As we aim to decarbonise our energy systems, the crucial role of electricity grids in enabling the energy transition, and investing in modernising networks, has never been more important. The recent Electricity Grids and Secure Energy Transitions report, launched by the International Energy Agency (IEA), has come at the right time, bringing to light the vital need to build stronger grid infrastructure in order to support the renewables revolution.
Unsurprisingly, this lack of focus to date has a consequence. Around the world, electricity grids have been identified as the weak link in the renewable energy transition. Almost 3,000 GW of renewable power projects are waiting in grid connection queues worldwide – a figure which mirrors the combined solar PV and wind capacity added in 2022. One thing is clear: we need upgrades – fast. This glaring discrepancy underscores the urgent need for greater build-out of robust grid infrastructure to match the rapid expansion of renewable energy sources.
Through faster government and industry action, targeted policy measures and big investment into grid infrastructure, we can ensure that our grids can keep pace with increasing renewables development and reach our net zero goals. But to make this happen, we require concerted and sustained effort between communities, operators, and industry.
We need copper in the ground – fast
Investment into grid infrastructure is not keeping pace with the development of renewable energy. New wind and solar farms are being set up at a faster rate than can be channelled by utilities onto current grid networks, and these often require significant upgrades and new equipment to handle large loads of electricity generated by renewable power. According to the IEA report, we need approximately 80 million kilometres of global electric grids to be operational by 2040 to effectively incorporate the projected surge in renewable energy and facilitate the decarbonisation of the power sector.
To put this into context, new grid infrastructure often takes five to fifteen years to plan and permit, in comparison to one to five years for new renewables projects and less than two years for new EV charging infrastructure. Evidently, the current speed of grid build-out is nowhere near fast enough to manage an effective energy transition.
Here in the UK, we have observed that developers are having to wait until the mid-2030s for a connection date onto the grid. To facilitate quicker, large scale renewables deployment that will deliver the transition to net zero, we need to move away from a “connect and build” mentality to a “build and manage” approach. Indeed, many in the industry have been advocating for accelerated grid development as we know the impact delays can have, by limiting the buildout of renewable energy, and thus effecting energy security and affordability.
We have seen positive steps being taken by the UK government to address current grid infrastructure issues, with the Prime Minister, Rishi Sunak, outlining a comprehensive strategy with three facets of grid development. Firstly, introducing a ‘Spatial Plan’ which can strategically pinpoint the areas of high demand and supply across the country. Secondly, streamlining the process for permitting new infrastructure, including pylons and cable routes, which are essential for linking renewable energy sources to the grid. Finally, minimising the waiting times for generators to secure connections.
These pledges are great news for the UK in terms of accelerating us towards net zero, addressing some of the key policy areas highlighted by the IEA as imperative for bolstering grid development. As the report identifies, the strongest barriers to progressing grid upgrades relate to public acceptance of new projects and the need for regulatory reform. In response, as we’re starting to see in countries like the UK, policymakers are speeding up progress by enhancing planning processes, ensuring regulatory risk assessments, facilitating anticipatory investments, and streamlining administrative procedures.
These signals are a great start, but we need fast action if we are to modernise our grids in time to reach net zero targets.
As the report highlighted, system operators are having to curtail renewables to manage system-wide demand and supply and maintain grid stability. Ten markets, sampled in the IEA report, have an average renewable curtailment of 3% – staggeringly, this is the equivalent to the annual electricity demand of New Zealand.
The role of storage is often underestimated when it comes to the energy transition, but it is gratifying to see its benefits being recognised, particularly with curtailment at such high levels. Battery storage solutions have a crucial role in our energy systems, providing the necessary flexibility to the grid and enabling system operators to store excess renewables when needed. As more of our lives start to rely on electricity like heating, and electric transport, battery storage will serve as an integral component.
However, it is essential to see storage as a complementary solution rather than the only one. This is emphasised by the report, which reiterates that innovations and technologies, like battery storage and microgrids, can act as an alternative to traditional grid infrastructure, but we still need poles and wires too.
The IEA has projected that the demand for system flexibility is anticipated to double from 2022 to 2030. This underscores the urgency of adopting a multifaceted approach that encompasses both advanced storage solutions and grid expansion to effectively navigate the challenges of the evolving energy landscape.
Ensuring policies are fit for purpose
The ten-year projection from the UK Electricity System Operator has caused concerns regarding the doubling of Transmission Network Use of System (TNUoS) charges in certain areas, coupled with significant decreases in others. These charges, borne by suppliers and generators, are meant to cover the expenses related to the installation and upkeep of the transmission network. The cost relies on factors like geographical location and actual demand.
The fluctuation in the TNUoS charges poses a potential threat to net zero goals. A comprehensive evaluation of this methodology is imperative to provide investors and developers with clarity and confidence. Additionally, Ofgem needs to strategise how to offer longer-term stability to ensure private sector investment continues to achieve net zero goals.
Making change happen
Decarbonising our energy is vital to mitigating the effects of climate change. A lot has been promised at the policy level to modernise our electricity systems to support the energy transition. However, we need to see talk turn into action through greater collaboration between communities, operators and industry to deliver a smarter and greener grid powered by renewable energy sources.