IEA net zero update reiterates need for rapid grid expansion

The IEA’s updated Net Zero Roadmap identifies the doubling of grid investments by 2030 as a key milestone for the electricity sector towards its net zero scenario.

The IEA net zero roadmap update highlights the need to expand the electricity transmission and distribution grids by around 2 million km each year to 2030 to meet the needs of the net zero scenario with the growing demands of electrification, the integration of the rising shares of solar PV and wind and the reinforcement of systems to adapt to changing system dynamics.

To achieve this the investment in the grids to 2030 needs to reach US$680 billion, of which close to 70% would be for the distribution grids with the aim of expansion, strengthening and digitalisation.

Thereafter the investment also needs to remain at a high level, approaching a peak of $1.1 trillion by 2040 before dropping back to around $850 billion by 2050.

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Coupled with this is the need for regulatory and policy reforms to facilitate the timely and efficient development and modernisation of the grids, with current grid building efforts potentially taking more than a decade.

In particular permitting is a particularly time-consuming bottleneck, as it is for other infrastructure, for example up to 5 years for ground-mounted solar and 9 years for both onshore and offshore wind, and needs to be expedited.

Along with permitting grid connections also need to be expedited in order to meet another key net zero milestone for the electricity sector – a tripling of the global renewables capacity from the level of 3,630GW in 2022 to over 10,000GW by 2030.

As an example of the scale of this issue, the IEA highlights that in Europe today around 60GW of onshore wind capacity – four-times the capacity commissioned in 2022 – is held up by various permitting procedures.

Globally, around 3,000GW of wind and solar PV projects in large renewable energy markets have applied for grid connections, although not all of them are expected to come to fruition.

The other two key electricity sector milestones towards net zero are a 95% reduction by 2040 in the unabated use of fossil fuels to generate electricity, including the complete phase out of unabated coal, and a more than doubling of the capacity of nuclear power from 417GW in 2022 to 916GW in 2050.

Grid modernisation and expansion for net zero

Regarding the modernisation and expansion of the transmission and distribution grids, the IEA highlights that this should be done in a way that facilitates demand response management, for example by providing incentives to use energy at times of high supply of renewable electricity, including through time-of-use tariffs.

Interconnections between regions are another option to provide flexibility, allowing for the pooling of flexibility resources and reducing the need for additional power system flexibility by balancing load, wind and solar production over large geographical areas.

Measures to ensure system stability also need to be integrated, including the deployment of synchronous condensers, flexible alternating current transmission systems (FACTS), grid-forming inverters and fast frequency response capabilities.

The IEA, which will further address the grids in dedicated studies due later in the year, concludes in its update report that the rapid ramping up of infrastructure requirements envisioned in the net zero scenario is technically feasible, but nonetheless represents an enormous undertaking.

While the build out of the electricity grids is already accelerating, averaging 1.9 million km each year over the past five years or about 9% higher than in the previous five year period, the pace needs to pick up to reach the 2 million km per year net zero target.