Macroeconomics: The Future of the Electricity Markets

Author: Francisco Castro, Mainspring Energy

As we navigate the evolving landscape of the renewable energy markets, it's crucial to acknowledge the significant contributions of the waste management industry in this sector. The solid waste industry, often operating behind the scenes, plays a pivotal role in meeting our increasing energy needs through landfill gas-to-energy projects. By converting waste to energy, these initiatives not only address waste management challenges but also bolster our power supply, making them an indispensable part of our macroeconomic discussions.

The economics of electricity are fascinating. When we discuss the power market macroeconomics, particularly demand for electricity, there are multiple variables at play on the demand side: data centers, EVs, green hydrogen and extreme weather conditions.

Let’s start with data centers, and no, let’s not talk about bitcoin mining. Think about the billions of pictures and videos on our smartphones, the countless apps that are part of our daily lives, information technology functions from businesses, migration of data to the cloud, 5G technology (perhaps 6G one day), and of course, the imminent growth of artificial intelligence. Is it possible to think about any of these and see anything other than exponential growth? I don’t think so.

What about one of the biggest sectors in the world - transport? Unless we are all willing to ride horses again and stop flying around, our beloved transport sector is going to continue to have a significant impact on our overall energy use. According to the IEA’s new World Energy Outlook 2023, electric vehicles account for around 15% of global car sales today, and they are on course to reach a share of 40% by 2030. And that is just car sales - not trucks, maritime shipping, or air transport.

Last but definitely not least, extreme weather conditions are impacting all of us more frequently than ever. The statistics are impossible to ignore. The increase in temperatures means that every home, shop and office cranks up its AC, and for that, we need more power.

Grid planners forecast a US nationwide peak demand growth of 38 gigawatts (GW) through 2028—a staggering figure. We need more power generation (not to mention transmission infrastructure), and if someone is looking the other way, macroeconomic fundamentals will make them focus again. When the world is begging for power in the next decade, electricity prices will reward the ones that made those investments today.

The waste management industry has the opportunity now to become a key player in shaping our ideal energy future. According to the Landfill Methane Outreach Program from the EPA (LMOP), 459 landfills across the US are good candidates today for converting landfill gas into energy. Incredibly, these landfills could provide about 1 GW of new baseload power generation capacity. While of course this only gets us a portion of the way toward meeting our growing power demand, converting landfill gas into electricity is not just environmentally beneficial in capturing methane emissions, but it is also an economically sound investment supported by high electricity demands.

As we experience a massive uptick in the demand for power, propelled by continued technological advancements, environmental changes and societal shifts, the integration of sustainable practices from the waste management sector will be crucial. By profitably harnessing the potential of landfill gas to electricity, we can ensure a resilient, sustainable power supply to meet our future energy demands.

To learn how Mainspring Energy can assist with your biogas energy projects, visit www.mainspringenergy.com/solutions/biogas.