It has been a pleasure working with 18 leading energy experts from different countries and backgrounds as part of the World Economic Forum’s Global Agenda Council on the Future of Electricity. We have just published a report entitled Global Agenda Council on the Future of Electricity: Busting the Myth for Transformation in which we take a look at the future of electricity in 2030.
Our basic conclusion is that by 2030, we can live in a world that is significantly more electrified, more connected, more efficient, more consumer-‐driven, more decarbonized-‐-‐and one that has a material impact on other systems and sectors. We see 10 key trends in the ongoing transformation of our electrical system.
1. The world is increasingly electrified. Global demand for electricity increases, regardless of efficiency, due to electrification of heating and mobility; to satisfy increasing demand in developing regions, and to provide access in emerging economies. New actors are entering the sector in an increasingly complex system, bringing technological innovation and new approaches, reducing demand (as is the current trajectory) on traditional centralized grids in developed countries and expanding its outreach to a scale never seen before.
2. Renewable energy has the greatest capacity growth. By 2030, the electrification of the world will be driven mainly by increased deployment of readily available, inexpensive and abundant renewable energy resources. With decreased levelized cost of solar and wind – already competitive with traditional fossil fuel generation in many markets – renewables, and in particular solar PV, are among the most competitive technologies available for investment in new generation capacity that decreases import dependency, reduces fuel poverty and empowers citizens, consumers and producers.
3. Renewable energy and other clean solutions enable growing universal access to electricity. By 2030, access to affordable, reliable, sustainable and modern energy will be attained in a much more significant way, owing to falling costs in solar and hybrid power technologies. Access is fundamental to reducing poverty, improving health, better education and promoting economic growth.
4. Energy security increases as a result of indigenous clean electrification. Large renewables projects and related grid infrastructure across borders will foster cooperation between nations, contributing to lowering the risks that can in turn attract capital. Volatility of prices is reduced because of stable fuel costs, ensuring more resilience in vulnerable economies. Increased digitization of the system enables improved accuracy of weather and renewable resource predictions, allowing for more reliable and resilient deployment.
5. Distributed energy resource (DER) deployment is significantly increased. DERs aggregated with ICT technologies will function as reliable and flexible supply resources from the distribution side of the grid that will be dynamically integrated with existing sources, and in some cases will obviate the need for additional supply side resources. The increasing presence of DERs will significantly transform and create new business models for the existing power sector – and that of some adjacent sectors, such as natural gas, building and transportation. DERs will enable leapfrogging central-system grid infrastructure in developing counties to allow for cost-effective and more rapid access to electricity.
6. Energy storage provides critical grid services. A wide range of promising energy storage technologies are developed and deployed commercially, with costs driven down by the automobile industry. Low-cost renewables combined with increasingly cost-effective energy storage are replacing diesel generators and allowing decentralized power solutions that in turn spur emerging economy electrification and development.
7. Consumer engagement and choices shape future electric growth. Consumers (large and small, households and businesses) in developing and developed economies are becoming increasingly able to store, produce, manage, buy and sell energy in an affordable, cost effective and profitable manner. New smart platforms and virtual market places support new business models, bringing consumers together, enabling individuals and communities to take control of their energy future, thus providing flexibility to existing, smart and distributed networks.
8. The system is more connected, resilient and secure. By 2030 the electric system will be more connected and hybrid (a combination of centralized and distributed resources and grids), with countries and regions having different energy mixes depending on their resources. Connection remains important as a way for a “prosumer” to sell excess power and act as an “insurance policy” for continued supply; decentralized systems allow for efficient return to service in case of disruption. The electrification of transport enables electric cars to provide grid services, including storage. A more decentralized and intelligent grid reduces cyber and physical security risks.
9. The price of electricity may increase for some time, but then will decrease.Forecasting future energy prices is notoriously risky, but, as the system and infrastructure are upgraded and modernized, there is every prospect that prices will fall to reflect the lower costs of renewables over those of traditional fossil and nuclear generation.
10. Regulation improvements support and accommodate electric grid changes. A comprehensive pricing system allows for supply and demand resources to efficiently interact, contributing to a maximization of social, environmental and economic welfare.