This article is the first of a three-part series of thought leadership on Energy Transition, authored by Anil Rawal. The Energy Transition series expounds on the role of six pillars on which global “Net Zero” ambitions would rest – Renewables, Battery Storage, Green Hydrogen, E-mobility, Distributed Energy Resources and Digitalization. In this installment, Anil Rawal touches upon Renewables and Battery Energy Storage.
The global energy system is presently undergoing a momentous transformation. Over the past decade, investments in various renewable energy sources have surpassed those in fossil fuels. In 2022, global investments in energy transition exceeded $1 trillion, marking a remarkable 31% increase from the previous year. Despite this impressive progress, the current level of global investment in low-carbon technologies falls short of the pace required to achieve Net Zero emissions by 2050.
The Net Zero ambition necessitates an annual investment of $5.7 trillion until 2030. The World Energy Transitions Outlook 2023 proposes redirecting $1 trillion of the planned yearly investments in fossil fuels towards energy transition technologies. Total cumulative energy investments should reach $44 trillion by 2030, with a strong emphasis on enhancing energy efficiency, promoting electrification, and expanding the grid.
Accelerating the deployment of renewable energy sources such as solar and wind is imperative to significantly reduce carbon emissions. Renewable energy maintained its leading position in terms of investment in 2022. However, more must be done to achieve the 1.5°C climate goal. Globally, we need to add 1,000 GW of renewable power every year to triple the total renewable energy capacity by 2030. Achieving this would allow us to avoid 7 billion tonnes of CO2 emissions by 2030. Simultaneously, there is a pressing need to intensify the use of renewable energy in various end-use industries. Additionally, concerted efforts are necessary to replace coal power and gradually phase out fossil fuels.
In the course of this ongoing energy transition, a multitude of frontiers are emerging, propelling the transition from fossil fuels to more sustainable energy sources. Ranging from solar and wind power to green hydrogen, battery storage and EVs, these emerging frontiers are significantly reshaping how we generate, distribute, and consume energy.
Unlocking the Potential of Renewable Energy
Renewable energy is critical to the pursuit of keeping the global temperature increase to 1.5 degrees Celsius above pre-industrial levels by this century end. In order to meet the energy transition goals, the world’s renewable capacity must be multiplied by more than three times to reach 11,174 GW by 2030, from 3,382 GW in 2022, according to IRENA’s World Energy Transitions Outlook. This means tripling renewable energy capacity for power generation and doubling energy efficiency by 2030 at the global level. A report launched recently, for the 28th session of the Conference of the Parties (COP28), underlines that, we need to cut 22 gigatonnes of greenhouse gases in the next seven years to keep 1.5°C within reach.
As of August 2023, India has a total power generation capacity of 424 GW, with 180 GW contributed by renewable sources, including small hydro. With an additional 88 GW of renewable capacity in various stages of development, India is making substantial progress toward its goal of achieving 500 GW of renewable energy capacity by 2030. Furthermore, India’s green hydrogen mission aims to add approximately 130 GW of renewable energy capacity, in addition to the 500 GW committed under its Nationally Determined Contribution to the Paris Agreement.
There is encouraging news that renewable energy sources have become the most cost-effective option for power generation in many regions. In 2020, a remarkable 162 GW, accounting for 62 per cent of the total new renewable power generation capacity added worldwide, proved to be more cost-effective than the least expensive fossil fuel alternatives, making renewable energy as the preferred and competitive energy source.
As we navigate through the energy transition, adopting a renewable-based approach is the most practical way to mitigate the severe consequences of climate change. This approach not only offers the potential for greater energy security but also promotes a more inclusive and climate-resilient global economy.
However, it’s crucial to acknowledge that the expansion of variable renewable energy (VRE) will increase the demand for grid flexibility. Therefore, there is an immediate need to address this issue by quickly adopting mitigating solutions, such as storage, smart metering, demand-side management, and other methods to enhance grid flexibility.
Harnessing the Power of Battery Energy Storage
Battery energy storage systems are at the forefront of the global energy transition, playing a pivotal role in the shift towards decentralised and decarbonised energy markets. In the realm of renewable energy generation, energy storage enhances capacity utilisation and contributes to voltage and frequency regulation. When integrated into T&D operations, it aids in peak load shaving, acts as a spinning reserve, bolsters grid stability, and optimises grid management. At the consumer level, energy storage systems enhance power quality and reliability, support peak load management, facilitate price arbitrage, and enable effective cost management. These multifaceted applications underscore the pivotal role of energy storage in modernising energy systems. Achieving global Net Zero would need an average annual installation rate of approximately 120 GW worldwide.
Selecting the appropriate long-duration storage solution is contingent on the specific grid applications and a range of performance attributes, including longevity, levelized cost of storage (LCOS), and, in some instances, geological conditions and real estate availability. For long-duration applications, an ideal solution should be capable of shifting four or more hours of energy capacity, operate efficiently across numerous charge and discharge cycles with minimal degradation, and consider local electricity costs and emerging tariff structures such as time-of-use rates.
On costing front, the notable development is the substantial reduction in the cost of battery storage systems, especially lithium-ion batteries. Over the past few years, lithium-ion battery prices have seen a sharp decline. In 2017, prices were at $273/kWh, and in 2022, the volume-weighted average price for battery electric vehicle (BEV) packs stood at $138/kWh. This trajectory indicates that lithium-ion batteries are poised to become a dominant force in energy storage solutions in coming years.
The growing investment in battery energy storage signifies a paradigm shift towards a more decentralised and resilient energy system. By enabling surplus energy storage at various scales, from individual households to large-scale grids, battery technology empowers individuals, communities, and businesses to actively participate in the energy transition. This democratisation of energy not only fosters greater energy independence but also promotes a more equitable and inclusive energy landscape, fostering a brighter and more sustainable energy future.
About the author: Anil Rawal is Managing Director & Chief Executive Officer, IntelliSmart Infrastructure Pvt Ltd.
(The second part of the “Energy Transition” series will appear on www.tndindia.com soon.)
