Grid bottlenecks delay transition to clean energy
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How soon the world reaches net zero carbon emissions depends on how quickly it can put up solar panels and wind turbines, adopt electric vehicles, and install heat pumps. But there is another, often overlooked, piece of the puzzle: the power lines required to transport all the new renewable electricity from where it will be produced to where it will be consumed.
That is going to be a massive capital project. The global network of cables will need to double in length between now and 2050, say analysts at research provider BloombergNEF, to reach 152mn kilometres — roughly the distance between the Earth and the Sun. Achieving that will require some $21tn of investments by 2050.
Or, to put it another way, “the network will soak up 30 per cent of all the investment required by the energy transition”, according to Lord Adair Turner, chair of the Energy Transitions Commission, a business coalition pushing for net zero.
Tomorrow’s network will need to be very different from the one we have today, in terms both of its size and its shape.
“The grid will have to evolve to carry a lot more electricity,” Turner says. “As we phase out fossil fuels and switch to EVs and heat pumps, electricity is going to account for almost 70 per cent of the global energy mix, up from 20 per cent today.”
In the UK, net zero scenarios see electricity consumption increasing from the current 300TWh to around 650TWh by 2050. In the EU, annual electricity demand is forecast to more than double from 3,000TWh today to 6,800TWh by 2050. Peak demand will rise by more, as the electricity system increasingly supplies winter heat.
The way electricity is generated will change, too. The network evolved to transport electricity from a few big coal or gas plants, located near big towns. In net zero economy, it will need to carry electricity from myriad smaller-scale renewable developments, located where there is a lot of sun or wind. For the UK, the North Sea will be a key producing area. In Italy, electricity will be generated in the sunnier south.
From an infrastructure perspective, that has two implications. The first is that the grid’s main trunk-lines will need to be reinforced, so that it can transfer additional electricity from, say, Scotland to London. And the second is that networks will need to build a lot of new connections to link smaller developments to the grid. Both objectives are challenging.
Big grid projects take a long time to build. The UK has managed to add some 4GW of new transfer capacity to the grid over the past decade. Over the next decade, it needs to build 17GW, according to energy research company Aurora. National Grid ESO, which runs Great Britain’s electricity system, reckons the country will need to invest at least £50bn in its electricity transmission network by 2030.
The whole cycle, from planning to permitting, through procurement and construction, lasts more than a decade. That may be compressible — for instance, by streamlining the permitting process. But there are those who believe that, to have any chance of the grid being ready on time, we need a radically different approach.
“Regulation has been looking out of the back window,” says Sir Dieter Helm, professor of economic policy at the University of Oxford. “Its main objective has been to minimise cost, which means it has only allowed the network operator to build where demand was already visible.”
Instead, the system operator should look at a map and come up with its own plan of how the network should evolve, Helm suggests. “We know where renewable electricity is going to be produced and where it is going to be consumed, and can start to make the required investments,” he says.
The downside is that the cost of infrastructure is spread across each unit of electricity consumed. If providers build ahead of new demand then, in the initial stages, existing consumers will pay the cost of the new infrastructure, too.
The second leg of the infrastructure challenge, connecting lots of small power generators to the grid, is also running late. Only 4 per cent of grid applications made from 2018 to 2021 have so far resulted in a connection, says Aurora.
This implies projects that might already be able to contribute to the country’s energy consumption are being held up. New projects applying today are being quoted connection times into the next decade. “We have a project in Durham where connection is scheduled for 2036,” says Greg Jackson, chief executive of power supplier Octopus Energy. “No one is going to wait 13 years.”
The snarl-up in connections to the UK network seems to be a largely self-inflicted problem. The queue operates on a first-come first-served basis, and there are limited penalties for not delivering projects. That means joining the queue is a free option. “It is the Hotel California of queues, where no one ever leaves,” says Dan Monzani, UK managing director of Aurora.
As a result, as of February 2023, the UK had 83GW of connected generation and a further 257GW of generation in the queue. That’s a lot of backlog, and more than the new generation capacity that the country actually needs. National Grid modelling suggests that the UK needs only 123-147GW of new generation to be connected to the grid by 2030 to be on the pathway for net zero power by 2035.
This has sparked debate on the governance of the queue. The grid has tried to make it easier for projects that are unlikely to be built to relinquish their place. Octopus Energy has also proposed that more advanced projects be allowed to queue-jump.
Such problems are not confined to the UK, though. Connections are a big problem in the US, where there are more than 2,000GW of projects — more than all of the existing power generation fleet — seeking to link up to the grid, according to the US energy department’s Lawrence Berkeley national laboratory.
In Germany, where wind power comes from the north of the country and big demand centres are located in the south, long planning and permitting times mean there is insufficient grid capacity connecting the two. That is already leading to some renewable power being curtailed.
“Unless the world’s networks evolve at pace, they risk being a major bottleneck for the energy transition,” Turner says.