Power

Modernize power grids, scale energy storage and manage power demand

In a clean energy future, the power system will have a high quantity of renewables, adequate levels of storage and the ability to smooth out variations in output from wind and solar power. 

In order to cost-effectively supply the population with the electricity services needed for sustainable development, many elements must work together. Both supply and demand will need to adjust to a new and diverse energy mix. This includes scaling demand-side management; building new energy storage capacity; investing in modern, efficient power grids and recognizing the importance of a more decentralized, flexible set of power assets, such as rooftop solar photovoltaic (PV). 

Adding more transmission and distribution infrastructure is an urgent priority, not only to connect those areas currently lacking reliable electricity, but also to move power from one location to another to improve reliability. 

Europe could achieve very high proportions of renewables with only around 25% more transmission infrastructure than what is available today. Africa and Asia may also adopt renewable energy based on micro and mini power grids with storage, if extending power lines is too costly in the short term.

Major changes are also needed at the demand-side of the power sector. Demand-side response (DSR) — the ability of electrical utilities to control and shift demands in real-time — is one of the most effective tools in stabilizing the variability in renewable energy. DSR techniques have existed for decades, but new technologies make them more attractive, and they now need to be rolled out widely and across the world. 

Transitioning to zero-carbon power requires us to be able to store electricity, and also rethink how we manage our power grids and demand.

Energy storage technologies will also play a crucial part in the future energy system, though their environmental risks will need to be carefully considered and managed. Currently, there are around 180 gigawatts (GW) of storage deployed on grids around the world, the majority (94%) of which is pumped hydropower. 

Due to the lack of sufficient technical potential in some regions and environmental and geopolitical concerns of pumped hydro, alternative storages need to be developed rapidly, particularly battery storage and green hydrogen. 

Additionally, pumped hydro is threatened by climate change, as droughts and a shortage of rainfall reduce water availability for energy and storage purposes. Model results from the International Energy Agency (IEA) suggest over 35-fold increase in battery storage capacity is needed to meet net-zero by 2050.  

Scaling up efforts on power transmission and distribution, DSR, and storage will require new policies to mobilize capital for new infrastructure, but also create the market conditions for demand management programs and technological innovation. 

Data Insights

What targets are most important to reach in the future?

Systems Change Lab identifies 2 targets toward which to track progress. Click a chart to explore the data.

What factors may prevent or enable change?

Systems Change Lab identifies 10 factors that may impede or help spur progress toward targets. Click a chart to explore the data.

Progress toward targets

Systems Change Lab tracks progress toward 2 targets. target. Explore the data and learn about key actions supporting systems change.

Total battery storage capacity

In 2020, there were 17 GW of battery storage installed around the world. To achieve a 1.5 degrees C scenario, the IEA estimates that the world will need 585 GW of storage by 2030 and 3,100 GW by 2050.

Battery storage technologies may offer the most efficient solution to smooth the variability in renewable energy output. Batteries are especially important in areas where transmission or demand-side solutions are difficult or costly to implement. Small-island states or mini grid systems are particularly well-suited to battery storage solutions.

In 2020, there were 17 GW of battery storage installed around the world, which has been growing since 2015. Battery storage capacity is concentrated largely in China, Germany, South Korea and the United States, but capacity is beginning to grow in other countries, such as India.

To limit warming to 1.5 degrees C, the IEA estimates that the world will need 585 GW of storage by 2030 and 3,100 GW by 2050. There is not enough historical data to assess a trend for this indicator, so we are unable to assess how quickly the rate of change must accelerate to reach the 2030 target.

Global potential flexible power demand

To cope with the inherent intermittency of key renewable energy technology, it’s crucial to make power grids more flexible. As of 2018, global flexible load totaled 4,000 TWh.

To cope with the inherent intermittency of key renewable energy technology, it’s crucial to make power grids more flexible. Grid managers will need to be able to alter or shift demand in real time to match variable supply from wind and solar power.

For example, if renewable output is low, grid managers could incentivize consumers to shift their energy demand to a later time. Conversely, they could encourage consumption during periods with abundant renewable power. This group of strategies is referred to collectively as demand-side response (DSR).

While we do not yet have global estimates of trends in flexible power demands, we know that flexible demands are growing since grid managers and utilities are rapidly rolling out flexibility programs in the United States, Europe, Australia and other regions. As of 2018, global flexible load was estimated at 4,000 terawatt hours (TWh), which could increase to 7,000 TWh by 2040.

There is no established target for the proportion of power demand that must be flexible to align with a 1.5 degree C scenario, but it is clear that increasing flexibility can help integrate renewables onto the grid without major interruptions. Also, a more flexible power grid means we need less storage and transmission infrastructure, which are more costly and cause greater pollution.

Enablers and barriers

We also monitor change by tracking a critical set of 10 factors factor that can impede or help spur progress toward targets. Explore the data and learn about key actions supporting systems change.

Cost of battery storage

Though the 2021 battery price was down nearly tenfold from that of 2010, more financial support, as well as research and development, is needed to further dampen costs.

Energy storage technologies, particularly battery storage, will form a critical component of new sustainable energy. Storage solutions will help to smooth out the intermittency in renewable energy supplies caused by weather variability and the lack of solar power at night.

