, hydrogen can be used as an energy carrier or storage mechanism, after having been created by natural gas reforming, electrolysis, or other emerging strategies. But the crux of hydrogen is that it can be a means of energy storage for use at a later time or location. For example, excess renewable energy generated when the sun is at its peak can be used to create hydrogen fuel rather than being curtailed, or transporting hydrogen via pipeline can be an effective way to move energy long distances as is done with natural gas (with the difference being that hydrogen doesn’t release any greenhouse gases when burned as a fuel). If hydrogen is produced using natural gas, then it is not necessarily a ‘clean’ energy source because it is responsible for the natural gas’s carbon emissions, but hydrogen produced via renewable energy is considered green hydrogen and can be a key tool to the energy transition.
The reason 2021 is a year for which many hydrogen advocates are optimistic is because of a number of high-profile investments and potential implementations of hydrogen energy finally look to make an impact on the market and on the energy sector as a whole. Across the world, nations including Chile, Japan, Saudi Arabia, Germany, and Australia are putting significant investments in looking to become a global hydrogen hub. That ability to tap into being a world energy leader, in a way countries couldn’t just decide to do in an oil economy unless they were fortunate enough to have resources under their feet, presents an energy arms race of sorts that could fast track the development of the fuel. Similarly, the widespread applications the industry is seeing for hydrogen are making investors salivate. Hydrogen fuel can be used as an alternative to petroleum products in long-scale shipment and transportation, in industrial applications that can’t be electrified because of temperature requirements, as a more economical seasonal energy storage solution, and more. Certain regions are also seeing hydrogen steadily mixed in with natural gas being piped to customers for use in heating and cooking as a way to gradually decarbonize those energy uses. The United States has been behind world leaders on hydrogen, but thanks to some federal funding, support from the incoming Biden Administration, new models of hydrogen-powered vehicles, and bold proclamations for utilities and investors alike that the role for hydrogen power is here now, 2021 could be a hallmark year for hydrogen energy.
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