The path to electrifying the global economy


A recent report from the Energy Transition Commission highlights the role of electrification in achieving our net zero climate ambitions. Mark Venables looks at the challenges ahead as we strive to increase the pace in our quest to mitigate climate change.

To limit global warming to below 2°C and as close as possible to 1.5°C, the world must reduce net greenhouse gas emissions (GHG) to net zero by mid-century. To achieve that will require as many activities as possible to be electrified, the use of hydrogen primarily made from electricity in many others, and to totally decarbonise electricity supply. Other technologies such as carbon capture and storage or use (CCS/U) and sustainable bioenergy will also need to be deployed. But clean electricity is necessarily at the core of a zero-carbon economy.

According to a recent report ‘Making Clean Electrification Possible’, from the Energy Transition Commission (ETC) direct electrification will be key to decarbonising many sectors of the economy, including road transport, and building heating. It predicts that electricity’s share of final energy demand will grow from only 20 per cent today to over 60 per cent by mid-century. It also believes that hydrogen will play a major role in decarbonising harder-to-abate sectors which cannot easily be electrified, such as steel and long-distance shipping, and will likely account for another 15 to 20 per cent of final energy demand.

Taken together, this requires a dramatic increase in global electricity supply, from today’s 27,000 TWh to as much as 130,000 TWh by 2050. Improved energy productivity needs to be a key priority but will not remove the need for a massive increase in electricity supply.

Achieving such a massive clean electrification will be a major challenge, but if managed effectively the ETC believe that the transition will pay for itself. It states that total system generation costs for electricity systems as much as 90 per cent dependent on variable renewables will be no higher than for today’s fossil fuel-based systems. Clean electrification will also deliver major local environmental benefits with better air quality and reduced noise pollution.

Achieving early power decarbonisation – ahead of economy-wide decarbonisation – must therefore be at the heart of all countries’ paths to netzero emissions.

The growth of renewables

A key strand of electrification is the rapid ramp up of renewables such as wind and solar which prevents challenges, not so much in the technology itself but the rate of increase. “In terms of total scale, if we had all the time in the world to get there, we do not think there are many resource challenges to get to a quadrupling of the size of the power system and do it in a renewable way,” Faustine Delasalle, director, ETC, says. “The fundamental difficulty is the pace at which we need to do it to meet the 2050 targets. Therefore, I would say it is a question of ramping up investments and having the right policy environment to enable private investment scale.

“There is no successful energy transmission if there are not massive amounts of clean electricity in the system. It is 70 to 80 per cent of our future energy system. If we do not get clean electricity right and fast, then none of the sectors’ decarbonisation will happen. One of the critical things to focus on is understanding that we need the power system to be net zero much earlier than 2050, so the timeline by which we need to decarbonise is much better for the power system than it would be for the rest of the economy.”

It will come as no surprise that Francesco La Camera, director-general, of the International Renewable Energy Agency (IRENA) is allied with that message about the pace of adoption required. “We have no time,” he says. “The window is closing and the pathway to a net zero future is narrowing. Science is clear: 45 per cent of global greenhouse gas emissions from 2010 levels must be reduced by 2030. Unfortunately, the recent trends show that the gap between where we are and where we should be is widening. We are on the wrong path, and we need to change the course now.

“The choices we make in the coming years will have a far-reaching impact. They could bring us on a path toward the goals we set out in 2015 when we adopted the highly consequential international agreements on sustainable development and climate change. Or they could take us in the opposite direction to further warming, with profound and irreversible economic and humanitarian consequences.”

It is unwise to make predictions or pre-empt outcomes at uncertain times. However, La Camera points to several trends that are shaping an unfolding energy transition and giving an indication of its direction. First, the costs of renewable technologies have plummeted to the point that new fossil-based electricity is no longer an attractive option. Second, the progress in the power sector is spilling over to end uses, allowing a re-imagining of possibilities with the abundance of renewable options at hand. Third, a consensus has formed that an energy transition grounded in renewable sources of energy and efficient technologies is the only way to give us a fighting chance of limiting global warming by 2050 to 1.5°C.

“Only a few years ago, the renewables-centred approach espoused by IRENA was considered too progressive, idealistic, or even unrealistic,” La Camera adds. “Today, our vision has become mainstream, and accepted as the only realistic option for a climate-safe world. And this is reflected in the growing number of commitments to net zero strategies by countries in all corners of the world, creating unprecedented political momentum for a transformative change.”

