IEA warns of gridlock risk in global energy transition

The International Energy Agency (IEA) has released a new report that highlights the urgent need to expand and enhance electricity grids globally to meet climate goals and ensure energy reliability. The report, titled Electricity Grids and Secure Energy Transitions, finds that the world must add or replace 80 million kilometres of power lines by 2040, equal to the entire existing global grid, to achieve all national climate and energy targets.

Grid investment needs to double by 2030

According to the IEA, annual investment in grids has remained relatively stagnant at around $300 billion per year, while investment in renewable energy generation and technologies such as wind and solar power, electric vehicles and heat pumps has nearly doubled over the past decade. This has created a major bottleneck for the clean energy transition, as grids are struggling to cope with the increasing demand and variability of electricity supply and consumption.

IEA warns of gridlock risk in global energy transition
IEA warns of gridlock risk in global energy transition

The IEA estimates that global investment in grids needs to double to over $600 billion per year by 2030, with more than half of it going to transmission networks that connect regions and countries. The report also calls for major changes to grid operations and regulations, such as expanding and strengthening grid interconnections, providing government backing for large-scale transmission projects, and utilising digitalisation to enable more resilient and flexible grids.

Grid delay could jeopardise climate targets and energy security

The IEA warns that without substantial policy attention and investment, deficiencies in grid infrastructure could jeopardise the objective of limiting global warming to 1.5°C and energy security. The report presents a scenario called the “Grid Delay Case”, which examines the consequences of inadequate grid investments and reforms. It finds that delayed grid investment would result in nearly 60 billion additional tonnes of cumulative carbon dioxide emissions between 2030 and 2050, exceeding the Paris Agreement target of 1.5°C. It also finds that grid delay would increase the reliance on gas-fired power plants, raising gas demand by 15% in 2040 compared to a scenario with timely grid investments.

Moreover, the report highlights the risks of power outages due to grid failures or insufficiencies, which can have devastating economic and social impacts. The IEA estimates that grid-originated technical/equipment failures alone caused outages that amounted to a global economic loss of at least $100 billion in 2021. The report also notes that grid-related challenges are more acute in emerging and developing economies, where access to electricity is still limited and grid expansion has declined by an annual average of 7% in the past five years.

IEA urges governments and businesses to act now

IEA Executive Director Fatih Birol said: “The recent clean energy progress we have seen in many countries is unprecedented and cause for optimism, but it could be put in jeopardy if governments and businesses do not come together to ensure the world’s electricity grids are ready for the new global energy economy that is rapidly emerging. This report shows what’s at stake and needs to be done. We must invest in grids today or face gridlock tomorrow.”

The IEA also emphasises the importance of international cooperation and assistance to help developing countries build and modernise their electricity grids. Birol said: “Ensuring the developing world has the resources it needs to build and modernise electricity grids is an essential task for the international community. By mobilising financing, providing access to technology and sharing best practices on policies, leading economies can help improve people’s lives, strengthen sustainable development and reduce the risks of climate change.”

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