Dana speaks to experts about the importance of the transmission grid in the net-zero transition, successful grid upgrades, materials needed for grid preparation. They also discuss challenges in power grids, streamlining environmental permits, Germany as a positive case study, and the impact of the US Inflation Reduction Act on the clean energy industry.
The global electricity grid needs to double in size and become smarter and more flexible to accommodate the increasing demand for renewable power and meet net-zero targets.
Successful grid development requires innovative and proactive solutions, such as Spain's implementation of competitive tenders and Germany's connect-and-manage approach, to reduce waiting times and ensure the economic viability of renewable projects.
Deep dives
The Need for Grid Expansion
The current electricity grid is ill-equipped to handle the increasing demand for renewable power. To accommodate the electrification of various sectors and meet net-zero targets, the global electricity grid needs to double in size by 2050 and become smarter and more flexible.
Grid Challenges and Bottlenecks
The grid is reaching its breaking point, causing delays and increased costs for wind and solar projects. Waiting times for grid interconnection can range from three to eight years, putting clean energy targets at risk. Countries like the UK and the US are experiencing the longest wait times and escalating costs, threatening the economic viability of renewable projects.
Success Stories: Spain and Germany
Spain revamped its grid interconnection process and implemented competitive tenders, effectively managing its interconnection queue and reducing waiting times. Germany has taken advantage of its dense grid and adopted a connect-and-manage approach, allowing power plants to start producing before grid upgrades are completed. These success stories demonstrate the importance of innovation and proactive solutions in grid development.
Supply Chain and Cost Challenges
The global grid build-out will put immense pressure on the supply chain, which is already experiencing bottlenecks for specialized equipment like cables and transformers. Copper and aluminum, crucial for grid infrastructure, may face supply constraints due to growing demand from multiple sectors. Localization efforts and diversifying the supply chain may be necessary to ensure future reliability and minimize cost increases for consumers.
The transmission grid is a topic that reaches across many of our episodes, but it’s never before been the center of attention. That changes today. While the installation of clean energy equipment is essential for the net-zero transition, the grid that delivers this electricity to consumers is equally critical. On today’s show, Dana speaks to Meredith Annex, BNEF’s Head of Clean Power, and Sanjeet Sanghera, Head of Grids and Utilities at BNEF. Together they discuss the transmission grid and why it’s so important, which nations are successfully upgrading their grids (and which are failing), and the scale of materials and buildout necessary to prepare the grid for a net-zero world.
Complimentary BNEF research on the trends driving the transition to a lower-carbon economy can be found at BNEF<GO> on the Bloomberg Terminal, on bnef.com or on the BNEF mobile app.