As electricity demand surges, the IEA details an integrated approach to a decarbonised system that yields reliable, affordable and clean electricity.
12 May 2014
Electricity is increasingly at the core of global energy system, but much like the IEA saw with oil security upon its founding 40 years ago, the warning is clear: only a strategic approach to develop an economic, secure and clean electricity system can meet surging demand and limit carbon emissions.
Electricity has many advantages in a low-carbon future: it emits no carbon dioxide (CO2) at the site where it is consumed; it can power large and small machines; and end-users need not stockpile it. But it is hardly carbon-free, contributing more than 13 giga tonnes of CO2 emissions in 2011. Almost 40% of global primary energy goes to its generation, though it represents just 20% of total final energy needs. Wind and solar grew at double-digit annual rates in the past decade, but more than 75% of new electricity generation in that time came from fossil fuels, half of it from Chinese coal-based output alone.
Unless the electricity supply is decarbonised, the growing electrification of economies will not slow climate change. But successful reduction in emissions in the electricity system will not only cut CO2 from generation, it will also automatically decarbonise sectors using that power.
A burgeoning share of the energy mix
Electricity use is rising fast. Already, electricity makes up more than 17% of overall energy use; 40 years ago, that figure was 9%. Its demand growth is on track to outpace that of overall energy. Just three years ago, oil products represented 40% of global energy demand, with electricity and all non-oil fuels each at less than half that amount. By 2050, electricity demand will grow by as much as 127% above 2011 levels, for at least 23% of all energy use.
In OECD member countries, electricity already has more than a 20% share, but under a carbon-constrained scenario, demand in those markets rises by an average of 16% through 2050, with the main growth in transport. Still, as use of fossil fuels declines because of the scenario’s decarbonisation, electricity’s overall share in the energy system approaches 30%.
But the same scenario sees electricity demand in non-OECD countries surging by up to 300% from 2011 levels. Transport is a factor for those countries, too, but the biggest expansion comes from providing universal access and enabling economic growth, as demand mushrooms in all sectors.
Benefitting from low-emissions electricity
Overall emissions from the electricity sector rose by 75% from 1990 to 2011 because of higher demand and little change in emissions intensity – or the amount of CO2 released per unit of electricity created. To cut emissions enough to hold global temperature rise to 2 degrees Celsius (°C) – a scenario called the 2DS – the flagship IEA technology series, Energy Technology Perspectives (ETP), sees that the 80% increase in electricity generation from 2011 to 2050 to meet demand will require a 90% cut in emissions. That means a reversal in capacity and generation from fossil fuels to renewable energy. More than 65% of global electricity generation now is fossil fuel-based, while all renewables, including hydropower, make up 20%. (The rest is largely nuclear power.) The 2DS calls for fossil fuels to fall to just under 20% of capacity by 2050, while renewables top 70%.
How to get there from here
Falling costs are already making the reversal possible. For instance, price reductions in solar photovoltaic systems since 2009 have accelerated global deployment, even as per-unit government support declines. Similar gains apply to other renewables, such as wind, and will spread as deployment experience increases and technologies develop.
While piecemeal efforts like installing more solar panels cannot suffice by themselves, they are in fact triggering the next big step. The scale of distributed generation from renewables is moving the system beyond the historical form of large-scale centralised electricity production.
The system now needs to be “smart” enough for all components to operate together seamlessly. Greater reliance on electricity and the increasing adoption of renewables to generate it requires more strategic planning to optimise existing infrastructure and determine what is needed where and when.
Looking at the system as a whole
The IEA calls for increased “systems thinking”, necessary to develop a smart integrated electricity system and ensure that short-term challenges do not undermine the deployment needed to realise long-term benefits. Such a systems perspective increases complexity but also enables more efficient use of energy resources. The approach is catching on: the energy community is realising how it must integrate a broad range of technologies – such as storage, demand response and smart grids – and policies across the supply and demand sectors to establish a system that can be operated efficiently, flexibly, reliably and affordably.
New technologies offer alternative ways to plan and operate the electricity system. These different approaches can also reduce or defer investments, though they can complicate operations, especially in environments requiring high levels of reliability. Using smart grid technology with more information and communications technology can help to address this new intricacy, even as it raises the risk of new security threats such as hacking of systems and computer viruses.
The necessary investment will be significant, so the research, development, demonstration and deployment should be increasingly targeted only at those technologies with system-wide benefits, not just sectoral benefits. In the highly regulated electricity industry, adaptable regulation will need to support new opportunities and approaches provided by novel technologies.
Maybe not easy, but well worth it
Flipping global electricity generation from fossil fuels to renewables will be challenging, to be sure, but it will provide significant benefits beyond limiting climate change.
In terms of energy security, a decarbonised electricity system diversifies the fuel mix and lessens dependence on fossil fuels, which many countries import. And a critical advantage of a systems perspective is policies that employ governance and market arrangements to incentivise efficient, flexible, timely and innovative responses to maintain power system security and adequacy, while discouraging short-sighted and wasteful patchwork investment.
Already, consumer engagement is changing, as electricity users become “prosumers”, or small-scale electricity producers and consumers, by, for example, installing rooftop solar panels. They stand to live in a cleaner world, with more cost-effective use of electricity.
This article by David Elzinga, the Senior Project Manager who leads the IEA flagship technology publication Energy Technology Perspectives, appears in the new issue of IEA Energy: The Journal of the International Energy Agency. The IEA produces IEA Energy, but analysis and views contained in the journal are those of individual IEA analysts and not necessarily those of the IEA Secretariat or IEA member countries, and are not to be construed as advice on any specific issue or situation. Click here to read the new and earlier issues of IEA Energy, and click here to send a request a free subscription.
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