By Seydou Kane
There is a rapidly growing awareness of the need to decarbonise energy supply, and we have recently seen dramatic shifts start to occur. As governments increasingly design policy targeting net zero carbon emissions, industry has been responding in kind.
We can now clearly see a path towards eliminating carbon from the electric power supply, as evidenced by global electricity generation emissions falling by 2% in 2019 – the biggest decrease for three decades. In South Africa, power utility Eskom has said that it has plans to reduce air pollution in high priority areas, including installing new technology and decommissioning power stations in time.
The upshot of initiatives like reducing coal dependence and expanding renewable capacity is that many daily energy requirements become less carbon intensive without requiring further action from businesses and individuals. In other words, decarbonising the supply side of the power equation also makes a significant part of the demand side greener.
It is therefore unsurprising that so much of the conversation around decarbonisation focuses on changing electricity generation to renewable sources. However, current patterns of electrical power energy pose challenges.
We still rely mainly on fossil fuels to power most transport, from cars to planes to ships; to heat water and air in buildings; and to run energy intensive industrial processes such as those used for manufacturing steel and plastics.
For these sectors to ride on the coattails of the progress being made in electric power generation, we need to change the demand side and find ways to fulfil their energy needs through the electric grid.
This process is known as sector coupling, and it works in two main ways. For many applications such as domestic heating, electric devices can be employed and leverage the clean electricity from the grid. Others can be indirectly coupled, by operating haulage services with electric vehicles that charge from the grid, for instance, or even using renewable energy to produce hydrogen to use as a clean fuel source.
A recent report on sector coupling produced by BloombergNEF, in partnership with Eaton and Statkraft, investigated the potential of sector coupling over the next thirty years and found that, in a typical Northern European country, coupling could reduce emissions across the transport, buildings, industry and power sectors by 68%.
The consequences of such a shift go well beyond this impressive top-line statistic. Adding significantly more economic demand for electricity means that we will have to add substantially more emissions-free generation capacity than the fossil-fuel powered production we are removing. BloombergNEF’s analysis suggests that, if we pursue deep sector coupling, total demand will rise 65% by 2050, nearly doubling the amount of wind and solar build we would otherwise need.
The new demand profile will also dramatically alter when and where power is needed. For example, in the future when a majority of passenger cars are battery electric vehicles, millions of individuals all plugging in and charging their cars when they get home for the day would lead to a spike in demand, which the grid could struggle to fulfil.
Likewise, if technologies such as electric heat pumps are adopted unevenly, grid operators may find it difficult to predict where the network requires strengthening far enough ahead in time to cope with the shift.
These changing patterns of power demand will go hand-in-hand with a radically different supply dynamic from an ecosystem led by renewable resources such as solar and wind. Being variable by their nature, these sources would require a more flexible system even without sector coupling.
Transforming both supply and demand together requires that we introduce new types of flexibility into the electric grid using energy storage systems and active UPS systems that can help stabilise the grid.
In such an environment, battery electric vehicles would not just take from the grid. They could also feed power back into the grid at times of peak demand. Dynamic pricing will be used to manage all these diverse resources to keep demand in line with available supply. Of course, initiatives like this will only succeed in the context of clear policy direction.
To maximise the benefits of sector coupling and maintain the reliability and cost we have come to expect, it is vital that policy makers plan well in advance for the energy transition.
Governments and businesses need to consider smart measures such as flexible tariffs that can flatten peak demand spikes, investments in renewable energy solutions including microgrids to improve the operation and stability of the grid and broadening their understanding of power-to-gas to enable hydrogen to have a full place in the energy ecosystem. Without such thinking, the very achievable promise of a 68% carbon reduction could slip through our fingers.
At this point, the decarbonisation of power generation looks unstoppable: renewable energy is rapidly reaching a point where it offers a better return on investment than traditional options, and governments’ support for emissions reduction is still growing. In order to ensure that this rising tide lifts all boats – including those used for international shipping – work on sector coupling needs to start now.
Seydou Kane is the Managing Director of Eaton Africa