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Access to affordable, reliable energy forms the foundation of modern economies, and this must urgently become clean energy to keep global warming to 1.5oC. Tackling climate change and alleviating poverty requires a complete transformation of the global energy system with a rapid switch to cheap renewable power and electrification of sectors including transport, heat, cooking and industry. The element that connects it all is the power grid; the backbone of the energy transition. The role of renewable energy is well understood, and investments are increasing, costs are falling. Yet, the grid that connects this energy to the consumer has less star billing in the energy transition narrative and is at risk of being a blocker if it is not given the attention it requires.
We are seeing load shedding in southern Africa. In Europe and the US, delays in connecting to the grid are slowing the roll out of renewable energy. A recent Financial Times article reported that one project, the Couture wind farm in southwest France is facing an eight-year wait before it can obtain connection to the grid. Grids need to be a bridge, not a barrier, to a clean energy future and they have huge potential to do so. But we need to act fast and ramp up the deployment and capability this decade.
The International Energy Agency estimates that annual investment in grids needs to more than double by 2030 to $750bn, and reach over $1 trillion by 2040 if we are to have any hope of being on a 1.5oC pathway. Global electricity grids that took 130 years to build need to more than double in length by 2040 and increase by another 25% by 2050.[1]
Put simply there is no transition without transmission.
We are all interconnected
Building domestic grids is essential to meeting the demand for electrification. Linking grids across countries and regions is essential to delivering low-cost renewable energy. One hour of sunshine provides enough energy to power the whole world’s economy for an entire year. Harnessing that energy and sharing it across the globe though interconnected grids between countries and across regions is a key step in building a clean and affordable energy future. Interconnectivity really is a triple win:
1. It unlocks least cost renewable energy through connecting markets and increasing flexibility. Interconnectivity within and between regions is an important source of flexibility (essential for balancing renewable energy and demand) as it creates larger markets that can draw on a wider range of resources, helping to smooth out weather patterns and reducing the need for back-up fossil generation. It is estimated that a connected ASEAN power system could achieve net savings of $9.1bn by 2035 through integrated transmission.[2]
2. Promotes economic development by bringing cheaper, cleaner power to market stimulating economies and supporting energy access. Through reducing constraints and maximising the utilisation of renewable generation, interconnection reduces the overall cost to the consumer and acts as an economic stimulus. In southern Africa, the World Bank has identified that every $1 invested in regional grids has the potential to deliver $21 of economic benefit.
3. Enhances security of supply by sharing resources, reserves, and balancing over a wider area, providing a more stable energy system that can better withstand shocks. Europe, which has comparatively high levels of interconnection, saw a huge switch of power flows last winter as France, usually a power exporter, required support from its neighbours to overcome outages of its nuclear fleet. 59TWh switched from export to import, with the UK, Germany and Spain becoming net exporters to France for the first time since 2015.[3]
Interconnection also provides significant political opportunities, with the potential to aid countries in scaling up renewables more rapidly and through interdependency, strengthen regional cooperation.
What are the challenges for grids today?
Grids are not keeping pace with the transition to renewables due to the time it takes to build and update them and challenges (real and perceived) of operating them with high levels of renewables. These challenges include:
· They are capital intensive and require large investment up front before the revenues flow and many grid utilities in the Global South are cash constrained, making access to finance challenging.
· In most jurisdictions grids are required to go through extensive planning and permitting processes which take many years.
· Traditionally grid investments tend to follow growth rather than anticipate it. However, consumer demand and the growth of renewables in some regions is outstripping the grid capacity sooner than it can be built.
· There is also severely limited capacity in the supply chain for key components of the grid and the pool of skilled workers to build and operate them is limited.
We need to turn these challenges upside down if we are to keep 1.5oC in reach and ramp up grid construction this decade.
A global plan to accelerate grid deployment
With the right government ambition and focus, supportive regulatory frameworks, and simplified planning processes, things can change. Through the Green Grids Initiative, we have identified eight priorities for accelerating green grids globally:
1. Political ambition and support to invest in domestic grids and interconnectors as part of a long-term energy plan. International collaboration to share interconnection experience and support the development of new projects.
2. Regulatory regimes need to be stable, fair and have a strong net zero focus to build the grid today that meets the needs of tomorrow.
3. Targeting concessionary finance to support underfunded grids projects in attracting the private finance they need to invest and expand.
4. Planning and permitting needs to be accelerated, recognising the critical nature of grids in the transition to net zero economies.
5. Sharing of international best practice for designing and operating high renewable grids, and managing intermittency, for example, through flexibility markets and storage technologies.
6. Ramping up supply chain capacity on a global and regional basis.
7. Prioritising skills and implementing plans to develop workforce capability to build and operate grids.
8. Engaging society on the role and need for grids in the energy transition and involving communities in grid development at an early stage.
To quote an African proverb “if you want to move quickly, go alone, if you want to go far, go together.” There is no benefit of one jurisdiction achieving their transition if others are left behind. We all need to go together, learning from each other, collaborating, and sharing as we can only win this race if we all get over the line in time. Our mission through the Green Grids Initiative is to bring a global community together to address the issues of grids, to deliver on these priorities at pace and for grids to play their part in delivering the energy transition.
Written by Marcus Stewart, GGI Lead, UK Department of Energy Security and Net Zero
[1] International Energy Agency, ‘World Energy Outlook 2022’ (2022); ‘World Energy Investment 2023’ (2023).
[2] Economic Research Institute for ASEAN, ‘INVESTING IN POWER GRID INTERCONNECTION IN EAST ASIA’ (2014).
[3] Ember: Weathering the winter27/04/23
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