| Transmission & distribution CO2
emissions from the power sector to 2050 would be 58 gigatonnes higher in the Grid Delay Case than in a scenario aligned with national
climate targets. This is equivalent to the total global power sector CO2 emissions from the past four years. It would also mean that the global long-term temperature rise would go well above 1.5°C, with a 40% chance of it exceeding 2°C.
At a time of fragile natural gas markets and concerns about gas supply security, failing to build out grids increases countries’ reliance on gas. In the Grid Delay Case, global gas imports are over 80 billion cubic metres (bcm) a year higher after 2030 than in a scenario aligned with national climate targets – and coal imports nearly 50 million tonnes higher. Delayed grid development also increases the risk that economically damaging outages would multiply. Today, such outages already cost around USD 100 billion a year, or 0.1% of global GDP. Regulation needs to be reviewed and updated to support not only deploying new grids but also improving the use of assets. Grid regulation needs to incentivise grids to keep pace with the rapid changes in electricity demand and supply. This requires addressing administrative barriers, rewarding high performance and reliability, and spurring innovation. Regulatory risk assessments also need to improve to enable accelerated buildout and efficient use of infrastructure.
Planning for transmission and distribution grids needs to be further aligned and integrated with broad long-term planning processes by governments. New grid infrastructure often takes five to 15 years to plan, permit and complete, compared with one to five years for new renewables projects and less than two years for new EV charging infrastructure. Grid plans need to integrate inputs from long-term energy transition plans across sectors, anticipating and enabling the growth of distributed resources, connecting resource-rich regions including offshore wind, and reflecting links with other sectors including transport, buildings and industry, and fuels such as hydrogen. Robust stakeholder and public engagement is key to inform scenario development. The public needs to be aware and informed about the link between grids and successful energy transitions, the IEA believes. To meet national climate targets, the report estimates that grid investment needs to nearly double by 2030 to over USD 600 billion per year after over a decade of stagnation at the global level, with emphasis on digitalising and modernising distribution grids. Concerningly, emerging and developing economies, excluding China, have seen a decline in grid investment in recent years, despite robust electricity demand growth and energy access needs. Advanced economies have seen steady growth in grid investment, but the pace needs to step up to enable rapid clean energy transitions. Investment continues to rise in all regions beyond 2030.
Building out grids requires secure supply chains and a skilled workforce. Governments can support the expansion of supply chains by creating firm and transparent project pipelines and by standardising procurement and technical installations. They also need to build in future flexibility by ensuring interoperability of all the different elements of the system. There is also a significant need for skilled professionals across the entire supply chain, as well as at operators and regulatory institutions. It will be essential to build out a pipeline of talent, ensure digital skills are integrated into power industry curricula and manage the impacts of the energy transition and increased automation on workers through reskilling and on-the-job training. The most important barriers to grid development differ by region. 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 market 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 cost transparency. For other jurisdictions, such as Europe, the United States, Chile and Japan, the strongest barriers relate to public acceptance of new projects and the need for regulatory reform. Here, policy makers can speed up progress on grids by enhancing planning, ensuring regulatory risk assessments allow for anticipatory investments and streamlining administrative processes.
Above: Coal and natural gas use worldwide in power generation (EJ), Grid Delay Case and Announced Pledges Scenario, 2010-2050. Source: IEA, Electricity grids and secure energy transition, Licence: CC BY 4.0
Above: Share of solar PV and wind in power generation worldwide (%), Grid Delay Case and Announced Pledges Scenario, 2010-2050. Source: IEA, Electricity grids and secure energy transition, Licence: CC BY 4.0
Above: Power sector CO2
emissions worldwide (Gt/y), Grid Delay
Case and Announced Pledges Scenario, 2010-2050. Source: IEA, Electricity grids and secure energy transition, Licence: CC BY 4.0
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