It’s time to address the electricity grid

Previous posts have discussed the efforts being made to address some of the roadblocks - speeding up the permitting process, changing bid criteria, securing the supply chain, redesigning the electricity market, finding staff, among others.

The electricity grid poses another challenge. There are legitimate concerns that grid bottlenecks could delay the green transition, and there is evidence that this is happening already, even before we get anywhere near the increase in renewable energy volumes needed in the medium and long term.?

A new report from BloombergNEF?says that today, there are 500 gigawatts of wind waiting to be plugged into the grid across the U.S. and Europe alone, five times as much as was built in these regions in 2022. The volume of solar held in the queue is double this, which means there are 1,500 gigawatts of renewables ready but not able to contribute to reducing emissions by decarbonizing electricity production.

“New renewables capacity is useless without the infrastructure to transport that clean electricity from where it’s produced to the end user,” the report says.

The report suggests that a net zero world by 2050 would need a global electricity grid with 152 million kilometers of cables, the same distance as the Earth is from the sun! The scale of investment needed to deliver this is similarly eye-watering - 21 trillion dollars by 2050, around 20% of what the IMF thinks the entire world’s GDP will be this year.

The?International Energy Agency’s short-term view is that investment in electricity grids needs to average nearly $600 billion a year by 2030, double the levels seen from 2015 to 2021.

Preparing the grid to accommodate the scale-up in wind energy requires more than just laying more cables and building new substations – the grid needs to evolve. Today’s grid has been designed around large coal or gas-powered electricity stations, located close to urban populations. The grid of the future will need to be closer to where the wind blows and the sun shines, with electricity capable of being delivered over longer distances than is required today.

The evolved grid also needs to cope with an evolution in power generation. Gigawatt-scale offshore wind power plants will drive decarbonization at scale, but there is a growing interest and take-up toward smaller-scale, local, community-based initiatives such as rooftop panels and smaller onshore wind turbines. The evolved grid will need to accommodate all renewable sources by creating brand-new processes for new small sites, at the same time as transitioning the existing infrastructure from fossil fuels to renewables at scale.?

The grid also has a material influence on the local, regional, and global electricity market. The regulatory environment for grids, therefore, needs to evolve to not only find ways to address the existing bottlenecks but also to start prioritizing renewables over fossil fuels. Grid bottlenecks and a lack of future planned capacity can impact investment decisions. Elsewhere, the grid must also evolve in a way that addresses intermittency issues by developing new and improved ways to store energy and balance the grid.

Many countries are addressing the fact that their grid will not be able to cope with the increase in renewables, which is happening due to an increase in demand. The UK has launched its “great grid upgrade” project and is looking at changing the current requirements which means it has to manage connection requests on a first-come, first-served basis.?

The German government is?looking to consolidate its grid, through mergers and acquisitions, into a single state-owned entity rather than the four grids that currently serve the country. European countries are also cooperating on the so-called “meshed grid”, which will allow large offshore wind power plants to connect directly to different national grids from the same source.

The U.S. grid is even more fragmented. The BNEF report says that the Biden administration has allocated nearly $30 billion of federal funding to grid-related initiatives, which BNEF?expects will stimulate more than $80 billion of extra grid investment through to the end of the decade. It does add, however, that this still falls short of what it thinks is needed for a net zero electricity supply.

As with other parts of the ecosystem which fall outside our sphere of influence, we’re willing to collaborate across the industry to help address the specific issues relating to the grid. My initial call to action is for the grid to become part of the conversation as a vital component in decarbonizing the electricity grid and driving the transition to a net zero world.

I look forward to seeing the progress made by Tim Holt and the Grid Technologies organization at Siemens Energy as they tackle this vital issue.