One of the significant challenges facing renewables’ development is planning and permitting permissions. Projects are often greatly delayed by lengthy planning and permitting procedures, and/or by local opposition on the grounds of localised impact or noise pollution. Countries therefore need to develop explicit strategies for future development such as a one-stop-shop for approval processes with coordination across regulatory bodies and encouraging distributed generation and community ownership models to build local support. “That is one of the big recommendations of the report,” Delasalle adds. “We need to consolidate permitting for everything renewable related, with a one-stop-shop for all processes, ensuring that some of the biggest infrastructures are declared as a matter of national emergency to some extent. If we do not do that, there is a risk that we won’t go fast enough in terms of a build-up of the whole power system.”

Working with a legacy grid

Massive clean electrification will require significant expansion and upgrade of transmission and distribution (T&D) networks. While a growing and decarbonised electricity system will require more networks, particularly at the distribution level, there is also a need for more digitalised, smarter grids.

Transmission and distribution costs vary significantly by country, but on average account for about 40 per cent of total power system costs, of which distribution is about two-thirds and transmission about one-third. In absolute terms and in all countries, total T&D investments will need to rise sharply to support the massive increase in electricity supply required in a net zero emissions economy.

There are several critical drivers of growing network needs, which go beyond rising shares of renewable energy. These include enabling mass electrification, including integrating new use cases (electric vehicles, heat pumps) and increasing variable renewable penetration, enabling flexibility, and managing network threats.

As renewables get ever cheaper, the critical question is no longer the relative cost of renewable versus fossil fuel-based generation, but the feasibility and cost of running systems with an increasing percentage of renewables. Running such systems will require the application of new technologies and approaches to system operation, supported by appropriate power market design. Provided those enablers are in place, it will be feasible and cost-effective to run power systems with penetration rates as high as 75 to 90 per cent.

When renewable resources were first introduced into power systems, some experts believed that technical system management complexities (for example, the need for real-time frequency balance previously provided by rotating inertia) might limit feasible levels of renewable penetration below 50 per cent. But as renewable shares have increased, technical solutions have been found.

Many countries already operate with average yearly renewable generation shares of 30 per cent or more. The Covid-19 crisis has also acted as a stress-test, with the share of renewables in electricity generation rapidly rising because of the demand shock from lockdown measures. Several systems operate today with daily or hourly renewable percentages reaching 60 per cent or more.

In many warmer climate, lower latitude countries – and therefore across much of the developing world – the main challenge in renewable dominated systems will be to balance plentiful daytime solar supply with demand which extends into the evenings and overnight. Even in countries where this is not the most important challenge because of more evenly distributed renewable generation, which tends to be the case with wind generation, demand and supply must still be brought into balance on an hour-by-hour basis.

While daily balancing can be provided at low cost, challenges are more complex over longer durations. But here too there are a range of zero-carbon technologies which can address both the predictable seasonal and the unpredictable week-by-week challenge.

“There are two types of flexibility challenges,” Delasalle explains. “You have your day-to-day balancing between night and day, and the good news is that batteries are getting cheaper and cheaper and can enable us to do that balancing at a low price.

“The bigger technology challenge is to account for seasonal changes. In these whole periods you do not have sun or wind, requiring new forms of storage, like hydrogen storage, which is not yet completely technology ready or else peaking plants. The good news about peaking plants is we have many thermal plants in our current power systems that can provide that flexibility and start being used only when there are peaks in demand. That is feasible, at least during the transition period. Over time, we might need to retrofit them with carbon capture or start using hydrogen in those plants to reach net zero. But in the meantime, in the next ten to 15 years, we can use them as a flexibility mechanism that makes the integration of 70-80 per cent variable renewables in the grid completely feasible.”

A zero-carbon future

The good news is that the ETC believes it is possible to reach net-zero carbon emissions by mid-century, significantly increasing the chance of limiting global warming to 1.5°C. Actions taken in the coming decade are critical to put the global economy on the right track to achieve this objective. Succeeding in this historic endeavour would not only limit the harmful impact of climate change, but also drive prosperity and better living standards, while delivering important local environment benefits.

A net zero GHG economy will be built on abundant, affordable zero-carbon electricity. Achieving massive electrification and early power decarbonisation – ahead of economy-wide decarbonisation – must be at the heart of all countries’ paths to net zero. Policymakers, investors, innovators,

producers, buyers, and more generally both public and private sectors have a major responsibility to collaborate and act now at the local, national, regional, and global scales to overcome the barriers to scaling and delivering the major step-change in the pace of renewables deployment required.

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