Transforming the world’s energy system with solar and wind

Recent analysis confirms the very large increases in solar and wind generation required to decarbonise the energy system by 2050.  Achieving this growth will require large scale investment in grid infrastructure and system balancing.  This is turn will require the right policy support.

An order of magnitude increase in build rates of solar and wind power is needed between now and 2050 …

All informed analysis of decarbonising the world’s energy system shows solar and wind power playing a central role.  For example, recent modelling published by the Energy Transition Commission (ETC)[i] shows electricity meeting around 85% of global energy demand by 2050.  This includes direct electrification and also “indirect electrification”, using hydrogen made by electrolysis, with some of the hydrogen used as ammonia.   Electricity is expected to be mainly from renewables, with nuclear having only a limited role due to high costs and lack of acceptance.  The remainder of the energy mix is expected to be mainly biomass with some use of fossil fuels with CCS.

The analysis emphasises the need for rapid scale up of deployment of renewables, mainly solar and wind (see chart).  In the 2020s the rate of installation of solar and wind must be more than double 2019 levels.  Further increases are required thereafter, reaching more than ten times 2019 rates of installation in the 2040s. The implied compound average growth rate of cumulative installed capacity is approximately 11% p.a. for wind and 13-14% p.a. for solar.  (Note: I published similar analysis in December last year, with largely consistent conclusions.  A comparison is included at the end of this post.)

Chart:  Increase in installation rates for wind and solar

Source:  Energy Transition Commission

Extensive supporting investment will be required to achieve this growth …

This growth in generation appears achievable, although to strong policy drivers will continue to be needed.  However increasing rates of deployment of generation, while essential, are not enough.  A large amount of investment in different types of infrastructure will be needed to make sure that the system balances and electricity is available when required. This includes the following.

• A mix of renewables – wind, solar and hydro, which have different patterns of production.
• Increased interconnection to help deal with variation in output from renewables.  For wind, variations within a continent can be large, so links across moderate distances help.  However, with solar, greater resilience may require interconnection over multiple time zones using HVDC (High Voltage Direct Current) transmission lines.  This is because solar output is strongly dependent on time of day, with similar longitudes having correlated output (night is at about the same time). 
• Dispatchable plant, for example using natural gas with CCS may play some role on systems, although residual and lifecycle emissions will be an issue in many cases.
• Oversizing the generation relative to peak demand, gives a greater probability of meeting peaks even if output is not at maximum.  This is made easier by falling costs and the availability of storage for surpluses.
• Demand side flexibility, especially reductions in demand from industry.

However even with these measures in place there will be a substantial need for daily, weekly and seasonal storage.

• Falling costs of batteries will allow them to play a major role in daily balancing, though likely not over much longer timescales.  There may be a role for batteries in electric vehicles to support grid, but their role remains unclear.
• Pumped hydro will also help daily and weekly balancing.  Compressed air storage may also play a role.
• Other hydro will become a very valuable balancing source, for example week to week.
• Hydrogen generated by electrolysis and then converted back to electricity may have an important role to play both weekly and seasonally.  The ETC analysis shows it as the most cost effective approach for week to week balancing.  It is inefficient due to the losses in conversion of electricity to hydrogen and back again, with a cycle efficiency of only around 35%.  However, this is similar to the efficiency considered normal for coal-fuelled electricity for decades, and should be sustainable if the electricity is cheap enough.  The balance between this and power generation from natural gas with CCS remains unclear, but the relative importance of hydrogen is likely to increase strongly over time.

All this will require large investments.   However with the costs of renewable electricity continuing to fall, renewables should remain cheaper than fossil generation, even allowing for these wider costs. (This excludes the costs of electrifying end use – for example the installation of heat pumps for residential heating will require large capital investments.)

With policy needed to make investment happen …

Making these investments happen will require farsighted regulatory and policy measures to be put in place.  This is partly about removing barriers to infrastructure, such as grids and storage.  In particular building transmission grids at scale is essential, but has too often in the past been a very lengthy processes due in large part to permitting issues.  The inability to build sufficient electricity transmission capacity in Germany has hampered its decarbonisation, for example. But it is also about new commercial arrangements, including electricity pricing and trading arrangements appropriate for a system with a large amount of variable, zero marginal cost capacity. 

What exactly these measures should be I will return to in future posts.  But it is clear that without further measures it will be difficult or impossible for renewable generation can grow at the required rates.  The urgency and scale of action required should not be underestimated 

Adam Whitmore – 15^th June 2021

Comparison of modelling

The ETC analysis quoted here has similar assumptions and reaches very similar conclusions to that which I published in a post on this blog late last year, although the two sets of analysis were carried out entirely independently.  A summary comparison is provided in the table below.  Both pieces of modelling envisage somewhat greater electrification than assumed in scenarios by IRENA and BNEF.

Assumptions	This blog (December 2020)[ii]	ETC analysis reported in this post
Total final energy demand in 2050  (000 TWh)	102 (sensitivity  127)	99 – 137
Percentage electricity of final energy	80% (range 70 – 85%)	85%*
Electricity consumption in 2050 vs. 2019 (factor higher)	3 – 4	3.5 – 5
Percentage wind and solar of electricity	80% (range 70 – 90 %)	75 – 90%
Annual installation rate of wind and solar 2020-2050 as a factor of 2019 rates for net zero by 2050	7 (range 5 – 11)	2 to approximately 14, growing over time
Compound annual growth rate of wind and solar installed capacity 2020-2050	11-12%	11% wind, 13-14% solar

* The ETC analysis shows electrification comprising 68% direct electrification, 15% electrolytic hydrogen and about 2% ammonia. My analysis did not separate out direct electrification, hydrogen from electrolysis, and ammonia from hydrogen. 

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[i] https://www.energy-transitions.org/publications/making-clean-electricity-possible/

[ii] https://onclimatechangepolicydotorg.wordpress.com/2020/12/14/a-further-huge-scale-up-of-solar-and-wind-power-is-needed/