In a year marked by election cycles, AI advancements, and evolving energy markets, 2024 emerged as a critical turning point for distributed and onsite energy systems. Let’s take a look at how some of our predictions for 2024 played out, including compelling numbers and insights from guests during the past year of Renewable Rides episodes.
The Economic Imperative
At the start of the year, we anticipated that 2024 would be a breakout year for distributed energy. There has been expectation and hype around this segment of the energy sector for years but it never materialized. There have been many reasons for this but the alignment of drivers – high energy rates, incentives, regulations, grid issues, and pressure to decarbonize – will unlock deployment. We largely saw this to be true – but not at the scale we expected given the returns onsite energy provides in most markets. The pieces are coming together and we’re turning a corner to ramp into early majority adoption for 2025, which we’ll discuss in more detail in an upcoming 2025 predictions episode. Let’s explore what tells us that the ramp-up is happening, we were just a bit too bullish.
There is a growing economic imperative to invest in onsite energy. It starts with the electricity pricing bombshell: over half of U.S. states have experienced electricity price increases exceeding 20% since 2020. California takes the crown with a staggering 24% increase from 2023 to 2024. This isn’t just a number – it’s a business survival challenge. Because corporations move slowly, fully internalizing these costs and taking action at scale hasn’t happened at the same pace as these mounting price pressures – but it’s happening. Corporate adoption of onsite energy year-over-year growth was 12% in 2021-2023 compared to 5% between 2015 and 2020.
And while rates have largely driven the adoption of onsite energy thus far, we’re seeing companies consider climate and operational risk in their decision to deploy systems. There is a strong push for companies to decarbonize by investors, consumers, and the market at large – especially for companies selling into European markets or other countries with carbon reduction mandates. Relying on utilities to decarbonize the grid is not a solution. Increasing energy demand, aging infrastructure, and long timelines for bringing renewables onsite are slowing progress on bringing renewable online – with the permitting time up to an average of five years from four a few years ago.
Take the example of a food and beverage distribution company in Florida. Given that the state has lower utility rates, the payback period was around 8 years, which would typically be too long to meet most customer’s financial thresholds. However, the leadership is taking a long-term view and recognizes that there are “stackable benefits” that extend far beyond simple cost savings.
The carbon intensity of the grid is a driver for companies to invest in onsite and offsite energy. Some of the most expensive energy states saw an increase in carbon intensity, including Vermont, Massachusetts, Maine, New Hampshire, Connecticut and even New York. When we look at 2024 state-by-state rates, according to the EIA, six of the top 11 most expensive states saw an increase in grid emissions. So if you’re a company with sites in these states and others like California, not only will you be facing some of the highest rates but also an increasing emissions profile as a result. As our co-founder, Dan Roberts, said in a recent podcast episode: “It starts to paint this picture that if you’re a business that’s trying to decarbonize, onsite energy is a phenomenal pathway for doing so.”
The idea of seeing onsite energy as part of a business’s fiduciary responsibility is emerging. In our episode with Brendan McCarthy, a sustainable real estate expert at Calvert Research and Management, he explains ” I think there’s a growing bifurcation of in the two roads real estate asset owners are taking. You can put your head in the sand and ignore climate risk and energy, and you will end up with stranded assets and higher financing costs, lower leasing rates, less leasing traffic, etcetera. Or you can embrace the risks and opportunities, and work to mitigate the risks and seize on the opportunities and generate superior assets that command premium rents, have lower financing costs, and increased leasing traffic.”
Energy Control and Resilience
As we started the year, the increasing number of outages and grid resilience issues were on our minds. We anticipated these issues would be growing concerns for commercial and industrial energy users as storms become more frequent and severe, the demand on the grid increases, and infrastructure ages. From our vantage point, this prediction has played out not only with our customers but in the market at large – companies are relocating from particularly risky coastal locations and pursuing onsite energy technologies to protect operations from grid outages and voltage lags.
A June survey of 300 senior U.S.-based executives conducted by the Massachusetts Institute of Technology found that 61 percent had suffered business disruption and 55 percent had dealt with facility damage due to extreme weather events. More than 60 percent said their operational costs were rising and that they were facing higher insurance premiums. All the respondents were either thinking about relocating some of their facilities or had already done so.
One major shift is that every executive responding to the survey believes climate change is harming the US economy now or will harm it in the future.
Source: SustainableViews and MIT Technology Review Insights Survey, 2024
The financial implications of grid instability for the manufacturing and retail sectors are particularly stark. One of our major industrial clients had a manufacturing facility facing three big energy challenges: voltage sags costing $9M annually, outages costing $2.6M annually, and high energy costs. By deploying uninterruptible power systems and power quality and power conditioning hardware they could solve the voltage sag issue with a payback of less than one year. A battery storage system could be deployed with a payback period of 3 to 5 years.
Supply Chain Transformation
Our expectation for a post-COVID energy supply chain at the start of the year was that it would become more stable and predictable and this is certainly what we saw happen. Some numbers to illustrate:
- Solar panel prices: Dropped from 41 cents per watt in 2020 to 31 cents in 2024
- Global solar prices: Plummeted from 22 cents to 11 cents. Solar prices actually spiked to 28 cents per watt during COVID.
