There is a growing list of systemic demands being placed on the electricity sector that will test the generation, transmission and distribution of power in the coming decades. These include environmental, social, and governance objectives for public and investor-owned utilities and vendors within their supply chain. There is also physical and cyber security; technological leaps in generation, smart grids and energy storage; vehicle electrification; conservation; and, of course, climate change.
In May 2021, the International Energy Agency (IEA) published ‘Net Zero by 2050: A Roadmap for the Global Energy Sector’. Transition to renewables will require massive investments in onshore and offshore wind, solar, hydro, biomass and geothermal. Nuclear refurbishment and expansion will also have a role in a non-carbon future.
The US currently ranks number one globally for renewable investment attractiveness according to advisory firm EY, and is the world’s second largest investor in transmission and distribution (T&D) networks. Canada is one of the leading countries utilising renewable energy, and 60% to 70% of power generation facilities in the country are scheduled to be replaced or upgraded during the next 10 to 15 years.
In Mexico, regulatory reform continues to be batted back and forth between pro-market and pro-public laws and rules, but significant investments are required nonetheless to expand T&D throughout the country and transition away from a heavy fossil fuel reliance. And Brazil, by far the largest electricity market in Latin America, is already 84% renewable – mostly hydro – and continues to rapidly expand its utility-scale solar and wind generation assets.
The IEA report is unequivocal that “the energy sector holds the key to responding to the world’s climate challenge”. Across the Americas, the challenges facing the electricity sector are as diverse and immense as the territories the sector serves. So, too, are the opportunities for domestic and foreign firms to invest in the energy transition that is already underway.
Gregg Wassmansdorf is a senior managing director, consulting, at Newmark, a global commercial real estate services firm, and also a member of the Site Selectors Guild. E-mail: Gregg.Wassmansdorf@nmrk.com
This article first appeared in the October/November print edition of fDi Intelligence. View a digital edition of the magazine here.