Improving utilities’ finances, workforce investment could better grid establishment to integrate renewables: IEA

The world’s first stocktake of electricity grids by the International Energy Agency (IEA), to assess where the grids stand in limiting global warming to 1.5°C, found that 3,000 gigawatts of renewable energy projects worldwide are waiting in queue to be integrated into their country’s electricity grids.

Worryingly, 1,500 GW projects of those solar and wind projects are at the final stages of development before they can be operationalised and grids are essential to decarbonise electricity supply and integrate renewables, the report released on October 17 titled Electricity Grids and Secure Energy Transitions indicated.

In order to bridge this infrastructural gap, the annual investment in grids would need to double to more than $600 billion a year by 2030. The IEA said:

The financial health of utilities is a central challenge in some countries, including India, Indonesia, and Korea, while access to finance and high cost of capital are key barriers in many emerging markets and developing economies, particularly in sub-Saharan Africa. Financial barriers can be addressed by improving the way grid companies are remunerated, driving targeted grid funding, and increasing the cost transparency.

Furthermore, building out grids requires secure supply chains and a skilled workforce, the report added. Otherwise, the delays could turn out to be a bottleneck in the transition to net zero as it takes between five to 15 years to set up new grid infrastructure, which includes the whole process of planning, getting permits, and integration into the electricity system.

In contrast, it takes about one to five years for renewable projects to get running and less than two years for new charging infrastructure for electric vehicles.

“The acceleration of renewable energy deployment calls for modernising distribution grids and establishing new transmission corridors to connect renewable resources — such as solar PV projects in the desert and offshore wind turbines out at sea — that are far from demand centers like cities and industrial areas,” the report stated.

This includes the digitalisation of distribution grids, flexibility, and energy storage, the IEA informed. “Ensuring the developing world has the resources it needs to build and modernise electricity grids is an essential task for the international community,” said IEA Executive Director Fatih Birol.

Over the next two decades, based on current national Net Zero goals, wind and solar PV may account for over 80 per cent of global power capacity addition. This is up from the 40 per cent growth observed during the last two decades.

However, reaching national goals would not be possible without adding or refurbishing over 80 million kilometres of grids by 2040, which is the equivalent to the entire global grid, the IEA report stated.

A Grid Delay Case was envisioned by the authors of the report to estimate the impacts of delaying grid expansion which would jeopardise the 1.5°C goal.

Compared to a scenario that meets the national climate target, according to their calculations, cumulative carbon dioxide emissions from the power sector by 2050 would amount to 58 gigatonnes higher in the Grid Delay Case. This is equivalent to the total global power sector CO2 emissions from the past four years, the paper warned.

“In the Grid Delay Case, global gas imports are over 80 billion cubic meters (bcm) a year higher after 2030 than in a scenario aligned with national climate targets — and coal imports are nearly 50 million tonnes higher,” the report added.

“Delayed grid development also increases the risk that economically damaging outages would multiply. Today, such outages already cost around US$100 billion a year, or 0.1 per cent of global GDP,” the report said.

In the last decade, in emerging markets and developing economies (EMDEs) alone, 15 million km of distribution lines have been constructed.

Among the countries, India accounted for more than 3.5 million km of expansion, while China added nearly 2.2 million km, which amounted to nearly 30 per cent of EMDEs countries’ distribution grids.

China alone accounted for over one-third of the world’s transmission grid expansion in the past decade. India has added nearly 180,000 km of transmission lines over the past decade, an increase of around 60 per cent. Similarly, Brazil has expanded its transmission system by over 92,000 km during the same period, growing by more than 50 per cent, the report said.

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