(Credit: Canva Pro)As the world continues to grapple with the effects of climate change, the electricity sector remains a crucial area of focus. The transition to a low-carbon economy is dependent on decarbonizing the power sector, which accounts for about 40% of global CO2 emissions. Ember, a non-profit think tank that aims to accelerate the transition to clean energy, has released its Global Electricity Review 2023.
A Paris Agreement-compatible pathway for the global power sector was set out in detail by the International Energy Agency (IEA) in its ‘Net Zero Emissions’ (NZE) scenario published in May 2021. In 2022, the NZE scenario was updated in the World Energy Outlook report.
Although there are many possible ways the power sector could reduce emissions in line with a 1.5° trajectory, the IEA NZE scenario is well respected by industry stakeholders, provides detailed benchmarks, and is also largely in line with the IPCC scenario for power sector decarbonization.
Across all models, wind and solar are set to lead this shift, offering low-cost and quick-to-deliver clean capacity. The IPCC showed that wind and solar can deliver over a third of the emissions cuts required this decade, and half of those emissions reductions would actually save money compared to the reference scenario.
In many countries wind and solar are also economically attractive: lower cost than fossil fuels, and without the potential energy security risks of dependence on the global fossil fuel market.
The report reveals that global electricity demand has rebounded strongly after the COVID-19 pandemic, and it is expected to continue growing at an average rate of 2.5% per year through 2023. While renewable energy sources such as wind and solar are growing rapidly, coal remains the largest source of electricity worldwide, accounting for 36% of global electricity generation. However, coal generation is expected to decline by 3% from 2022-2023, driven by the rapid growth of renewables and the closure of uneconomic coal plants.
Wind and solar becoming the cheapest sources of new electricity generation in many parts of the world. The cost of solar photovoltaic (PV) modules has fallen by more than 90% since 2010, and the cost of wind turbines has fallen by more than 70% over the same period. As a result, solar and wind now account for 11% of global electricity generation, up from just 2% in 2010.
The IEA NZE scenario shows a clear route to a net zero global power sector by 2040, and by 2035 for OECD countries. The pathway does require a massive expansion of clean power generation, requiring multiple technologies. In the IEA modeling, wind and solar are vital linchpins, providing 75% of the increase in clean power from now to 2050. Interconnections, networks, demand-side management, and storage will all play a vital role alongside this deployment of clean power, and they will all need to expand to support the energy transition.
By 2030, wind and solar need to have increased to 41% of global electricity generation, up from 10% in 2021. Coal generation needs to fall by 54% and gas generation by 24%. At the same time, electricity demand will rise dramatically, by an average of 3.7% per year from 2021 to 2030, as electrification picks up pace.
While the shape of the path ahead is broadly clear, it is interesting to note the adjustments made by the IEA when updating the NZE scenario from 2021 to 2022. The scenario remains largely the same except for a much larger forecasted fall in gas power from 2021 to 2030 (previously 5%, now 24%), and a smaller fall in coal power (previously a 71% fall, now a 54% fall). This change likely reflects the slower progress in 2022 on the coal phaseout, but also a newfound possibility that gas power could begin its phasedown this decade.
Global power sector emissions increased in 2022 instead of decreasing, highlighting the urgent need for clean energy sources to replace fossil fuels. Despite this setback, there are indications that 2022 was a turning point in the global electricity transition.
The shift towards renewable energy sources has been accelerated by the energy crisis and concerns caused by the Russian invasion of Ukraine. Wind and solar energy are being prioritized due to their cost-effectiveness and security. For the first time, investment in low-carbon energy technology reached $1 trillion in 2022, matching investment in fossil fuels.
However, the investment must triple by the end of the decade to meet the 1.5° target.
Rapid investment in renewables is crucial to unlocking affordable and effective pathways to decarbonization. Moreover, securing clean electricity decades ahead of net zero will unlock the most affordable and effective pathways to economy-wide decarbonization.
