With the energy landscape transitioning quickly, market intelligence firm Lium recently launched coverage of the US Power and Renewables. SmartBrief caught up with Lium partners Daniel Cruise and Joseph Triepke to learn more about their launch report and how they see the renewables sector taking shape.
What made you decide to launch your coverage of US Power and Renewables right now?
Lium’s launch has been more than a year in the making, and we couldn’t be happier with the timing. In early-2021, powerful forces in the capital markets, government, and technology are converging to reshape the U.S. energy market. Industry dynamics are changing faster than anyone could have predicted four or five years ago. Investor focus is changing too – clients we’ve served for many years with shale research are increasingly focused on power and renewables. More than ever before, institutional users need holistic energy value chain research to avoid being blindsided by generation mix shifts.
Your research suggests different outlooks for onshore and offshore wind. Which data points led you to those different outlooks?
Onshore wind resource is limited in some parts of the country, and orderbook growth has slowed in recent quarters as sweet spots reach critical mass. We are concerned about fewer greenfield opportunities in prime onshore wind resource zones, and Lium’s view is that more transmission and retrofitting will be needed to push the onshore installed base forward. Meanwhile, U.S. offshore wind is in the first inning of a massive growth story. We believe the new administration will help push the 30 GWs in Lium’s offshore wind orderbook towards the finish line faster.
Are there any specific states/regions where you see renewables enjoying outsized growth in the next 12-18 months? Any states/regions where uptake might have plateaued?
The pipeline of future projects Lium tracks in large scale solar and wind resembles the geography of the installed base. That is to say that solar developments are concentrated in the southwest from California to Texas, while wind developers continue to focus on North/West Texas and the MidCon. In residential solar, Lium data shows the market diversifying outside of California and Hawaii. In fact, those two states are down to 35% of rooftop solar installations today vs. 50% just five years ago. Digging into California, we have run solar rooftop inventory scenarios at various growth rates. If California installations only grow by 10% per year, inventory of additional homes would remain robust with only 15% penetration by 2025 and 20% by 2030. However, if the industry anticipates 30%+ annual growth through 2025, then the inventory of available California homes could shrink significantly.
With electric vehicles increasing in popularity, do you forecast renewable power generation being able to keep pace with EV-related electricity demand?
The short answer is yes. Lium’s power consumption model projects U.S. EV share scenarios ranging up to 5% by 2025 and 15% by 2030. In any 2025 EV scenario we model, the pipeline of announced large scale solar and wind projects in the U.S. plus residential solar growth should be able to supply this new electricity demand and then some. To be more specific, by 2030 we believe direct EV related electricity consumption could add an additional 100k GWh of demand to the grid, well within the range of forthcoming investments in renewable generation capacity.
Do you have any other thoughts you’d like to share regarding the overall renewables landscape?
Project pipelines are ballooning in large scale solar and offshore wind, and a positive view on green hydrogen requires inflection in solar and wind over the next several years. That said, there is plenty of room for cautiousness. At Lium, we are concerned that robust expectations in residential solar are tracking ahead of leading edge data. The renewable sectors we’ve launched on are growth juggernauts, but there are many knowledge gaps where we think better market data is needed. We are excited about being a part of the information solution in this space.
Daniel Cruise has 15+ years of energy finance experience working in both buyside and sellside equity analyst roles. He founded Coras Research, a leading independent oilfield service data firm, prior to co-founding Lium Research. Daniel has also held research analyst positions at Jefferies, Evercore-ISI, and Wells Fargo Securities. He attended Texas A&M University, graduating with degrees in both accounting and finance.
Joseph Triepke has worked in diverse energy finance roles for 15+ years. As a publishing Wall Street analyst, he covered the oilfield for Jefferies, JP Morgan, and Guggenheim. He then joined a large hedge fund, helping run an energy book. After leaving Wall Street, Joseph built the most widely read market intel platform in the frac supply chain, Infill Thinking, which he continues to manage. He graduated from UT Austin with a degree in finance.