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Sources of Energy
Decarbonizing electricity supply through renewable energy sources such as solar, wind, hydropower and geothermal, is at the very heart of a clean energy transition. Nuclear power is also likely a key part of the transition. As prior sections have detailed, there are many opportunities to power the transportation, building, and industry sectors through electricity. Transitioning electricity generation to renewable and low-carbon energy sources is central to maintaining the global economy and improving quality of life for humans and other species.
Global electricity generation currently contributes over 30% of all carbon emissions because much of electricity is produced today from fossil resources. Continuing to rely on fossil resources is unsustainable for numerous reasons. Fossil fuel combustion releases greenhouse gases such as carbon dioxide, methane and nitrogen oxides, which cause global warming. Uncontrolled warming has and will have devastating impacts on humans and the environment. Fossil resources are also non-renewable, and cannot power future electricity needs indefinitely.
As we transition away from relying on fossil fuels for electricity production, global power supply will look radically different in the future than it does today. Not only will we continue to see a massive scaling up of renewable and clean energy sources to supply electricity, but production may no longer simply come from a large centralized energy source or power plant. Distributed home solar and battery systems, electric vehicles, and buildings will also be able to export energy during certain hours of the day. These and utility-scale energy storage installations will facilitate reliable and steady electricity sourced from clean and renewable energy sources.
Clean Energy Supply
Nearly 60% of global electricity is currently generated using fossil fuels. Nuclear energy constitutes 15% and renewable energy constitutes approximately 25% (IEA 2020). Of this 25%, nearly 85% of renewable electricity is produced from hydropower. A clean energy transition will rely on a massive, rapid expansion of reliance on renewable and low-carbon sources to supply electricity.
Nuclear energy is able to generate carbon-free electricity. Most projections looking at clean energy supply feature nuclear energy in varying proportions (IEA 2019). However, nuclear energy has several safety concerns. Sequestering the radioactive waste generated by nuclear reactors has long posed a challenge. Additionally, human error or natural disasters have created dreadful nuclear accidents that have affected hundreds of thousands of people over long timeframes. Nevertheless, careful planning and execution of nuclear projects can enable these resources to contribute to a clean energy economy by acting as a reliable base-load electricity resource and providing for a more manageable pace of transition to a system dominated by renewable energy.
Hydropower is currently the most common renewable resource with a contribution of nearly 16% of global electricity supply. Hydropower functions on fairly simple technology with water stored at elevated heights (having high potential energy), then released to turn a turbine and generate electricity. Several countries such as Brazil, China and India rely heavily on hydropower. Hydropower is predicted to play an important part in the energy transition. The IRENA 2040 energy supply projections lay out a future in which hydropower would supply 12% of global energy.
Hydropower installations should be approached, however, with great attention to limiting socio-ecological damage. Climate change is drying up rivers and lakes, and drastically altering the hydrology of landscapes on which hydropower facilities have been built (Congressional Report, 2015). Additionally, hydropower facilities disrupt ecological processes such as salmon spawn. Finally, both the initial flooding of valleys to form reservoirs, and hydropower accidents can have devastating social and ecological effects (Sayano-Shushenskaya hydropower accident). There is a demonstrated history of energy injustice in the siting of hydropower reservoirs against Indigenous and underrepresented peoples (Hoffman 2017, Zhao et al. 2020).
Solar and Wind
Renewable energy sources such as solar and wind energy are poised for exponential growth, and can achieve substantial reductions in global greenhouse gas emissions. Solar energy, for instance, has a life-cycle emissions value of 70g CO2/kWh (life-cycle emissions) as opposed to upwards of 900g CO2/kWh (combustion emissions) that coal power produces. The cost of solar energy has fallen significantly over the last decade, lowering utility-scale solar development costs from above $5/Watt to a little over $1/Watt (Wood Mackenzie Animated Graph). In the same period, capacity installations of solar PV have also increased substantially. Wind power prices also reduced considerably in the last two decades.
IEA’s Sustainable Development projections for 2040 estimate that wind and solar energy would make up approximately 40% of global energy supply in 2040 (IEA Interactive Graph). Concentrating solar power (CSP) is a form of solar energy generation where focusing mirrors direct solar rays onto a collector that contains a working fluid (such as molten salt). CSP can be combined with thermal storage systems to improve their capacity factor.
While most renewable energy resources are technologically mature and have increasingly competitive economics, their continued installation can be accelerated through a robust policy framework. Policy measures can take many forms including economic incentives, mandates for renewables in energy portfolio, or through research and development grants. These can help overcome some of the barriers facing renewables such as high capital costs, transmission and siting bottlenecks, and unequal economic playing fields. The Union of Concerned Scientists provides additional detail on the largest roadblocks to renewable energy integration.
The Narwal Curve and the 21st Century Energy Transition
Fossil resources receive large subsidies in the form of tax breaks, stimulus payments, and preferential zoning considerations. The International Monetary Fund identified that global fossil fuel subsidies stand at $5.2 trillion (IMF, 2019). If comparable subsidies are not extended to renewable resources, or curtailed for fossil resources, they are not competing on an even economic playing field.
Likewise, current energy market structures have a major shortcoming in that costs associated with environmental externalities are not accounted for. For instance, fossil fuels produce carbon dioxide and other pollutants that cause local and global environmental degradation, and are not taxed for the harm they cause (LSE, 2018). A price on carbon that accounts for some or all damages can serve as an economic mechanism to discourage the use of fossil resources and encourage further adoption of clean energy sources. Analysis by the Rhodium Group indicates that carbon pricing is an especially effective means of driving down emissions in the electricity sector, though the study also found that a carbon tax of $50/ton C would be insufficient to limit warming to 2°C by 2100. Thus, a carbon pricing system with an appropriate starting price and with well-defined yearly appreciation would be critical in continued energy decarbonization (Columbia SIPA 2018).