In order to realize energy storage at scale, we will need technologies that are affordable to purchase and operate. This indicator tracks the price of lithium-ion (Li-ion) batteries — a relatively advanced and widely used battery technology — as a proxy for affordable storage.

Li-ion storage prices have been declining sharply since 2010, at a rate that surpasses the cost decreases of solar and wind technologies. In 2010, battery prices stood at around 1,220 dollars per kilowatt-hour ($/kWh), and in 2021 this decreased nearly tenfold to $132 per kWh.

Although the significance of these trends cannot be understated, battery technologies remain expensive and are particularly unaffordable for emerging economies. To realize the level of storage proliferation needed to achieve a net-zero power system, more financial support, as well as research and development, is needed to further dampen costs.

New patents for energy storage

As of 2021, 15,456 claimed patents for energy storage were submitted, a 400% increase from 2000 — a positive indication that storage players are operating and innovating in a stimulating market.

Renewable energy technologies, such as solar and wind, will form the backbone of the future energy system. Because supplies from renewable energy are inherently variable, we need to be able to store energy for use at a later time.

Achieving high proportions of renewables will require technological innovation in energy storage techniques to bring down prices. Advances are also required to ensure energy storage technologies are produced and operated sustainably, and can be disposed of or recycled with minimal environmental impact at the end of their life.

While technological innovation can be measured using a range of different approaches, we track the number of patents filed for a given technology. This method is a proxy for market innovation and progress for energy storage technologies.

The number of patents filed related to energy storage technologies have increased considerably since 2000. As of 2021, 15,456 claimed priorities for energy storage patents were submitted, a 400% increase from 2000. This is a positive indication that storage players are operating and innovating in a stimulating market. Because storage technologies are still maturing, businesses and governments will need to provide strong support to unravel latent innovation.

Percent of customers with a smart meter

Given that smart meters are expected to play an important part in the future power system, it is critical to track the roll out of meters at a global scale by country.

To mitigate against the variability in renewable energy output, power grids will need to be made more flexible, primarily by improving the way we manage energy demands.

Smart meters will be an important technology in the future power system, allowing both consumers and producers to better understand and manage demands in real time. Unlike conventional meters that usually track total power consumption, smart meters can monitor power usage at high time resolutions, from seconds to a half-hourly scale.

This helps consumers track energy use to keep their bills low; it also enables power suppliers to better match supplies with demand. For example, producers could incentivize customers to shift their energy use away from peak times by offering cheaper tariffs.

Given that smart meters are expected to play an important part in the future power system, it is critical to track the roll out of meters at a global scale by country. Currently, there is no reliable and open database that tracks smart meter rollout.

Number of countries with financial incentives for energy storage

Financial incentives, such as research funds to develop technologies or grants and subsidies to part-finance the cost of infrastructure, will be necessary to make supply chains more efficient while keeping costs to consumers low.

Sustaining the clean energy transition at the pace needed to achieve our climate goals will require rapid and widespread deployment of energy storage. Currently, global storage capacity is a fraction of what is needed by 2030 to align the power sector with net-zero pathways.

Although the price of energy storage technologies continues to fall at unprecedented rates, it remains very expensive, particularly in the least developed countries, which could hinder progress.

Financial incentives, such as research funds to develop technologies or grants and subsidies to part-finance the cost of infrastructure, will be necessary to make supply chains more efficient while keeping costs to consumers low. Such measures could turbocharge global adoption rates, which is vitally needed to meet net-zero by 2050, according to the IEA.

Taking stock of the countries with financial incentives for energy storage is important to understand whether storage technologies are receiving the support they need, as well as the geographical hotspots of innovations. While there is currently insufficient data to comment on global long-term trends, early analysis indicates very few countries have financial incentives in place for energy storage.

Number of countries with efforts promoting load-shifting measures

Load shifting is now more important than ever as power grids integrate additional amounts of variable renewable energy. Monitoring load-shifting roll outs would not only allow us to track progress toward this transition, but also help to identify regions that are leading the way.

Running power grids is a constant process of balancing supply and demand. At times, demands (also called “load” in the power system) surge significantly and unexpectedly, and power grid managers need to be able to respond to these changes quickly. To do this, some grid managers implement load shifting, which is the process of moving energy demands to another period.

For example, large industrial consumers of electricity can make agreements with their local grid operators to shift their energy demands away from peak times, or even make a certain portion of their energy demand readily curtailable in exchange for preferential tariffs. Similar incentives can be rolled out for residential and commercial consumers.

Load shifting is now more important than ever as power grids integrate additional amounts of variable renewable energy. However, to increase the amount of demand that can be shifted, power grid managers will need to provide incentives — like cheaper tariffs — for customers to participate in load-shifting programs.

While there are currently no reliable global data on future flexibility needs, some estimates show a nearly twelvefold increase in flexible demands could be needed by 2030. Therefore, it is important to track the number of jurisdictions or countries with policies that support load shifting globally. This would not only allow us to track progress toward this transition, but also help to identify regions that are leading the way.

