V2U Research

By early 2024, wind and solar energy are expected to overtake coal as the world's primary energy sources.

Energy-efficient sources like nuclear and hydropower are also essential to achieving renewable energy targets.

A brighter future is anticipated based on the record expenditures made in renewable technology like solar panels.

However, reducing inequality, improving storage, and having a diverse range of energy sources are necessary to speed up the energy transition.

According to a news release from the International Energy Agency (IEA), the demand for electricity is predicted to rise globally over the next three years, based on a new analysis titled Electricity 2024. On the other hand, it is anticipated that renewable energy technology will meet the increased demand.

As renewable energy sources continue to grow rapidly and allow the production of low-emission energy sources to surpass the demand for power, nuclear power is expected to reach a record high in 2025.

According to the press release, Fatih Birol, executive director of the IEA, said, "It's encouraging that the rapid growth of renewables and a steady expansion of nuclear power are together on course to match all the increase in global electricity demand over the next three years." The power sector currently produces more CO2 emissions than any other in the global economy.

This is mostly due to the enormous momentum behind renewable energy, with solar energy becoming more and more affordable leading the way, as well as backing from nuclear power, whose generation is expected to hit a record level by 2025. These are quite encouraging tendencies, even if more work must be done quickly.

How is the switch to sustainable energy being aided by the World Economic Forum?

As a result of the global energy crisis and geopolitical unpredictability, the global energy transition has reached a standstill, according to the Fostering Effective Energy Transition 2024 report, which documented a decade of development.

The move towards an energy system that is "fit for 2050" is being spearheaded by the World Economic Forum's Centre for Energy and Materials. It is a cross-sector platform that forges new alliances and disseminates information needed for a safe, equitable, and sustainable energy future.

Clean energy in developing nations: For the four largest emerging and developing nations—India, Brazil, Nigeria, and Indonesia—we are building nation-specific renewable energy finance solutions. A recent solar and battery project in the latter is providing the East Sumba region with 15MW of sustainable energy, which is sufficient to power 4,000 houses and prevent 5.5KtCO2 emissions annually.

Energy Transition Index: WEF have evaluated 120 nations based on how well their energy systems are doing, allowing companies and politicians to determine what steps are required for the energy transition.

Blockchain mining and metals: We unveiled a proof of concept to use blockchain technology to track emissions along the value chain, hastening international action for nation-specific finance solutions.

Electrification and clean power: In order to contribute to a threefold rise in clean energy consumption by 2030, we are increasing the use of electric and clean power solutions over the next ten years.

The IEA's annual review of events and policies in the electricity market is included in the new report. Forecasts for supply, demand, and carbon emissions from the electricity industry are given through 2026.

Based on the analysis, the average global growth rate of energy demand is predicted to accelerate to 3.4% between this year and 2026, even if it decreased to 2.2% in the previous year due to lower power consumption by advanced economies.

It is estimated that South-East Asian, Chinese, and Indian countries will account for 85% of the rise in the world's need for power.

Reliance on fossil fuels should decrease concurrently with record-breaking generation from solar, wind, hydro, nuclear, and other low-emission power sources, according to the research.

In 2023, less than 40% of the world's electricity was generated by low-emission sources; but, by 2026, that percentage is predicted to rise to almost half.

Source: eco-business.com

According to estimates, 85% of the increase in the global demand for power will come from countries in South-East Asia, China, and India.

The study suggests that fossil fuel dependence should decline in tandem with record-breaking output from solar, wind, hydro, nuclear, and other low-emission power sources.

By 2026, it is expected that over half of the world's electricity would come from low-emission sources, up from less than 40% in 2023.

In Africa, per capita electricity use has essentially been at a standstill for more than 30 years, whereas in South-East Asia and India, it has grown quickly.

According to the press release, Birol stated, "Electricity use is a key indicator of economic development in any country, and it's a grim sign that it has flatlined in Africa on a per capita basis for over three decades."

"African nations must provide all of their population with access to sustainable, affordable, and dependable energy in order to meet their economic and environmental objectives. In order to facilitate the necessary and urgent progress, the international community must collaborate with the governments of Africa.

Peak power

According to the IEA, power sector CO2 emissions will level off as a result of the clean energy squeeze on fossil fuel electricity generation, as seen in the chart below (left).

As you can see from the full numbers below, there appears to be a small drop in CO2 emissions from the electricity industry by 2025. Decreases in Asia Pacific (yellow, red, and orange) would be more than compensated by rises in Europe (blues) and the Americas (greens).

It is important to note, too, that the IEA reports that emissions from the electricity sector hit a new high in 2022. This implies that rather than beginning to rapidly drop, emissions would instead stay at, or only marginally below, their record level for the ensuing few years.

The Rocky Mountain Institute's projection from earlier this year is consistent with the one made by the IEA. It claimed that, as a result of the rapid expansion of wind and solar power, the globe had reached its pinnacle for producing electricity from fossil fuels. The institute proceeded to project 4% annual decreases in fossil fuel generation from 2025 to 2030.

Obstacles to come

The IEA predicts difficulties as wind and solar power produce ever-larger percentages of the world's electricity. It cites recent heatwaves, storms, and droughts as instances of how weather is becoming a more significant factor in determining the supply and demand for electricity.

According to the IEA, this indicates the necessity of raising consumer demand-side flexibility and improving storage capacity. Additionally, it states that there will be a need for "dispatchable" capacity that is able to be turned on and off as needed. According to the report:

"Dispatchable renewables, like hydro reservoirs, geothermal energy, and biomass plants, will be essential for complementing the variable renewables [wind and solar] in a decarbonised electricity sector."

However, the paper highlights that there is currently no barrier to the expansion of variable renewables due to the constraints associated with their integration. It clarifies:

"In many parts of the world, there is sufficient potential for additional capacity expansions of variable renewables without encountering significant system integration bottlenecks."

In a related vein, the paper observes that the number of battery storage systems constructed annually is rising. The figure below illustrates the total amount of new battery capacity added in 2022—roughly 17 gigawatts (GW, thousand megawatts, MW). Compared to a year ago, this represents an increase of almost 90%.

According to the IEA, within that global context, battery additions increased by 80% in the US.

In China, 100%, whereas in the EU, 35%.