As much as $14 trillion needs to be invested in global grid expansion in order to keep up with the rise in renewable energy production
$14trn in grid investment is needed globally by 2050.Rural areas have the greatest shortfall in grid coverage.As the capacity to generate wind and solar power continues to expand around the world, hopes of accelerating the phase-out of coal as the leading source of electricity may depend on the expansion of a less discussed but equally important part of the energy supply chain: electricity grids.
Earlier this year Vietnam’s Ministry of Industry and Trade announced that no new solar or wind projects would be connected to its grid in 2022, citing the fact that the build-out of over 20 GW of renewables over the last three years has led to frequent grid overload and wasted renewable power generation.
The large number of solar energy projects coming on-line in the years ahead triggered Australia’s announcement, with the authorities mindful of the fact that solar overtook wind as the country’s top source of renewable energy in 2021. Solar briefly surpassed coal as the country’s top source of power in August.
Both wind and solar are cheaper sources of power than coal and natural gas, but the scale of the solar projects on-line is reflective of the construction of larger and more sophisticated projects that make use of economies of scale. Zambia’s Rural Electrification Authority commissioned the $465,000 Kalungu-Sansamwenje grid extension project in Isoka last month to provide more reliable power supplies to rural areas. More recently, last week the World Bank approved an additional $335m to support grid extension and densification in Tanzania as part of the Tanzania Rural Electrification Expansion Programme.
Specific to transmission, the agency highlighted cases studies related to the development of new business models aimed at bolstering private investment in Brazil and India, third-party distribution investment in countries throughout Latin America, the issuance of tenders for bulk procurement of smart grids in India and the provision of early-stage capital for smart-grid development in the Philippines.
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