Carbon pricing can be implemented as a tax or through other approaches. A cap and trade (or emissions trading system) program has an overall cap on carbon emissions and creates tradable permits that allow emissions. Emitters who reduce their emissions below allotted levels can sell remaining permits to others who may struggle to adequately reduce their emissions owing to technological or financial constraints. California has a carbon trade program, and its step by step explanation can be viewed here.
There are also cap and invest programs that distribute emissions permits through auctions, the proceeds of which are reinvested in clean energy programs. The Regional Greenhouse Gas Initiative (RGGI) in the U.S. is an example of the cap and invest program (Regional Greenhouse Gas Initiative). The E.U. has also established that at least 50% of the proceeds of auctioning are invested in climate and clean energy (European Commission). Hybrid carbon pricing programs can combine a cap and a tax, providing a more balanced approach to managing uncertainties when setting prices or emission quantities on strict tax or cap programs (Harvey, 2018).
Some renewable energy sources like wind and solar are, by nature, intermittent (the wind is not always blowing and the sun is not always shining). With increasing installation of renewable energy resources, energy storage can fill these gaps. There are times during a 24-hour period when the total supply of electricity can exceed total demand. For instance, there can be excess solar energy generated during a sunny afternoon or excess wind energy generated in the early hours of a day when demand is low. This energy can be stored to meet energy demand during times of no generation or intermittency.
There are many types of energy storage – mechanical, gravitational, electro-chemical, chemical, electromagnetic, biological or thermal. An example of gravitational storage is a pumped hydro storage system (PHS). PHS systems currently constitute upwards of 96% of global storage capacity. Electro-chemical storage (i.e. battery storage) is the second most common form of energy storage. Mechanical storage systems consist of flywheels, where energy storage is achieved through inertia of mass. The DOE Global Energy Storage Database breaks down the installed capacity of storage by country and technology.
Energy storage prices have fallen significantly (Lazard, 2019). Bloomberg NEF estimates that global energy storage will grow exponentially in the coming decades to exceed 900 GW by 2040. Like all other emerging technologies in the energy transition, storage requires a robust policy framework to overcome a number of barriers. Fiscal policies, mandates, and research funding can contribute to the acceleration of energy storage deployment. Several U.S. states have passed energy storage mandates with Massachusetts being a great example, targeting 1000 MWh of energy storage by 2025. The Federal Energy Regulatory Commission (FERC) passed Order 841 allowing market access to energy storage.
Distributed Energy Resources
In addition to centralized energy generation and energy storage, distributed energy resources (DERs) will play a major role in the clean energy transition. DERs refer to assets located on the electric grid capable of independently generating and/or storing electricity. DERs have several benefits:
DERs can act as “grid-edge” resources, lowering electricity demands of the grid during peak hours. This can lessen or even eliminate the need for expensive and fossil-intensive natural gas peaker plants.
DERs can alleviate distribution network bottlenecks, allowing the deferment of transmission and distribution infrastructure that tends to be very costly.
Lastly, aggregating DERs can allow for capacity deferment - postponing or eliminating system capacity expansion, which if needed more immediately would likely be filled by a natural gas plant.
Examples of DERs include home solar and battery systems, smart thermostats, and electric vehicles. Home solar and storage systems can feed electricity back to the grid during times of over-generation. Smart thermostats can be controlled by an electric utility or a service aggregator to reduce or increase temperatures en masse to reduce grid energy demand. Electric vehicle batteries can be charged or discharged from the grid on cue (Vehicle 2 Grid or V2G).
DERs as they stand today are highly undervalued (Greentech Media, 2019). Opening up markets and modifying age old regulatory schemes would allow for DERs to obtain their full value. Such an effort would also allow for value stacking of DERs. Rocky Mountain Institute’s (RMI) research finds that clean energy portfolios including DERs would become more economic than operating 50% of existing gas power plants by 2030. Properly constructed market participation regulations and subsidies are essential to unlock this powerful resource.
For instance, buildings can decarbonize quickly through the use of distributed or on-site power generation. The most common distributed clean energy technology in use today is solar PV. At the end of 2018, there was a little over 140 GW of distributed solar capacity globally. By 2024, it is expected to be between 320 and 400 GW. The cost of distributed solar PV is falling steadily with median PV costs for residential and commercial systems of $3.7/ watt-DC and $2.4/ watt-DC respectively. Policy measures such as net energy metering, feed in tariffs, and tax credits can further incentivize residential and commercial customers to install solar PV. The National Conference of State Legislatures has published the Solar Policy Toolkit on such policy mechanisms.
Residential and commercial buildings can use battery storage systems situated behind meters to increase the utilization rates of on-site PV generation. Commercial buildings can use the storage system to offset peak electric power consumption and costs. The Federal Energy Regulatory Commission (FERC) Order 841 unlocked the electricity market for behind the meter (BTM) storage systems, allowing them to participate in the wholesale energy, capacity, and ancillary markets.
The rooftop solar sector has experienced massive growth in the U.S., growing by as much as 50% since 2012. Increased adoption of rooftop solar energy, however, has come with several challenges. In a 2019 study published in Nature, severe racial disparities are seen in the installation of rooftop solar PV. On average, the study found that census tracts with predominantly Black or Hispanic populations saw significantly lower PV installations: 61% and 45% respectively. Awareness of the lack of equity in how different people experience the energy transition is necessary, as it creates opportunities to target and combat these differences.
Related AGCI Resource:
Quarterly Research Review: What rooftop solar tells us about who's participating (and who's not) in the clean energy transition
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