Power & utilities

Decarbonizing the power and utilities sector requires a large-scale shift to renewable sources of energy. This will mean significant investments in new energy infrastructure. That includes not only wind and solar energy development but much wider deployment of battery-based or thermal energy storage to smooth out volatility in supply and demand.

This is feasible, and many of these needed changes are already seeing considerable momentum. For example, the generation of electricity from renewables continues to accelerate around the world (Source 3). The International Energy Agency (IEA) expects that, by 2040, renewables will account for 47% of the global electricity market, up from 29% today.

<sup>Source:
3. IEA, Press Release, https://www.iea.org/news/renewable-electricity-growth-is-accelerating-faster-than-ever-worldwide-supporting-the-emergence-of-the-new-global-energy-economy</sup>

The energy sector’s path to net zero, the IEA notes, is “narrow but still achievable.” (Source 4)Transforming an industry that’s currently responsible for about three-fourths of all greenhouse gas emissions will mean a push to deploy clean and efficient energy technologies on a massive, global scale.

Governments will need to invest heavily in energy research and development. Support will also be needed from both businesses and individuals, as this energy transition will demand behavioral and societal changes as well as technological ones.

<sup>Source:
4. IEA, Net Zero by 2050, https://iea.blob.core.windows.net/assets/deebef5d-0c34-4539-9d0c-10b13d840027/NetZeroby2050-ARoadmapfortheGlobalEnergySector_CORR.pdf</sup>

Efficiency improvements are critical to temper the growing demand for energy. Without more efficient technologies and significant change in energy policies, global energy consumption is projected to increase by 50% by 2050. (Source 5)

The power and utilities industry will also benefit from ongoing efficiency increases on the supply side. Even with recent increases in commodity costs, the cost efficiency of renewables such as wind and solar has risen dramatically over the past couple of decades.

<sup>Sources:
5. eia, https://iea.blob.core.windows.net/assets/deebef5d-0c34-4539-9d0c-10b13d840027/NetZeroby2050-ARoadmapfortheGlobalEnergySector_CORR.pdf</sup>

Around the world, many regions need to make large investments to bring their grid and power infrastructure up to date. Even more upgrades will be required to defend it against climate change risks that include extreme weather, droughts and wildfires. Without resilient energy systems and up-to-date digital technologies to help balance supply and demand, utilities face the growing potential for rolling blackouts that could affect large areas for days, weeks or even months.

Utilities must also have IT defenses that can protect the grid against ever-evolving cybersecurity threats. In addition, modernizing systems will be critical to meet rising energy demands.

The electricity grid will provide the backbone for a transformed, net zero energy system that will include more renewable energy sources, wider adoption of electric vehicles, home-based solar generation, storage and more. So grid companies must take the lead. They have a critical role to play in bringing about a cleaner, more distributed energy system – from educating consumers about required behavioral changes to integrating innovative energy storage technologies to supporting net zero industry and government policies.