POWER January 2020 - 8

10 Power Sector Insights from the
IEA's World Energy Outlook 2019
The International Energy
Agency's
(IEA's) November 2019-released World
Energy Outlook 2019 (WEO2019) is
studded with interesting findings about
emerging trends in the power sector.
Here are 10 from the Paris-based autonomous
intergovernmental organization's
latest annual report.
Explosive Solar Growth. Perhaps the
most stunning finding is that IEA expects
explosive growth for solar photovoltaic
(PV) capacity through 2040. If countries
pursue existing and already announced
policies (a WEO2019 scenario that was
formerly known as the " New Policies
Scenario, " and which the IEA renamed
the " Stated Policies Scenario " in the
new report), global installed solar capacity
could surge from 495 GW in 2018 to
3,142 GW by 2040, and in just 15 years
it could surpass coal and gas to become
the largest source of installed capacity.
If considered in terms of generation, the
IEA suggests solar PV will grow from 592
TWh to 4,705 TWh-from a 2% share of
global electricity generation today to 11%
in 2040. The IEA is optimistic about other
renewables too, especially wind, which
could make up 13% of global generation
in 2040, buoyed by offshore installations
(see below), but also geothermal, which
could grow from 90 TWh today to 316
TWh in 2040 (when it could make up 1%
of global generation).
Overall, the report suggests the share
of renewable generation-not capacity-
could nearly double, from 26% today to
44% in 2040, surpassing coal as early
as 2026. Combined, solar PV and wind
generation's share could surge from 7%
to 24%. Comparatively (Figure 1), the
share of fossil-fired generation could fall
in 2040-down from two-thirds, where it
has hovered for decades. Coal's generation
share, which grew fivefold between
1970 and 2013, could decline from 38%
today to 25% by 2040, though natural
gas-fired generation, which has tripled
over the past 22 years, is set to surge
nearly 50% by 2040, owing largely to the
cheap shale gas supply.
Flexibility to Grow 'Faster than Electricity
Demand.' Power system flexibility
is a special focus in the WEO2019.
Researchers completed an exhaustive
hour-by-hour analysis of power systems
worldwide to gauge how countries are
8
1. The global electricity generation mix in 2018 compared to what it could be in 2040 under
two possible scenarios are shown in these pie charts. The International Energy Agency's
(IEA's) " Stated Policies " scenario factors in current and already announced policies, whereas
the " Sustainable Development " scenario is fully aligned with the Paris Agreement, which has
an objective of holding the increase in the global average temperature to well below 2C above
pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5C. Source: IEA,
World Energy Outlook, 2019 edition (WEO2019)
managing power plant acceleration and
deceleration in response to changes in
electricity supply and demand. While the
report expects thermal power plants will
continue to provide the bulk of flexibility
through 2040, it also suggests batteries,
demand response, and sector coupling
will play pivotal roles. Battery storage, in
particular, is accelerating. In 2018, developers
added 3 GW to bring cumulative
battery capacity to 8 GW. By 2040, owing
to regional targets and dramatic cost
reductions-the IEA predicts four-hour
system costs could fall from $400/kWh
to less than $200/kWh-batteries could
provide 330 GW of flexibility. India could
lead that growth, followed by China,
the U.S., and the European Union (EU).
However, that growth will require electricity
market reforms ranging from scarcity
pricing, operating reserve prices,
frequency control ancillary services, and
capacity mechanisms, some of which
are already in place.
Net-Zero Targets Are Catching On.
By the end of September 2019, more
than a third of the world (65 of the
world's 195 countries, along with the
EU) had set or was actively considering
long-term net-zero carbon targets. Several
cities and states had made similar
announcements, as well as major companies,
which are increasingly driven
toward decarbonization owing to an increased
focus by shareholders on risks
to investment from energy transitions
and climate change impacts.
Gas Infrastructure Decarbonization
Ramping Up. The WEO2019 also dedicates
an entire chapter to gas infrastructure,
noting the next decade will be
" critical, " because short-term decisions
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on whether to invest could have major
implications. The reason: Interest in electrification,
which promises to provide
" modern energy services with no emissions
at the point of use. " The trend is
tangible: global power demand has risen
60% faster than gas demand in final energy
consumption since 2000, says the IEA.
But while electrification has a huge potential,
the WEO2019 emphasizes there
are limits to how quickly and extensively
it could occur. It says current electricity
infrastructure is not well-suited to deliver
all types of energy services, such as to
shipping, aviation, heavy-freight trucks,
and certain industrial processes, and a
future switch would depend heavily on
variable generation, which raises practical
issues, such as meeting demand for
large-scale high-temperature heat. To
secure a role in a low-emissions energy
system, gas infrastructure must adapt to
decarbonized gases, such as low-carbon
hydrogen and synthetic methane (produced
from fossil fuels with carbon capture
or via electrolysis using renewables
or nuclear) or biomethane (such as landfill
gas). These aren't currently competitive
with the natural gas supply today,
but the IEA still urges policymakers to
consider them in long-term strategies.
A Mixed Bag for Power Sector Investment.
Energy investment stabilized
in 2018 at more than $1.8 trillion, following
three consecutive years of decline,
but for the fourth year in a row, the
power sector exceeded oil and gas supply
as the largest investment sector. The
WEO2019 projects that global power
sector investments will total $20 trillion
over the period through 2040-20%
higher than annual spending from 2010
POWER | January 2020

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POWER January 2020

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