The electricity sector, which today accounts for 20% of total global energy consumption, is undergoing its most dramatic transformation since it started to emerge over a century ago, a new report by the International Energy Agency said Tuesday.
The IEA's Power Systems in Transition report, which has examined cyber threats, extreme weather events due to climate change and the increasing share of variable generation from wind and solar, calls for a more comprehensive approach to electricity security to meet these challenges in a sector that is ever-increasing in importance.
Commenting on the report, Fatih Birol, the IEA executive director said the COVID-19 crisis has underscored electricity’s vital role in modern societies.
"Energy security is critical for social wellbeing, economic prosperity and successful clean energy transitions," he said.
"Reliable electricity ensures the smooth functioning of hospitals and enables many people living under lockdown to continue to work, study, shop and socialize from home," he added.
Birol stressed the importance of electricity security for rapid clean energy transitions to succeed.
The biggest transformation of the electricity sector since it started to emerge over a century ago is now being witnessed through new sources of power generation, new digital technologies, new business models, new forms of storage and more, he said.
Although he viewed these changes as “exciting and promising”, he said they also bring new challenges as they disrupt how complex electricity systems operate.
According to the report, electricity accounts for one-fifth of global energy consumption today and it is set to play a bigger role in heating, cooling and transport as well as many digitally integrated sectors such as communication, finance and healthcare.
In the IEA's Sustainable Development Scenario, electricity could surpass oil as the world's largest energy source by 2040. The share of wind and solar in global electricity generation would rise from 7% to 45%, with all renewables accounting for more than 70% of the total.
However, the rapidly growing renewables create a relatively decentralized and variable power generation compared to the traditional sources that can supply electricity whenever needed.
- Electricity security needs to be central part of planning
The report shows changes in the sector that come with steep declines in the costs of variable renewables, decentralization and digitalization trends and the impacts of climate change directly impact the electricity security model which has prevailed over the past century.
"The challenge for governments and utilities is to update policies, regulations and market designs to ensure that power systems remain secure throughout clean energy transitions. An essential goal is to make systems more flexible so they can smoothly accommodate the variable electricity production from wind and solar," the report said.
This requires increasing investment in grid systems and other sources of flexibility such as demand-side technologies and storage resources, according to the report. The COVID-19 crisis has exacerbated the declining investments in grid systems, thus an increase in investments needs to be facilitated.
The report also highlighted that with the growing digitalization comes increasing cyber threats. It is necessary to strengthen cyber resilience measures and make them a central part of the planning.
The last significant challenge for electricity security derives from the climate crisis resulting in extreme weather trends.
The electricity systems need to become more resilient to the impacts of changing climate patterns, which can be accomplished by giving a high priority to climate resilience in electricity security policies and establishing better standards to guide the necessary investments, the report said.
"Electricity is critical for successfully achieving transitions to clean energy. The electricity sector is the biggest single source of CO2 emissions today. Thanks to the spectacular rise of wind and solar, electricity is a driving force for reducing its own emissions and those of other sectors," Birol noted.
By Nuran Erkul Kaya