A first-of-its-kind study by the International Energy Agency has found the world must spend $600bn annually to add or revamp 80 million kilometres of grids by 2040, equal to all grids globally today, or risk hobbling the green energy transition.
The IEA warned in its report today (Tuesday) that electric grids currently receive “too little attention” and are “not keeping pace” with the rapid rollout of solar, wind, electric cars and heat pumps.
“Without greater policy attention and investment, shortfalls in the reach and quality of grid infrastructure could put the goal of limiting global warming to 1.5°C out of reach and undermine energy security,” the report warns.
The IEA found that achieving all national climate and energy goals will “require adding or refurbishing 80 million kilometres of power lines by 2040 – an amount equal to the existing global grid in less than two decades.”
While investment in renewables has been increasing rapidly, nearly doubling since 2010, the IEA found investment in grids is “remaining static” at around $300bn per year. This must double to more than $600bn annually by 2030 to meet climate targets, it said.
The report identified 3TW of renewables projects – including 1.5TW at advanced phases – that are in development but are still waiting for the green light to connect to the grid.
That amounts to five times the amount of solar and wind capacity that was added worldwide last year, it noted, showing that “grids are becoming a bottleneck for transitions to net zero emissions.”
“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,” said IEA executive director Fatih Birol.
“This report shows what’s at stake and needs to be done. We must invest in grids today or face gridlock tomorrow.”
Concern around grid infrastructure has been on the rise, with Europe’s top wind and electric associations recently warning that limited capacity risks throttling the continent’s energy transition.
Another issue is that projects to upgrade grid infrastructure frequently meet fierce local opposition, with a recent UK government-sponsored report suggesting people affected receive lump sums in compensation to help win them over.
The IEA said such payments can help with the acceptance of projects, citing Australia, India and Ireland as countries with compensation schemes. It also stressed the importance of effective communication with local stakeholders to help win support.
The report also developed a scenario for what would happen if grid investment is not scaled up quickly enough, finding that cumulative carbon dioxide emissions between 2030 and 2050 would be almost 60 billion tonnes higher due to a slower rollout of renewables.
That is equivalent to the total carbon dioxide emissions from the global power sector over the last four years and would “put the global temperature rise well above the Paris Agreement target of 1.5°C, with a 40% chance of exceeding 2°C.”
The IEA said that actions that could help prevent this include expanding and strengthening grid interconnections both in and between countries, governments backing “large-scale transmission projects,” and grid developers and operators embracing digitalisation.
With new grid infrastructure often taking five years to 15 years to plan, permit and complete, compared to new renewables projects that take just a fraction of that, “the need for decisive action is urgent,” said the IEA.