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Making energy transition possible: how technology can help

In this comprehensive guide for policymakers and practitioners alike, our senior consultant, Benjamin Klooss, looks at both supply- and demand-side technological solutions for balancing intermittency and increasing the efficiency of renewable power systems.

The need for urgent and sustained cuts in greenhouse gas emissions is clear, but the path towards it is unchartered. An unprecedented transformation of the energy system is required to break the link between energy and emissions – all the while allowing countries to develop. This challenge is acute for poor countries, where access to electricity is frequently low but population growth is among the fastest in the world. There is a pressing need for clean, affordable and reliable energy. How can new and emerging energy technologies help balance the variability of renewable energy supply?

A non-sustainable trend that needs to bend

Ambitions for emission reductions are high and COP26 will seek to translate them into action – a big challenge. Thus far announced pledges are insufficient to limit global temperature rises to 1.5°C, according to the latest World Energy Outlook that the International Energy Agency (IEA) launched in early October 2021. As Covid-related restrictions are lifted, emissions are rising strongly in 2021. Instead, BP estimates in their Statistical Review of World Energy that achieving the Paris Agreement would require the rate of emissions to fall each year from now at a rate similar to the declines seen in the midst of lockdowns.

Climate compatible growth will be a particular challenge for less developed countries. More than three-quarters of the global population without access to electricity live in Africa alone. As electricity access increases and the population grows, so will electricity consumption. Meanwhile, in the near-term, the pandemic has resulted both in reduced household incomes and increased government borrowing – two factors that make affording clean energy more complex. At the same time, most of the power generation technology to meet expected long-term future demand in Africa and Asia has yet to be installed.

But this also presents an opportunity to lock in carbon savings now.

Renewable energy and decentralised solutions will be key, but supply is variable

Our FCDO-funded Energy and Economic Growth Applied Research Programme (EEG) has commissioned a body of research that investigates practical solutions to enhance energy access and renewable energy procurement. Given underlying resource potential, some of Asia and Africa’s emerging economies now rank amongst the most attractive in the world for renewable investments.

Grid-scale renewables will gain importance. But decentralised power generation solutions such as mini-grids and standalone systems will be the least-cost option for achieving more than two-thirds of the additional household connections to achieve universal access to electricity in Arica. These are often anchored around renewables, solar in particular. Yet as the sun does not always shine or the wind does not always blow, the growing share of renewable energy will increase the importance to balance variable supply patterns and demand

How can renewable energy sources be balanced to ensure constant supply?

Flexible generating technologies that can be ramped up and down quickly have traditionally provided supply-side balancing services. This includes gas turbines, steam turbines, combined-cycle power plants, gas engines, reservoir hydropower plants, nuclear and, at a small-scale, diesel back-up generators. Dispatch can be managed across the grid or through direct bundling with renewables.

Natural Gas

Natural gas offers significant climate benefits relative to other fossil fuels, with e.g. 50% lower CO2 emissions than coal and 20% fewer emissions than oil in power generation, and even larger emissions savings relative to burning of traditional biomass. Yet while there is a case for natural gas, it is a fossil fuel that generates CO2 emissions. Carbon Capture, Utilisation and Storage (CCUS) may offer the possibility for making ‘gas to power’ climate-proof as the technology matures and costs decline. The majority of net-zero emissions scenario models project an important role for CCUS in achieving a least-cost energy transition. However, CCUS for power generation is only just gaining line of sight to commerciality and will need to be proven at scale. Absent major transformation of the underlying cost and remuneration structure, it is also unlikely that gas CCUS power plants would be built purely for balancing generation or as reserve capacity – especially in emerging markets.

Hydropower

Hydroelectricity has historically played an important role in balancing as well as baseload generation and will continue to do so, particularly in Africa. However, recent weather events have exposed the vulnerability of such systems. This vulnerability may increase as planned hydro plants are bunched into single basins. More than 80% of east Africa’s planned new large hydro capacity to 2030 is to be built on the Nile, while almost 90% of southern Africa’s large hydro plants are to be sited along the Zambezi river. EEG-funded research led by the University of California Santa Barbara is assessing climate change impacts on hydropower and modelling optimal energy pathways, including cooperation across the Southern African Power Pool region.

Nuclear power

Nuclear will be an integral part of Asia’s clean energy transition, with China alone accounting for over 50% of global nuclear generation growth to 2050 in the IEA’s sustainable development scenario. Growth will also be strong in other parts of Asia and, to a lesser extent, in Africa. Most of this will rely on existing nuclear reactor designs that offer some flexibility in ramping production up or down to meet demand. Small modular reactors (SMRs) are currently at the prototype development stage, including floating units, of which the first was installed in Russia in 2019. The potential of SMRs for shorter lead times and lower investment requirements means that they are likely to become part of the long-term transition to support the rising share of variable renewables.

The opportunity for new and emerging electricity technologies

Technological progress means that new opportunities for flexible energy system solutions abound – with a snapshot provided below.

