WASHINGTON DC, Sep 25 (IPS) – The climate community, meeting this week again on the edge of the UN General Assemblycontinues to explore ways to triple the world’s installed renewable energy generation capacity by 2030an objective agreed at last year’s summit COP28 conference international climate negotiations. Much of this discussion has been about how to mobilize finance and otherwise engage the private sector, with its vast resources and competence, to take on the challenge … and what government policies and incentives are needed to stimulate more investment.
However, this discourse hides an important reality: a large part of the energy sector is controlled by governments and their state-owned enterprises and utilities (SPCUs). This is particularly true in emerging markets and developing countries (EMDEs) Where Most of the future growth in global electricity demand is expected to occur. Consequently, tripling renewables by 2030 will require SPCUs. More consideration We need to look at how we can get these companies to contribute to the effort.
SPCUs are currently responsible for nearly half of the global electricity sector’s CO2 emissionsThis figure is not surprising, given that a a similar percentage of global generation capacity is owned by SPCUs, including more than 50% in Asia and a significantly higher share in China.
It is telling that most EMDE governments prefer state ownership and control of the strategic electricity sector. When this EMDE preference is coupled with the expected dominance of these countries in future growth of global electricity demand (85% of expected global increase from 2022 to 2026) the already significant share of government energy assets within the global electricity system can be expected to increase further over time.
Moreover, SPCUs play an important role even in advanced economies. This includes countries such as France, where Electricity of France has been the dominant energy company for decades. SPCUs are also present elsewhere. For example, approximately 15% of North American generation is owned by SPCUThis includes Hydro-Quebec, the largest supplier of renewable energy on that continentIt also includes the iconic American Tennessee Valley Authorityas well as other lesser known SPCUs across the country on the state and municipal level.
Why are these elements important? They point to the need for SPCU action in any effort to triple the world’s installed renewable energy capacity by 2030.
How can this be achieved? There are several ways.
- SPCU action should also focus on joint ventures with private investors. This could take various forms, such as co-investment in new renewable capacity or new government-owned plants operated by the private sector.
- SPCUs are the purchasers of electricity produced by private companies in many systems. independent energy producers (IPPs). So even if it does not own the power plant, an SPCU can help to promote new renewable energy generation by providing potential private investors with a commercially viable counterparty to purchase the IPP’s electricity, and by supporting robust and transparent competitive bidding processes and other tools to incentivize private investment in clean energy.
- SPCUs can provide critical complementary/associated infrastructure and systems to support private sector investment in the plants themselves. This could include the construction of a dedicated transmission line to connect a large but remote renewable IPP to the grid. It should also include, on a much smaller scale, SPCU support for households interested in rooftop solar systems, which are often operated in partnership with a local government-owned utility.
However, increasing generation capacity is only a means to an end. The key is rather to translate additional generation capacity into clean electrons flowing to users. And here SPCUs play a crucial role in two additional dimensions.
First, activating additional renewable capacity requires massive investments in the grid to connect that new production to actual consumers. To translate investments in renewable energy generation into a greener electricity system, Investments in the electricity grid must double to over $600 billion by 2030.
This was a lesson learned in part from the experiences in China, where new Renewable energy generation outpaced grid expansiona shortcoming that required investment in the grid specifically to overcome. With government ownership of the grid in many, if not most, countries around the world, SPCUs will be key to expanding the electricity grid to accommodate the integration of greater amounts of renewable energy generation.
A second dimension that is often overlooked is that in energy systems where a lot of renewable energy is generated, there are also fossil fuel plants. The decision as to which plants are called upon to produce electricity at any given time is often made by a grid operator.
In many countries — from Mexico to China and beyond — that entity is once again government-owned and controlled. To ensure that additional renewable capacity actually results in a carbon-free electricity supply, additional and supportive action is needed by the government-owned grid operator to send that renewable energy into the grid to serve customers.
For all these reasons, active involvement of SPCU is required to achieve the goal of tripling renewable energy generation capacity by 2030 and, more broadly, decarbonising the global electricity system.
This is particularly true for emerging economies and other developing countries, whose electricity sector emissions are expected to increase without robust decarbonization measures. But it is also true for the United States and other advanced economies. More attention should be paid to SPCUs, key players in achieving global climate goals.
Filip Benoit is director of Global Infrastructure Advisory Services 2050He previously held management positions at the International Energy Agency and the World Bank, and worked as an adjunct senior research scholar at Columbia University-SIPA’s Center on Global Energy Policy and as an investment banker. He is currently a visiting professor at the University of SciencesPo-Paris.
Leonardo Beltran is a senior advisor at Iniciativa Climática de México. He was the Mexican Deputy Secretary of Energy, responsible for the energy transition (2012-2018), and a member of the board of Pemex and CFE. He currently holds fellowships at the Institute of the Americas and the School of Public Policy at the University of Calgary.
© Inter Press Service (2024) — All rights reservedOriginal source: Inter Press Service