Annual global investment in transmission grids

In many parts of the world, the transition to renewable energy supplies will need to be supported with significant investments into the transmission network, primarily to upgrade or expand existing lines.

Transmission networks are responsible for moving large amounts of electricity from one point to another. In many parts of the world, the transition to renewable energy supplies will need to be supported with significant investments into the transmission network, primarily to upgrade or expand existing lines. This is vital for balancing the variability in renewable energy.

Improving transmission infrastructure can aid the transition in several regions, such as the United States, Europe and the Middle East and North Africa. Because the grid can be balanced more efficiently, we can avoid the need for additional supply or storage infrastructure, which would be more costly and have more significant environmental impacts.

Recent data show investments in transmission systems have declined. In 2016, $104 billion of capital was allocated to transmission grids across the world, which declined to $88 billion by 2019. Yet, data from 2020 saw a 3.3% rise with investments reaching $91 billion, indicating that this indicator could be heading in the right direction.

Tracking the global investment into transmission lines is important to understand the state of the energy transition. It is not only a good measure of investment priorities within a country, but also a sign of energy cooperation between states since transmission lines often cross borders.

Annual global investment in distribution grids

In many areas, distribution grids will be the lifeline of the sustainable energy future, and global expansion of these networks are expected as renewable energy generation and energy access increase.

How we move energy from where it is generated to its end use is an important part of the power system's transformation. Currently, the global power system is set up for a few large power plants, such as coal and gas plants, whose power is dispersed through large transmission line infrastructure.

This paradigm is beginning to change with the sustainable energy transition as a range of distributed power suppliers begin to appear, from large wind farm operators to micro solar sites. For many suppliers, a connection to large transmission infrastructure may not be needed, and instead, power can be best supplied with smaller distribution-scale grids.

In many areas, distribution grids will be the lifeline of the sustainable energy future. For example, there is evidence showing that large regions of Africa could economically close energy access gaps with micro or mini grid systems. These networks are expected to expand globally as renewable energy generation and energy access increase.

Global investments distribution grids have been declining. In 2016, $203 billion was invested into distribution systems across the world, and this has decreased by an average of 5% per year, reaching $168 billion in 2020.

We need investments to increase to ensure that energy access goals are met by 2030; this will also facilitate progress toward a low carbon energy system.

Global investment in battery storage

In 2020, total investment stood at $6 billion — this amount tripled to $18 billion in 2022. While these signs are encouraging, these investments still require commensurate increases by 2030.

Battery storage technologies will form a vital component in the future zero-carbon power system. Large amounts of capital are expected to flow into storage solutions.

Monitoring the total investments into battery storage allows us to track the global investment priorities of governments and businesses, an important market signal of the clean energy transition. Over time, we expect this indicator to increase significantly.

Recently, annual investment into energy storage has risen substantially. In 2015, a combined $1.6 billion of financial commitments were made for energy storage, but this has been rising by an average of $2.3 billion each year.

Much of this growth has taken place in just the last few years. In 2020, total investment was just over $6 billion – this amount tripled to $18 billion in 2022.

Although these signs are encouraging, there is still a major gap in energy storage deployment. Since far more energy storage is needed by 2030 to align the global power sector with pathways compatible with the Paris Agreement, global investments in storage need to increase commensurately, though available data are currently insufficient to estimate by how much.

Annual global investment in power grid resilience

Tracking investment into power system resilience is important to monitor the preparedness of countries to climate extremes, particularly the least-developed economies that are most vulnerable to climate change.

Although mitigating climate change by decarbonizing the power sector is an urgent priority, existing power systems also need to be prepared for future climate shocks. Power systems are highly vulnerable to climate change, and because vast segments of the world’s economy are dependent on electricity, climate-related power failures can pose devastating threats to global systems.

Investment in grid resilience is needed to prepare electricity grids for a changing climate. Adaptation options include building flood defenses around critical network components such as power plants and substations, making transmission lines more resilient to extreme temperatures and building network redundancy by increasing regional connections to cope with unexpected failures due to extreme climate events.

Tracking investment into power system resilience is important to monitor the preparedness of countries to climate extremes, particularly the least developed economies that are most vulnerable to climate change. However, no reliable and openly available data were found for this indicator.

Number of jobs in energy efficiency

An increasing number of jobs for workers across the clean energy supply chain reflects that moving toward a greener energy actually creates opportunities to access decent and productive jobs.

An increasing number of decent jobs for workers across the clean energy supply chain reflects that moving toward a greener energy actually creates opportunities to access decent and productive jobs.

These must be quality jobs and ensure basic labor rights. It is essential that new employment opportunities provide men and women with decent work, meaning that they should offer fair compensation, safe working conditions, equal opportunities and social protections. These jobs must be free of forced and child labor and provide employees the right to organize or discuss work-related issues.

Globally, there were 10.9 million jobs in energy efficiency in 2019. At the country level, some estimates suggest that there are 33,000–62,000 efficiency-related jobs in Brazil, 60,000–236,000 in Australia, 472,000 in Canada, 730,000 in China, 2.4 million in the United States and 1–3 million in Europe.

Photo credits

Photo by Arby Reed

Back to Top