Storage solutions

Storage is the most frequently cited technology solution for balancing intermittency. Where conditions are favourable, solar thermal plants can provide effective storage solutions and be cost-competitive, especially if also linked to hot water generation. Other electricity storage options include, but are not limited to, compressed air and liquid air, sodium sulphur, and flow batteries. Lithium-ion is emerging as the main commercial solution for short-term storage and costs are falling rapidly, while new chemistries are also entering the market. Stationary batteries are already being deployed effectively for standalone solar PV, mini-grid systems, utility-scale battery storage plants, and overall grid storage. As electric vehicle ownership increases (in particular with battery swap solutions), such vehicles can also become part of grid balancing. The IEA estimates that batteries may provide up to 25% of all electricity system flexibility in 2050 in low-and middle-income countries. Yet questions remain over long-term battery performance within hot and humid conditions, decommissioning and electronic waste need to be considered, and requirements for skills, maintenance, and spare parts have to be evaluated. In addition, the value chain of cobalt and other battery components needs to be assessed for both its environmental and social impact in producing countries.

Hydrogen – hype or reality?

Hydrogen is one of the few options beyond hydroelectricity for balancing power systems over days, weeks, or even seasons. Hydrogen can act as a form of electricity storage either directly or via ammonia, methane or other synthetic fuels. This may allow hydrogen to become a major source of electricity system flexibility in high renewable energy penetration scenarios. Yet BloombergNEF notes in their New Energy Outlook 2021 that the need for hydrogen in power will be greatly diminished in alternative scenarios with high nuclear or CCUS build. This is raising questions over whether hydrogen is a hype or reality.

One of the reasons it is gaining attention, attracting research and development as well as project investment is its promise beyond the power sector. This includes hydrogen applications in heating, cooking and transport. Most importantly, hydrogen can decarbonise otherwise hard-to-abate industrial sectors, such as steel, refining, fertiliser production, and methanol. Moreover, ‘green hydrogen’ from electrolysis of water and renewable electricity allows countries to export their renewable energy, in the form of hydrogen-derived fuels, to other geographies that lack similar resource. Countries such as Germany and Japan are recognising the case for hydrogen imports, while others are seeking exports. Some African countries may find opportunities for exports, given their high solar and wind potential. In addition, there is the possibility to create clean hydrogen via natural gas combined with CCUS (‘blue hydrogen’) or via nuclear (‘red hydrogen’). Shipping of hydrogen across countries is already a reality, with the world’s first shipment of (blue) hydrogen from Saudi Arabia to Japan in September 2020.

Long-distance connections

High-voltage AC or DC interconnectors are another supply-side solution. They allow the dispatch of least-cost electricity generation units within interconnected areas, which can help to balance the system over large geographies. We discuss the opportunity for Green Grids more closely in our dedicated blog as well as an EEG webinar on 3 November 2021 from COP26 in Glasgow.

Digital solutions for supply and demand

Options for balancing intermittency are not limited to large-scale assets and they extend to the demand side. In particular, digital and ‘smart’ technologies offer a myriad of solutions. Digital energy investment is growing at around 20% per annum.

Smart system versatility

Smart grids can help optimise the operational efficiency and utilisation of transmission and grid infrastructure. Investment currently remains focused on hardware, including digital substations, power engineering equipment, and smart metering. Smart metering can be integrated with connected devices (‘internet of things’) within buildings or transport to smooth consumption to match power generation profiles better, and thereby help overcome intermittency issues. Opportunities for demand-side response are set to increase further with the growing use of electric vehicles, heat pumps for water and non-fossil fuel based space heating. This combines with ‘traditional’ methods of demand response as customers adjust use due to price or mandates. Overall, demand response could provide more than 20% of electricity system flexibility in emerging markets by 2050, according to the IEA’s World Energy Outlook.

Digital networks and data management

Data and data management are becoming increasingly important for integrating renewables within power systems. This will require digitising power networks, which will allow dispatch to be automated, rather than relying on manual operations, as remains the case in several African countries. Real-time data analytics makes it possible to manage distributed energy resources within seconds to balance the system. Beyond smart grid hardware investments, this implies software and local data gathering needs. Utilities are increasingly employing sophisticated software tools and artificial intelligence for data processing, predictive analytics, and machine learning. 

At the grid edge, computing technologies optimise energy use and cost, while ensuring energy availability and power quality. Edge computing processes data at the source of data collection, in the same device that generates the data or as close to it as possible. This removes dependency on transmitting data over a network (which may not be reliable) – making it possible, for example, to forecast energy demand in near real-time to drive automated decisions at electricity substations to ensure grid stability and safety. Edge computing can also optimise energy use within industry and buildings. This offers a potentially cost-effective, safe, and energy-efficient solution that can mitigate/optimise the need for investment in traditional electricity infrastructure. 5G mobile technology in particular is expected to propel the overall edge computing market forward. While the application within Africa’s energy sector has yet to emerge fully, the technology is beginning to take centre stage, according to technology providers such as Siemens.

Not just more, but smart investment needed

The clean energy transition will require substantial investment – causing some to conclude that there is a long-term funding gap (see e.g. IEA World Energy Outlook). Yet it is clear is that technology opportunities abound. Therefore, it is not necessarily more, but rather smart investment that is needed. New and emerging technologies can defer investment in traditional transmission and other electricity infrastructure. They are key to the least-cost integration of variable renewables in more and less developed countries