IEA: grids may become transition’s ‘weak link’ without fresh investments

Efforts to accelerate net zero targets and to ensure a reliable supply of electricity may be at risk unless investors and policy makers improve and expand the world’s electricity grids, according to a new report shared with Net Zero Investor.

The International Energy Agency (IEA) warns that electricity grids are not keeping pace with the rapid growth of key clean energy technologies such as solar, wind, electric cars and heat pumps. A lack of ambition and attention risks making electricity grids the weak link in the clean energy transition, the researchers wrote.

"Without greater policy attention and investment, shortfalls in the reach and quality of grid infrastructure could put the goal of limiting global warming to 1.5 °C out of reach and undermine energy security," the report warns.

The report, Electricity Grids and Secure Energy Transitions, which offers "a first-of-its-kind stocktake of grids worldwide", as the IEA put it, stressed that, to achieve all national climate and energy goals will require adding or replacing 80 million kilometres of power lines by 2040.

This an amount equal to the entire existing global grid, according to the detailed country-by-country analysis. 

"Major changes to how grids operate and are regulated are also essential, while annual investment in grids, which has remained broadly stagnant, needs to double to more than USD 600 billion a year by 2030," the researchers wrote.

Issues are already emerging, the IEA stressed as it identified a large and growing queue of renewables projects waiting for the green light to be connected to the grid, pinpointing 1 500 gigawatts worth of these projects that are in advanced stages of development. 

"This is five times the amount of solar PV and wind capacity that was added worldwide last year," the report stated.

Net Zero Investor's Annual Conference | 11th December 2023 | London

 IEA Executive Director Fatih Birol, said that “the recent clean energy progress we have seen in many countries is unprecedented and cause for optimism, but it could be put in jeopardy if governments and businesses do not come together to ensure the world’s electricity grids are ready for the new global energy economy that is rapidly emerging.”

He warned governments and investors should not downplay the role of electricity, as it is set to continue growing strongly, increasing the demands on grids. 

"Grids are not keeping up. Investment in renewables has nearly doubled since 2014. For grids, it has barely changed," the energy chief said.

"Grids are becoming a bottleneck, with potentially serious impacts on clean energy transitions and electricity security. If investments in grids aren't scaled up quickly, it will result in slower growth of renewables, higher fossil fuel use and stronger global warming," Birol said.

The report further mentioned that the adoption of new technologies such as electric cars and heat pumps means electricity is expanding into realms previously dominated by fossil fuels.

Meanwhile, countries are adding renewable energy projects at a fast rate, requiring more power lines to connect them to electricity systems and high-functioning distribution grids to ensure reliable supplies for end customers.

This includes the digitalisation of distribution grids and enabling more flexibility through demand response and energy storage.

Delays

A new scenario developed for the report, the Grid Delay Case, examines what would happen if grid investment is not scaled up quickly enough and regulatory reforms for grids are slow.

It finds that cumulative carbon dioxide (CO2) emissions between 2030 and 2050 would be almost 60 billion tonnes higher due to a slower rollout of renewables that results in higher fossil fuel consumption.

This is equivalent to the total CO2 emissions from the global power sector over the past four years. It would put the global temperature rise well above the Paris Agreement target of 1.5 °C, with a 40% chance of exceeding 2 °C.

The report identifies several actions that the IEA believes can make a difference. These include expanding and strengthening grid interconnections within countries, between countries and across regions to make electricity systems more resilient and allow them to better integrate rising shares of solar and wind power.

Finally, the IEA recommended that governments back large-scale transmission projects to ensure grids are prepared for further strong growth in renewable power.

And it urged grid developers and operators to embrace digitalisation to enable the grids of the future to be more resilient and flexible.

"The need for decisive action is urgent because of the long lead times for modernising and extending grids," Birol said.

"New grid infrastructure often takes 5 to 15 years to plan, permit and complete, compared with 1 to 5 years for new renewables projects and less than 2 years for new charging infrastructure for electric vehicles."

Improving and expanding grid infrastructure in countries worldwide will require stronger international collaboration, the researchers warned.

They pointed out that emerging and developing economies, excluding China, have seen a decline in grid investments in recent years, despite robust electricity demand growth and ongoing efforts to meet energy access goals.

“Ensuring the developing world has the resources it needs to build and modernise electricity grids is an essential task for the international community,” Birol said.

“By mobilising financing, providing access to technology and sharing best practices on policies, leading economies can help improve people’s lives, strengthen sustainable development and reduce the risks of climate change," he concluded.

Also read
Expanding NZAOA says asset owners’ financed emissions drop for first time ever