- Lithium-ion battery prices: Crashed from $806 per kWh in 2013 to just $115 in 2024
Under the new Trump administration, there’s a strong focus on energy and resource sovereignty, particularly in securing critical minerals and metals to reduce reliance on external parties. While this didn’t feature prominently during the election, it’s expected to become a key priority moving forward. We recently had author and energy expert Peter Kelly-Detwiler on our podcast and he highlighted some crucial challenges, such as rising steel prices and persistent supply chain issues for major energy equipment like transformers, which face delays of three to seven years. These challenges emphasize the growing appeal of distributed and onsite energy solutions, such as panels, batteries, and generators, which are more readily available compared to utility-scale infrastructure.
“Transformers need special grain steel and there’s very limited supply of that. In fact, right now there’s about a three-year wait for transformers and switchgears. Some housing developers can’t put in new developments in certain parts of the country, let alone businesses. So that’s been a concern. And we also import about $4 billion a year of transformers from China.”
Additionally, concerns around sourcing equipment from countries like China, including cybersecurity risks, are driving discussions about reshoring manufacturing to the U.S. This shift will likely gain momentum as supply chain resilience and domestic production become increasingly vital.
Electric Vehicles: The Quiet Revolution
The electric vehicle (EV) market has taken a significant leap forward in 2024, transitioning from a niche segment to a growing mainstream option. Contrary to claims of industry stagnation, the latest data tells a different story. According to Kelley Blue Book, the U.S. EV market grew by 11% year-over-year through Q3 2024, with 346,000 EVs sold—a 5% increase from Q2. EVs now account for 9% of all vehicle sales, signaling a shift in consumer priorities.
This growth isn’t just about sustainability. Drivers are embracing EVs for their practicality, lower operating costs (comparable to paying $1 per gallon for fuel), minimal maintenance, and sheer enjoyment. Common misconceptions, like the need for extended range, are fading as people realize that most daily commutes don’t require 400+ miles of battery life.
As the market expands, challenges like scaling EV charging infrastructure and managing grid demand remain key areas for innovation. Yet, with falling prices, diverse models, and increasing consumer awareness of the long-term benefits, these hurdles feel more like opportunities than roadblocks.
A recent conversation with Kristen Siemen, the former Chief Sustainability Officer of General Motors underscored the industry’s commitment to advancing EV adoption and tackling these challenges head-on. With momentum building and the market unlocking new possibilities, the future of electric vehicles is undeniably bright.
Regulatory Winds of Change
2024 marked a turning point in emissions and building-related regulatory compliance and incentives, pushing businesses to act on decarbonization and electrification. Over the past few years, regulations on building performance standards and emissions have focused on benchmarking and planning. This year, however, for many enforcement kicked in, with fines starting to impact businesses.
Incentives have also played a critical role. Programs like the USDA REAP grant, combined with tax credits and accelerated depreciation incentives, make renewable energy systems more accessible than ever in rural areas. An assessment for one customer showed that by leveraging the REAP grant they could install an onsite energy system at zero cost, while also circumventing a costly $1 million utility infrastructure upgrade for their EV fleet.
The Inflation Reduction Act continues to drive momentum, with tax credits remaining largely intact despite potential legislative tweaks. This stability ensures businesses can confidently invest in sustainable energy solutions while maximizing financial benefits.
These shifts underscore a larger trend: regulations and incentives are no longer just about compliance—they’re creating opportunities for businesses to innovate and save, paving the way for a greener, more resilient future.
For a full overview of local regulations building owners should be aware of, check out of our blog post: Under the Radar: Local Regulations Impacting Commercial Real Estate
The AI Connection
The rapid growth of AI exemplifies how digital transformation is reshaping industries, with AI markets projected to leap from $420 billion next year to $2 trillion by the end of the decade. This explosive evolution underscores how AI and the energy industry are deeply interconnected and mutually dependent for sustained growth.
A key example of digital transformation’s impact is cryptocurrency. Despite initial hesitation to offer investment advice, crypto’s value soared, fueled by ETFs, the Bitcoin halving event, and clearer regulatory frameworks. These developments illustrate how innovation in digital markets is intrinsically tied to advancements in energy—highlighting the urgent need for flexible, sustainable, and affordable energy solutions to power these transformations.
As both sectors advance, the focus will remain on ensuring energy innovation keeps pace with digital demands, shaping mega-trends that promise an exciting future.
Looking Forward
2024 isn’t just another year in the energy transition. It’s the year distributed energy stopped being alternative and started being essential. Companies like Walmart, Target, and Lineage Logistics are showing massive returns, making the rest of the market pay attention.
The message is clear: Resilience is no longer optional. It’s a strategic imperative.
As we move into 2025, the question isn’t whether distributed energy will continue to grow – it’s whether the market leaders will continue to dominate or they’ll be activity at scale by a wider range of commercial and industrial buyers.
