An extract from IRENA’s whitepaper titled, “Towards 100% Renewable Energy: Utilities in Transition”
Governments and companies are setting their sights more and more on the exclusive use of renewable electricity. Recent years have witnessed steep reductions in the costs of renewable energy technologies as well as continuing technological innovation. These factors make the vision of a renewables-only power system more achievable than ever before.
In the power sector, where renewables already account for over half of new capacity additions each year, the prospect of going entirely renewable could soon be within reach for many countries. The focus on renewables by many public and private companies has shaped new roles and responsibilities for traditional electricity providers. At the same time, long-term government policies increasingly aim to promote the transition to 100% renewable power.
In 2019, a total of 61 countries had set a 100% renewable energy target in at least one end-use sector, up from 60 countries in 2018. Geographically, these 61 countries are distributed as follows: Africa (19), Asia (15), Oceania (10), Central America and the Caribbean (8), Europe (7), and South America (2) (see Figure 1). Of the 61 countries, 14 countries have committed to reaching a 100% renewable energy target in at least one end-use sector by 2030 at the latest, two countries by 2040 and the others by 2050.
As the entities traditionally responsible for delivering power to consumers, utilities retain a crucial role, both in maintaining large-scale generation hubs and as more flexible grid operators enabling distributed generation. Both national and local utilities must adjust to the new and growing demand specifically for renewable power.
“The transition to 100% variable renewable energy is not simply the substitution of one generation source with another,” says Dr Bryn Williams, future network strategy manager at SA Power Networks in South Australia. “It entails an unprecedented transition from centralised, top-down, to decentralised, bottom-up, generation.”
Big power utilities helped create the current energy system. Traditionally, they have delivered power to communities and industries from large, centralised generation facilities. Dr Williams says the next wave of transformation is going to be led by customers. Currently, SA Power Networks distributes power to around 860 000 homes and businesses and is expected to reach 73% variable renewable energy in electricity generation by 2021 and 100% in 2025. Government subsidies and incentives help to steer the market towards sustainable options, he adds.
Denmark’s largest energy firm, Ørsted, generates and distributes electricity and heat to businesses and households around the country. In 2018, 75% of Ørsted’s total power and heat generation was achieved through renewable energy sources(41% wind and 34% biomass), an 11 percentage points increase from 2017. The remaining 25% consisted of fossil fuel generation (17% coal and 8% natural gas).
The Danish government aims for 99% renewable power by 2025 and a complete phase-out of coalfired power generation by 2023. “The dynamic [between policy makers and industry] is key to developing a world run entirely on green energy,” said Magnus Hornø Gottlieb, Ørsted’s senior global public affairs advisor. “Industrial players are ready to invest, innovate and industrialise new, renewable solutions, but policy makers must provide the political ambition and a clear pipeline of upcoming projects to speed up the process as well.”
Transforming the power system requires firm commitments at national and also sub-national levels. Shannon Tangonan, corporate communications manager at Hawaiian Electric Companies (US), recommends starting with transparent stakeholder engagement. “Setting expectations for stakeholders, customers and regulators will become more challenging as the Hawaiian Electric Companies makes the transition to 100% renewables,” she says.
“The stakeholder engagement process had an important and positive influence on the formulation of the final strategic plan currently being implemented by the utility.” Under a decisive transformation plan, Hawaiian Electric Companies went from 9.5% renewable electricity generation in 2009 to over 25% in the past decade. Close collaboration between utilities and decision makers is essential.
Another US power utility, Aspen Electric, reached 100% renewables for its customers in the Colorado ski-resort town by 2015. “A major lesson was not to listen to those who were opposed to the idea and keep a long-term frame of reference when approaching these goals,” emphasises Phil Overeynder, retired utility director for Aspen Utilities. “Teamwork is very important,” he adds. “For example, Aspen Electric made MEAN (Municipal Energy Agency of Nebraska – the wholesale energy provider for Aspen) part of the team, and therefore developed positive collaboration and effective compromises.”
IRENA’s whitepaper, “Towards 100% Renewable Energy: Utilities in Transition” can be accessed by clicking here