A cleaner electric grid is the key to the energy transition, the single most important requirement if the rest of the programme is to succeed. The reason is straightforward: many types of energy demand that now rely on fossil fuels can in principle be switched over to electricity. Cars are an obvious example, but by no means the only one. The clean-up of the electric grid is thus the most critical issue that we track in this report.
Figure 8: Growth of wind and solar
Source: Ember, Generation analysis
We believe the moment is close when worldwide emissions from the grid will peak and begin to fall. One organisation that we respect, Ember, argues that the peak may already have been reached in 2022. We are less certain on that point, but it has definitely happened in many countries, proving that it can be done on a global scale. Even if 2022 proves not to be the year, we believe a peak will likely occur within the next few years, though we will then need years of after-the-fact data to know exactly when it was reached and a sustained decline began.
Figure 9: Diverging
The chart above illustrates how sharply the emissions trajectories of the rich, developed countries have diverged from those of the developing world. The rise of emissions is unfortunate, but it is also a measure of how rapidly lives have been transformed in the developing world as hundreds of millions of people have been lifted from poverty in recent decades.
Figure 10: Clean power, dirty power
The phase of rapid growth in power emissions is likely coming to an end. They rose again in 2022, but only by a little more than 1 percent. Electricity demand is still growing fast, especially in the developing world, so what is holding back the rise of emissions? The main answer is the rapid growth of wind and solar power, which are now meeting 80 percent of the demand growth in electricity.1 As new policies designed to speed up renewable power kick in, we expect that figure to exceed 100 percent, meaning that wind and solar will begin to claim market share from fossil fuels at a global scale.
Figure 11: Electricity emissions
These basic facts hold despite some turmoil in the market for renewable energy, much of it stemming from the after-effects of the pandemic. For instance, the pandemic forced delays in the commissioning of new wind farms in China, the United States and elsewhere. Huge run-ups in the cost of commodities, many of them stemming from pandemic-related disruptions to supply chains, threw renewable-energy auctions in several countries into turmoil, mainly because the auction rules are not set up to allow power developers to capture higher commodity costs. Countries are now looking at revising those rules. The need to do so is urgent, for the inflationary spiral in commodities like steel has produced some bizarre circumstances. At a moment when Europe is making huge new commitments to wind power, for example, every supplier of wind turbines there is losing money, and thus in a weak position to invest to meet the expected future demand.
The Ukraine war sharply cut supplies of Russian gas to Europe and forced a reckoning in that region with decades of misguided energy policy. The outcome has been less dire, however, than anyone expected. The United States, flush with gas due to the technology called hydraulic fracturing, is sending it to Europe by the tanker load. But more important from the standpoint of the energy transition, gas demand in Europe fell sharply in the winter of 2022 and 2023, with gas use in Germany down by 18 percent, for instance.2 The reductions came in part from a population willing to sacrifice for a cause; surveys in several countries showed that consumers responded to the pleas of the authorities by lowering their thermostats.
The superstar energy source during this period has been solar power, which hit a global installation record in 2022. The boom is not only because of supportive government policy, and not only because of rising adoption by power companies, but because individual households looked at their electric bills and realised the economics of rooftop panels had become more favourable. The Netherlands moved its electricity supply nearly 5 percentage points toward solar power in the course of a single year.3 India is making a major push on solar power, with solar and wind together accounting for more than 90 percent of the recent generating capacity added to the Indian power grid.4
Figure 12: Wind power capacity, China vs US
Figure 13: Solar power capacity, China vs US
As it has done for years, China is leading the world in the installation of renewable power. Not only does it have most of the world’s capacity to produce solar panels, it is also the world’s largest market for those panels.5 Unfortunately, China has also dialled up its approvals of new coal-burning power plants in the past two years, after the issuance of permits nearly came to a halt for a while. The Chinese leadership was panicked by large-scale power outages in 2021 and 2022, and has ordered the new power plants to prevent any recurrence.6 The outages occurred during intense heat waves that scientists reported were made worse by global warming, so the new coal-burning plants — which will, of course, worsen the emissions problem — illustrate the dire feedback loop in which we are caught. The bright spot in this situation is that China is now using its coal plants approximately half the time and that figure has been falling; if the new plants are kept largely on standby, as seems possible, they need not necessarily torpedo China’s emissions goals.
Figure 14: The latest coal boom in China
Source: Global Coal Plant Tracker, GEM
In summary, we believe the clean-up of the world’s electrical grids is moving in the right direction. The trend should get a huge boost from the new climate law in the United States and new policies in Europe, India and other regions. Like the rest of the energy transition, though, the clean-up is not moving quickly enough.
Figure 15: The big clean-up
We are concerned by a relatively new problem that is bogging things down. First in the United States, and then increasingly in countries all over the world, lengthy queues have developed for renewable-energy developers wanting to connect to the grid. The procedures used to plan for the expansion of power lines have turned out to be wholly inadequate to accommodate the rapid growth of renewable energy.7 Waiting lists that used to stretch for 18 months are now running to five years, and the situation is getting worse. Governments need to move urgently to break this bottleneck.
Figure 16: Rising backlog
On top of that, developers trying to answer the call for more renewable power face additional hurdles, including red tape in getting the land-use permits they need, as well as rising citizen opposition in many jurisdictions. If they want to meet their own stated goals, countries have to find ways to slash through the red tape, bring citizens on board and speed up the needed permits.
Not only must existing generation capacity be replaced by clean sources if the goals of the Paris Agreement are to be met, but the coming electrification of transport, industry and heating implies potentially large increases in power demand. Meeting that demand will require not just a massive wave of clean-power generation, but also the construction of extensive new power lines to supply power at times when solar and wind are not delivering. Grid-sized batteries will be needed to help cover the demand, as will new types of longer-duration electricity storage.
This is a big agenda, and the time to deliver is short.
- 1. Wiatros-Motyka, Małgorzata et al. “Global Electricity Review 2023.” Ember, April 2023. Back to inline
- 2. The figure compares total gas demand across households, industry and power in November 2022, December 2022, January 2023 and February 2023 with 2019 – 2021 average figures for the same months. Williams, B., Zachmann, G. “European Natural Gas Demand Tracker.” Brugel, accessed 30 August 2023. Back to inline
- 3. EurObserv’ER. “Photovoltaic Barometer,” April 2023. Back to inline
- 4. Lee, U. “Solar and wind dominate India’s capacity additions in 2022,” Ember, 17 March 2023. Back to inline
- 5. “World Energy Investment 2023.” International Energy Agency, 2023. Back to inline
- 6. Myllyvirta, L., A. Yu, F. Champenois, and X. Zhang. “China Permits two new coal power plants per week in 2022.” Global Energy Monitor, 2023: 1 – 17. Back to inline
- 7. For a detailed discussion of the problem and potential solutions in the American context, see Norris, Tyler H. “Beyond FERC Order 2023: Considerations on Deep Interconnection Reform.” Nicholas Institute for Environment, Energy & Sustainability, Duke University, August 2023. Back to inline