Power Grids Can Bottleneck Clean Energy Transition (Data via IEA Report)

A recent report from the International Energy Agency (IEA) highlights just how essential electricity grids are for clean energy transitions. The 130-page report, titled "Electricity Grids and Secure Energy Transitions," finds that while renewable energy technologies are burgeoning, the grid isn’t keeping up. This is creating a bottleneck that could hamper progress towards a net-zero emissions future. 

The IEA estimates that grid investment needs to double by 2030 to meet the demands of the clean energy transition. This investment is necessary to upgrade existing infrastructure, build new transmission lines, and integrate new technologies, such as energy storage and demand response.

How Does the Power Grid Bottleneck Impact the Clean Energy Transition? 

At least 3,000 gigawatts of renewable power projects are waiting for connection to the grid.

If the power grid can’t handle more power from renewable sources, it will rely on more power from other technologies, including fossil fuels, resulting in higher emissions. 

While investment in renewable energy is increasing – it’s doubled since 2010 – investment in power grids has remained basically unchanged. 

How Much of the Grid Needs Attention, Globally? 

More than half of existing power grids need to be replaced. For each nation to reach its goals, it’d need to add or refurbish over 80 million kilometers of grids by 2040, equal to the total power grid worldwide. 

Reaching these goals requires long-term planning. New grid infrastructure can take five to 15 years from planning to completion, compared with one to five years for new renewables projects.

How Do You Keep Track of Planned Transmission Build-Outs? 

C Three Group, which Yes Energy recently acquired, provides this information. The New Build Dataset is the most thoroughly researched database of all energy infrastructure projects in North America, and if you’re interested in learning more about this wealth of information and how it can inform your business, let us know. 

What Are the Risks If Power Grids Don't Keep Pace with Energy Transitions? 

If we don’t develop the grid or if we delay developments, it will hamper clean energy transitions and raise costs.

In one scenario, delays in developing grid infrastructure would delay deploying solar photovoltaics and wind power globally. This could restrict global solar photovoltaics and wind capacity additions 10 to 20% below the Announced Pledges Scenario (APS) from the World Energy Outlook in 2030 and 2050. This would mean a greater reliance on fossil fuels as well as more emissions. 

Besides higher emissions, slower grid development could also raise the probability and length of power outages, significantly impacting individuals and the overall economy. For example, outages currently cost around $100 billion a year. The US already has more outage hours per year than Japan, the European Union, and other advanced economies. 

What Can We Do?

IEA policy change recommendations cover six key areas: 

• Bring planning up to date: We’ll have to coordinate planning across the different parts of the power grid and regions.

• Invest more: Improving the way we compensate grid companies, enabling private participation in some cases, and improving cost transparency can boost investment. 

• Address barriers to grid development: Policymakers can help by ensuring regulatory risk assessments enable anticipatory investments, streamlining administrative processes, and making sure there are incentives for better using current infrastructure and for new infrastructure. 

• Secure supply chains: New grid development will stress existing supply chains. Governments will need to support expanding supply chains by creating transparent project pipelines and by standardizing procurement and technical installations.  

• Leverage digitalization: Digitalizing transmission and distribution grids can continue supporting efficiency. Developing artificial intelligence and machine learning tools for energy systems can increase the value of these solutions.

• Build a skilled workforce: We need a pipeline of talent and to reskill some current workers to keep pace with new technologies. 

Conclusion

To achieve countries’ national energy and climate goals, electricity use around the world needs to grow 20% faster in the next ten years than it did in the previous decade. The use of electric vehicles, installation of electric heating and cooling systems, and production of hydrogen using electrolysis will partly fuel this demand. While this will reduce carbon emissions, the electricity grid needs to be able to facilitate this increased demand for electricity. 

The US, and nations around the world, need investment and policy changes to keep pace with growth and to build a cleaner future. 

See the full IEA report for details, or contact us to learn more about the New Build Dataset.