Triple Renewables Funded by State-Owned Energy and Utilities — Global Issues
WASHINGTON DC, Sep 25 (IPS) – The climate community, meeting this week and on the edge of The UN General Assemblycontinues to explore ways to triple the world’s renewable production capacity by 2030a goal that was agreed upon last year COP 28 international climate negotiations. Much of this discussion was about mobilizing finance and enabling the private sector, with large resources and expertise, to meet the challenge … and what government policies and incentives are needed to encourage more investment.
This rhetoric, however, hides an important fact: a large part of the energy industry is controlled by governments and their state-owned electricity and utilities companies (SPCUs). This is especially true in emerging markets and developing economies (EMDEs) there most of the future growth in global electricity demand is expected to occur. Therefore, renewables that triple by 2030 will need to include SPCUs. More thought it must be given how to make these companies contribute to the efforts.
SPCUs are currently available which is responsible for almost half of the CO2 emissions of the global energy sector. This figure is not surprising because a a similar percentage of global production capacity is managed by SPCUs, including more than 50% in Asia and a the highest share in China.
Notably, many EMDE governments favor state ownership and control of the strategic energy sector. When these EMDE preferences are combined with the expected dominance of these countries in future growth in global electricity demand (85% of the expected global growth from 2022 to 2026), the existing weight of state-owned energy assets within the global electricity system can be expected to grow over time.
Moreover, even in developed economies, SPCUs play an important role. This includes countries like France there Electricite de France has been a leading electrical company for decades. SPCUs also exist elsewhere. For example, about 15% of the generation in North America is managed by SPCU. This includes Hydro-Quebec, the continent’s largest provider of renewable energy. It also includes a US icon Tennessee Valley Authorityand other lesser known SPCUs across the country e at the government and municipal level.
Why are these factors important? They point to the need for SPCU action in any attempt to triple installed renewable capacity worldwide by 2030.
How can this be accomplished? There are several important methods.
- The SPCU action should also target joint ventures with private investors. This may take different forms, such as co-investment in new renewable energy or new state-owned plants operated by the private sector.
- SPCUs in many systems are consumers of privately produced electricity independent power producers (IPPs). So even if it does not own the power plant, the SPCU can help promote new renewable generation by providing prospective private investors with a reliable partner to purchase IPP electricity, as well as supporting robust and transparent bidding processes and other tools. encouraging private investment in clean energy.
- SPCUs can provide important complementary/related infrastructure and programs to support private sector investment in the industries themselves. This may involve building 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 that are often managed in partnership with a community-owned utility.
Increasing production capacity, however, is only a means to an end. Instead, the key is to translate the increased production capacity into clean electrons flowing to users. And here, SPCUs have an important role to play in two additional areas.
First, activating additional renewable capacity requires significant investment in the grid to connect that new output to real consumers. To convert investment in renewable generation into a green electricity system, Grid investment to double by 2030 to over $600 billion.
This was a lesson learned in part from what happened in China when it burned renewable generation is a long-term network expansiona shortcoming that required investment in the grid to eliminate. Because in many, if not most, countries around the world, the grid is owned by the government, SPCUs will be key to expanding the electricity network to enable the integration of large amounts of renewable generation.
A second aspect that is often overlooked is that often even in power systems where there is significant renewable generation, there are also fossil fuels. The decision as to which plants are called upon at any given time to produce electricity is usually made by the grid system operator.
In many countries — from Mexico to China and beyond — that business is now owned and controlled by the government. Ensuring that additional renewable capacity actually translates into providing carbon-free electricity will require consistent and supportive action by the state-owned grid operator to send that renewable energy into the network to serve customers.
For all these reasons, achieving the goal of tripling renewable generation capacity by 2030, and broadly decarbonizing the global electricity system, requires the active participation of the SPCU.
This is especially true in developing countries and other developing countries where the electricity sector is expected to grow in the absence of strong decarbonisation actions. But it is also true in the United States and other developed economies. More attention is needed on SPCUs, key players in achieving global climate goals.
Philippe Benoit is the managing director of Global Infrastructure Advisory Services 2050. He previously held management positions at the International Energy Agency and the World Bank, and worked as an adjunct research fellow at Columbia University-SIPA’s Center on Global Energy Policy and an investment bank. He is currently a visiting professor at the University of SciencesPo-Paris.
Leonardo Beltran he is a senior consultant at Iniciativa Climática de México. He was the Deputy Secretary of Energy of Mexico in charge of Energy Transition (2012- 2018), and a member of the board of directors 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
Source link
