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Accelerating the energy transition

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There has been substantial investment in renewable energy technologies (RETs) over the past decade. This investment, coupled with an increase in the number of renewable energy projects developed, has contributed to the ongoing clean energy transition. Apart from the health and environmental benefits on offer, accelerating the process will contribute towards economic growth, creating new jobs and improving energy security through diversity of energy supply. Yet a lot of work remains before the goal of a clean energy supply is realised. Fossil fuel technologies still dominate the global energy mix. This has fuelled conversations concerning how the transition to a clean energy supply can be accelerated.

In recent years, the International Renewable Energy Agency (IRENA) has published several reports examining how the global energy transition can be accelerated. In a 2017 report titled “REthinking Energy 2017: Accelerating the global energy transformation”, IRENA highlight the crucial role played by government policies and regulations in creating an attractive market for clean energy technologies such as RETs, and how strong government commitment can reduce the risk and cost of financing of renewable energy projects.

Unfortunately, strong government support is not always forthcoming. Governments have a variety of different priorities to balance that extend beyond the energy sector. Politicians are often more interested in short-term gains that may see them re-elected, rather than making some of the long-term decisions regarding infrastructure and other elements of the energy sector needed to accelerate the global energy transition.

However, there has been some progress achieved. Many countries have set renewable energy targets and put in place supportive energy policies. Renewable energy auctions, such as the REIPPPP in South Africa, have experienced greater uptake worldwide as an instrument for achieving record low prices for RETs.

These days, efforts to accelerate the energy transition are no longer solely dependent on action by governments and state-owned utilities. While the energy sector remains a highly politicised and regulated one, even in so called liberal energy markets, the uptake of small scale embedded generation (SSEG) systems presents private sector businesses with the opportunity to generate and consume their own electricity on site, and at an affordable rate.

SSEG systems enable firms to offset their consumption of electricity from the national grid, and hedge themselves against future unknown electricity price increases. Furthermore, such systems allow for companies to contribute towards global sustainability goals, with many firms possessing sustainability and corporate social responsibility (CSR) mandates which need to be addressed. SSEG systems can either be purchased up front through capital expenditure, or through financial models, such as power purchase agreements (PPAs) and leases.

Breakthroughs in energy storage technologies, such as batteries, will also be of great benefit to the clean energy transition. These technologies have the potential to accommodate a higher percentage of RETs in national electricity grids. Furthermore, they can improve the (business) case for stand-alone or microgrid systems, particularly in areas where grid expansion is not cost-effective or feasible, such as rural communities.

In a chapter authored by IRENA titled “Innovation Driving the Energy Transition” in the 2018 Global Innovation Index (GII) report, four policy-related actions were recognised as being essential to efforts aimed at accelerating the clean energy transition. These are: (1) fostering a system-wide approach to innovation that goes beyond R&D, (2) strengthening international cooperation to nurture innovation, (3) advancing power system integration, and (4) supporting a portfolio of energy technologies to electrify and decarbonise end-use sectors.

These recommendations emphasise the importance of carefully designed policies and strong government support for achieving the goals associated with the ongoing energy transition. In addition, given the complexity of the energy sector, there is a need for a holistic approach that encompasses multiple elements, many of which may appear unrelated at first.

Yet possessing knowledge of which policies and actions are required to accelerate the rate at which progress is made, and actually implementing said policies and actions are two completely different challenges. Apart from the political will required, the global energy transition could profit from efforts that make it clear to all respective stakeholders how active involvement and contribution to the energy transition can complement and add value to their own interests, with a focus on long-term goals and objectives.

A more collaborative approach to the energy transition should assist in lowering the barriers and objections to the process, and increase the rate of buy-in from a (diverse) range of stakeholders. If achieved, such an approach could be of great benefit to the overall objective of accelerating the global energy transition towards a sustainable future.

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