In this discussion, Sandhya Ganapathy, CEO of EDP Renewables North America, shares her journey through investment banking to leading a major renewable energy company. She examines the robust growth of the U.S. renewable energy market, highlighting the demand dynamics and investment opportunities. Sandhya tackles the tricky challenges of interconnection queues and the potential for power shortages. She also touches on federal policies shaping the energy transition and the critical need for diverse energy sources to meet future demands.
The U.S. renewable energy sector is rapidly growing, now representing nearly 20% of the overall energy mix, driven by legislative mandates and aging conventional sources.
Despite this growth, the energy sector faces significant challenges with interconnection delays and the need for improved infrastructure to meet increasing demand.
Deep dives
The Growth of Renewables in the U.S.
The renewable energy sector in the U.S. has experienced significant growth over the past two decades, now comprising nearly 20% of the overall energy mix. This surge is driven by various factors including state mandates known as renewable portfolio standards that require local utilities to source clean power. Additionally, the aging thermal power fleet is leading to the retirement of conventional energy sources, further promoting the demand for renewables. The robust corporate Power Purchase Agreement (PPA) market allows companies to secure long-term, stable pricing for renewable energy, distinguishing the U.S. market from global counterparts.
Challenges in Energy Interconnection
Despite the optimistic growth in renewable energy demand, there are substantial structural challenges, particularly in energy interconnection and transmission. The backlog of projects waiting for interconnection exceeds available installed capacity, highlighting existing infrastructure limitations. ISOs are concerned about blackouts due to extreme weather events and must adapt to accommodate increased energy demands. Streamlining the interconnection process and utilizing AI for study acceleration could alleviate some of these bottlenecks while addressing the aging grid issues.
Capital Allocation and Market Dynamics
When considering capital allocation, companies focus on various factors including resource availability, transmission costs, and permitting ease. Certain U.S. regions, like Virginia with its data center demand, are becoming increasingly attractive for renewable investments. A diversified strategy across multiple ISOs helps companies mitigate risks and capture opportunities. The demand for renewable energy is amplified by corporate needs and the expectation of stable energy costs, pushing the market towards more innovative solutions in energy procurement.
The Role of Federal Policy in Energy Transition
The energy transition requires collaboration across federal, state, and local levels, as it entails substantial changes to the power mix to meet growing demand. Federal policies are critical for providing the certainty needed for capital investments, while ISOs and RTOs must implement measures to enhance operational efficiency. Stakeholder engagement—from federal decision-makers to local development agencies—is essential for successful project permitting and execution. With rising energy demands driven by factors like AI and data centers, the need for a cohesive and adaptable policy framework becomes increasingly urgent.
This week on Energy Unplugged, we’re excited to welcome Sandhya Ganapathy, CEO of EDP Renewables North America. She joins our North America Managing Director, Oliver Kerr, to explore the US power market—its appeal, and the challenges and opportunities shaping its future.
Before stepping into the CEO role in 2022, Sandhya was the Global Head of Investments and M&A, and also served as the Head of Investments and M&A for North America. With her vast experience in evaluating renewable energy investments and acquisitions, Sandhya brings a wealth of expertise to the conversation. Prior to joining EDPR, she spent over a decade as an investment banker, working with both regional and global banks across multiple regions.
Main topics include the following:
Opportunities and challenges arising from demand growth
Given challenges with interconnection queues, is there a meaningful chance that any US markets will be short on power in the next 5 years?
The attractiveness of the US power market, and its sources of competitive advantage