IEA on the Global Shift to Electrification and Renewables
Remarks from TPEX consultancy for decision makers.
Energising the Future
Written SH on 2024-01-29.
Tagged energy climateChange
Encouraging observations from the International Energy Agency (IEA) shows that the share of electricity in final energy consumption continues to increase. This trend may signify a decisive shift towards electrification, with the prospect of an eventual transition to renewable sources for power generation.
The share of electricity in final energy consumption is estimated to have reached 20% in 2023, up from 18% in 2015. While this is progress, electrification needs to accelerate rapidly to meet the world’s decarbonisation targets. In the IEA’s Net Zero Emissions by 2050 Scenario, a pathway aligned with limiting global warming to 1.5 °C, electricity’s share in final energy consumption nears 30% in 2030.IEA, 2024. Electricity 2024. online.
A continued elevation in the proportion of electricity within final energy consumption is imperative to meet declared climate change management objectives. Consequently, there is a pressing need to intensify electrification efforts in heating and transportation, coupled with a heightened emphasis on expanding renewable electricity generation.
Currently in certain regions, renewable energy sources present a distinct competitive advantage, underlining the significance of embracing sustainable practices. Furthermore, the rewards of long-term planning become evident, emphasizing the strategic foresight required in the evolving energy landscape. This not only ensures resilience but also plays a pivotal role in securing stable and sustainable energy supplies for the future.
The hydropower-dominated Nordics remain the only market in Europe with average wholesale electricity prices comparable to those in the United States and Australia.IEA, 2024. Electricity 2024. online.
The establishment of a renewable-based electricity grid demands substantial investments aimed at enhancing the reliability and resilience of the system, particularly in light of shifting weather patterns. This necessitates heightened coordination among diverse renewable energy sources and considerable investment in interconnects between generation markets. Such measures are essential for mitigating interruptions in renewable generation. Challenges encompass not only the need for interregional and potentially global interconnects but also the imperative investment in energy storage for effective utilization as and when required.
Diversifying energy sources, building regional power interconnections and implementing strategies for resilient generation in the face of changing weather patterns will be increasingly important.IEA, 2024. Electricity 2024. online.
Amidst culture wars and electoral cycles, misleading signals regarding likely trajectories abound. The electrification of heating and transportation emerges as a crucial measure, not just in combating climate change but also in fortifying energy security. The peril lies in the delayed adoption of this pivotal shift, posing potential dangers and offering advantages solely to those with vested interests who have failed to diversify appropriately and swiftly.
Electric vehicles, heat pumps and data centres will remain strong pillars of growth over the period.IEA, 2024. Electricity 2024. online.
Enhancing Strategic Clarity
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References
IEA, 2024. Electricity 2024.URL.
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