Why Grids and Renewables Must Evolve Together?
Vijay Shinde
🌍 Your Friend in Energy ..... Turning Tech, Regulation & Strategy into Market Wins
Clean Energy: At the Crossroads of Policy, Technology, and Trade
The Energy Technology Perspectives 2024 report paints a vivid picture of an energy system in transition, where energy, industry, and trade are deeply interconnected. As governments balance the need for secure, clean technology supply chains with the imperative to ensure cost-effective transitions, we face pivotal decisions: Which industries to support, how to foster international collaboration, and where to direct innovation efforts. These questions define the new global clean energy economy.
The Rising Market for Clean Energy Technologies
The numbers tell a remarkable story. The global market for clean technologies - spanning solar PV, wind, electric vehicles (EVs), batteries, electrolysers, and heat pumps - has grown nearly fourfold since 2015, exceeding $700 billion in 2023. By 2035, this market could almost triple to over $2 trillion, rivalling the global crude oil market's value in recent years.
Trade momentum: Clean technologies accounted for $200 billion in trade value in 2023, nearly 30% of their global market value.
Economic transformation: By 2035, clean technology trade is expected to reach $575 billion, surpassing the current trade value of natural gas.
Clean technologies are not just about addressing emissions - they are reshaping industries, creating jobs, and securing long-term energy resilience.
Electricity Grids: The Backbone of the Clean Energy Revolution
A resilient electricity grid is essential to unlock the full potential of renewables. However, the current pace of grid upgrades and expansion is lagging far behind the rapid deployment of clean energy sources. This imbalance leads to grid congestion and limits renewable integration.
The IEA emphasizes that grid development must double by 2035 to meet clean energy demands. Key actions include:
Modernizing infrastructure to handle variable renewable energy sources.
Boosting investment in digital technologies for efficient grid management.
Aligning grid policies with clean energy targets to streamline deployment timelines.
Geopolitics, Trade, and Energy Security
The energy landscape remains fragile. Geopolitical tensions, such as conflicts in Ukraine and recent geopolitical tensions, have heightened risks to energy security. At the same time, the clean energy supply chain is marked by high market concentration, with China accounting for up to 98% of the manufacturing capacity for some technologies.
Trade complexities: Since 2020, nearly 200 restrictive trade measures targeting clean energy technologies have been implemented globally.
Resilient supply chains: Diversification and strategic partnerships are essential to reduce dependencies and vulnerabilities.
Clean Energy Transitions: Who’s Leading the Way?
Several regions and countries are vying for leadership in clean technology manufacturing and deployment:
China: Dominates global clean technology manufacturing, accounting for 70% of value creation across key technologies. Its exports are projected to reach $340 billion by 2035.
India: Positioned to shift from a net importer to a net exporter by 2035, potentially offsetting 20% of its fossil fuel import bill.
United States and Europe: Ambitious policies like the Inflation Reduction Act and the Net Zero Industry Act are fostering domestic manufacturing and innovation.
Emerging markets, including Southeast Asia and North Africa, have significant potential to rise in the value chain, provided they address barriers like infrastructure and skilled workforce shortages.
Key Challenges and Opportunities in the Energy Transition
The journey to net-zero emissions is fraught with hurdles but also offers unparalleled opportunities:
Cost dynamics: While clean technologies are becoming more affordable, disparities in production costs - such as a 40% premium for manufacturing solar PV modules in the US compared to China - pose challenges.
Policy-driven growth: Strategic industrial policies and trade agreements can drive clean energy adoption but require careful balancing to avoid inefficiencies and protectionism.
Global equity: Ensuring that developing economies benefit from clean energy transitions is both a moral imperative and a strategic necessity for global climate goals.
The Role of Innovation and Collaboration
Innovation remains a cornerstone of the clean energy transition. From advanced battery technologies to AI-driven grid management, the next wave of breakthroughs will define the pace and scale of decarbonization. However, no country can achieve this alone. International collaboration is essential to:
Build secure, diverse supply chains.
Share technology and expertise.
Align global climate and trade policies.
The Road Ahead: Shaping a Sustainable Future
The Energy Technology Perspectives 2024 report underscores the urgency of action. Every decision today shapes the energy landscape of tomorrow. As we modernize grids, scale clean technologies, and navigate complex geopolitics, the vision of a sustainable, resilient, and equitable energy system is within reach - if we act boldly and collaboratively.
How do you see your region contributing to and benefiting from this energy transformation? Let’s discuss how we can collectively shape the future of energy.
Vice President, Siemens Energy
9moVijay Shinde … thought-provoking as ever. So, here’s an alternative viewpoint … What happens if the investments in offshore wind, in solar PV, in electrification of industrial processes, cannot keep up with the growing investments in grid? At what point do politicians and regulators call time on the huge Capex that we are convinced is essential for the energy transition? What are then the essential 2-3 steps in each European country to ensure that this nascent decarbonisation movement continues … ? How do we get the EU to redouble efforts on the #energytransition … before it’s too late? This is our “To Do” list for 2025 … #powerthroughcollaboration
Chair, Non-Executive, Advisor, Trustee specialising in Sustainable energy, Transport and Smart technologies
9moVJ. As always insightful and backed up with some great stats. One question. For historians this transition is a 21stCentury equivalent of The Great Game with the roles reversed! How does the continent of Europe compete in this global race for jobs and growth in a manner appropriate to current trade interdependent relations? Philip
A timely and insightful analysis. The importance of robust and flexible grids in the energy transition cannot be overstated.
Energy Transition and Sustainability Lawyer
9moSpot on Vijay! We need an integrated approach across the energy transition rather than a siloed one which if we are honest has been the historic way of doing things. And it is not just grid but a whole host of other areas which need integrating but grid is a good place to start so thank you!
Founding Partner at IN PERPETUUM PARTNERS LLP
9moThanks Vijay. I am largely in agreement with your points. Couple of things from me: We definitely need more resilience in grids and supply chains. All feels very fragile at the moment. While fragility exists we likely need to plan for more hybrid solutions at the demand level so that demand can flex between primary energy sources. Smart, domestic heating hybrid heat pumps for example that can draw power when we’re generating from resilient low carbon sources or draw from sustainable liquid/ gaseous sources when the grid is more compromised. If we add demand when there’s not enough low carbon supply then we exacerbate the problem. Regional policy makes a difference. China and likely USA for the next four years have more protectionist policies that encourage their own industries. Europe has a more free trade approach. UK definitely has had a more free trade approach and that’s embedded into the civil service so difficult for any government to shift. See how well we get on with the brave new mission for net zero generation in the UK. The grid will need investment in flexibility measures to build resilience.