POWER January 2022 - 6

Disorderly Transitions:
Eight Enduring Global
Power Sector Trends
While 2021 unfolded with some relief
from the chaotic global pandemic
that jolted the world in 2020, the year
may be remembered for its extraordinary
series of energy crises. After a
cold snap prompted mass generation
outages across a swath of the central
U.S., most prominently in Texas, volatile
energy markets and power supply
vulnerabilities jacked up turmoil in California,
China, India, and across Europe
and Latin America. The International
Energy Agency (IEA)
took
stock
of
these events as it rolled out its World
Energy Outlook (WEO2021) in October
ahead of the United Nations Climate
Change Conference (COP26) meeting
in Glasgow, Scotland. Scenarios that
could move the world toward limiting
global warming to 1.5C may usher in a
" new energy economy " centered on
electricity, but they must at the outset
take into account that the system is
ridden with risks to energy security, affordability,
and sustainability, the agency
warned. Here are eight overarching
trends gleaned from the Paris-based
autonomous intergovernmental agency's
annual outlook.
A Glaring Ambition Gap for Electricity
Supply. Continuing their trajectory,
massive additions of solar
photovoltaics (PV) and wind capacity in
2020 raised renewables' share to 30%
of total generation and squeezed fossil
fuels' share to 61%, the lowest level
in the last three decades. According to
Brent Wanner, head of IEA's Power Sector
Unit, policy support in more than 130
countries and " very low " technology
costs have driven this growth. Decarbonization
and electrification demands,
including for hydrogen production from
electrolysis, will continue to fuel new
renewable installations, and the IEA
expects that existing and already announced
policies outlined in the " Stated
Policies Scenario " (STEPS) may lead to
an increase in combined renewable capacity
additions from a record 248 GW
in 2020 to 310 GW in 2030.
However, " unabated " coal-fired generation
is still slated to remain the largest
source of electricity through 2030
under STEPS, Wanner said. While financing
new coal power plants has
6
1. The International Energy Agency (IEA) reported that fossil fuels accounted for 61% of global
electricity generation in 2020-the lowest level in 30 years-while renewables accounted for
nearly 30%. By 2030, wind and solar photovoltaic growth will lead renewables to a share of
nearly 50% under announced pledges and potentially much higher, it said. Courtesy: IEA
2. Natural gas demand drivers vary by market, but coal-to-gas switching is slated to increase
gas demand across the board. Low-carbon fuels like hydrogen and ammonia may also moderately
affect future natural gas demand. Courtesy: IEA
become increasingly difficult, 140 GW
of new coal capacity was under construction
and more than 430 GW were
in planning stages when the report was
released before COP26. During the historic
climate conference, 47 countries
supported a statement to cease new
construction of and stall permitting of
new unabated coal generation. These
include several coal heavyweights like
Indonesia, which suggested it may
target a 2040 phaseout with international
financial and technical assistance.
Ukraine, Vietnam, Poland, and South Korea
also committed to phaseouts, while
India announced it would target a 2070
net-zero goal.
These announced pledges could halt
investment decisions and facilitate retirements
of nearly 150 GW of coal-fired
capacity by 2030. Even so, the world
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still faces a substantial " ambition gap "
of the carbon emissions reductions
needed to put the world on a solid pathway
to achieve net-zero emissions by
2050 (Figure 1), the IEA said.
" We estimate additional wind and
solar PV, and hydropower expansion in
developing economies, as well as some
nuclear power expansion and lifetime
extensions are cost-effective measures
that could cut the gap by 60% going
forward, " said Wanner. How much new
hydro and nuclear capacity could come
online is still in flux, however, given shifting
policy and investment decisions.
The IEA is more resolute about its
outlook for natural gas generation,
which it projects will increase between
5% and 15% to 2030. Natural gas, already
the largest source of power in
advanced economies, " remains broadly
POWER | January 2022

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POWER January 2022

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