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The world is adding renewable energy capacity at a record pace. Solar farms are springing up in the deserts of Arizona, wind turbines spin along the coasts of the North Sea, and hydroelectric plants are being built on the slopes of European mountains. Billion-dollar green policy packages – including the US Inflation Reduction Act and the EU’s “REPowerEU” strategy – are driving the boom. Global investment in renewable energy last year surpassed $700 billion, more than double the amount in 2015. However, despite all the progress, there is one major drawback: too much will be wasted.
Green energy generation is intermittent. Solar panels need sunny days. Wind turbines thrive on gusts. This means that when they generate electricity, it is even more important that it is fed into the grid for use or stored. However, grid and storage capacity has lagged behind the growth of renewable energy sources around the world, a report from the International Energy Agency will reveal on Wednesday.
As a result, significant volumes of green energy capacity are being curbed. In the United States, about 2,500 GW of electricity from renewable sources was waiting to be connected to the grid last year, according to the Lawrence Berkeley National Laboratory.
In some cases, governments have had to pay renewable energy companies not to generate electricity, at taxpayers’ expense, to avoid clogging the grid. Supplies with nowhere to go also drive down prices and act as a disincentive to future green investments. In Europe, energy prices have fallen below zero for a record number of hours this year. Above all, problems with the grid make it more difficult to reduce reliance on burning more reliable, albeit highly polluting, fossil fuels to meet energy demand.
What needs to be done? The obvious answer is for governments to support network development. The towers and cables that move electricity from new plants to homes and businesses have become the forgotten ones, less sexy, part of the green transition. Grid upgrades must be accompanied by investments in renewable energy. Regulation also needs to be streamlined. Arduous planning processes and nimbyism periodically impede network development. Wind energy projects in Europe can sometimes face waits of up to nine years to receive a grid permit.
But better storage capacity is the other piece of the puzzle. Pumped storage hydroelectric projects, such as those around Loch Ness in Scotland — use surplus electricity to pump water to reservoirs, which act as caches. However, this depends on steep topography. Elsewhere, network-scale storage is essential. Private investors are moving quickly into storage research and development. But policymakers have an important role. California, for example, has become a leader in battery storage through a combination of incentives for homeowners to install batteries and mandates for utilities and builders. International cooperation to strengthen the supply of critical minerals used in storage technologies also remains key.
Networks also need to be better managed. Digital technology, sensors and software can help monitor and adapt energy supply and demand. And better connectivity would support efficiency. For example, the lack of integration across the EU’s energy network means that it cannot quickly move electricity from renewable sources from production areas to high-demand regions.
Despite progress in the green transition, global temperature targets are still on a knife’s edge. Rising population, economic growth and artificial intelligence will increase energy demand. Greater efforts are needed to build green energy capacity. But it must come with the investment and regulatory reform necessary to develop larger, stronger, and smarter networks and storage capacity. Otherwise, much of the world’s renewable energy potential will remain untapped.