Report warns renewables, EV surge could ‘strain the grid’

Source: By David Iaconangelo, E&E News reporter • Posted: Sunday, February 28, 2021

The world needs to double investments in grid upgrades to accommodate a surge of low-carbon energy in coming decades, or risk bottlenecks that could hinder the transition away from fossil fuels, according to a new analysis.

The report from clean energy market researcher BloombergNEF this week found that global spending on the grid will have to rise from around $235 billion in 2020 to $636 billion by 2050 to keep pace with an influx of low-carbon power. In the U.S., the estimate was similar — from $49 billion in 2020 to $123 billion per year by 2050.

The findings were based on an assumption that wind, solar and hydroelectric power sources would provide well over half of the grid’s electricity, both in the U.S. and worldwide, by midcentury — even if the main driver is favorable economic trends rather than policy mandates. President Biden has called for decarbonizing the power grid by 2035, although that would not exclusively be from renewable power.

According to BNEF, wind and solar plants by midcentury will be smaller, more numerous and more likely to send their power straight into the low-voltage distribution side of the grid, rather than into high-voltage transmission lines. The median size of a power plant is likely to shrink sixfold by 2050, BNEF said.

“You start to need an architectural change in the way the grid looks,” said Sanjeet Sanghera, a grid analyst at BNEF and lead author of the outlook.

When paired with new nodes of demand from electrified cars and buildings, all those new sources of renewable power might be too much for grid managers to handle and “strain the grid,” unless provisions are made for upgrades, the analysis found.

That could spell bad news for clean energy targets and decarbonization goals, said Sanghera.

“If you don’t get ahead of it, you can delay your ability to meet some of these objectives,” he said.

“These [grid] projects can take very long, especially on the transmission side — five to 10 years is not uncommon. If we lose track of the fact that the network plays an important part of making those happen, there’s ambitious objectives that we think are at risk.”

In the U.S., over half of the required investments through 2050 would consist of little more than replacing aging grid assets, BNEF’s team found.

Upgrades could take place on regional grids or as part of a nationwide expansion that connects the heartland’s wind and solar plants to eastern and western population centers — though federal researchers at the National Renewable Energy Laboratory have found that the second type of upgrade would yield cost savings.

The largest portion of the upgrades is likely to become necessary after 2040, although Biden’s 2035 goal could shift that schedule forward, BNEF found.

Analysts also said that investment levels in the U.S. are likely to be “volatile,” partly because some utilities may decide to delay upgrades and accept a higher risk of blackouts and asset failures.

“This could decrease overall investment in some years but may trigger investment” in others “due to overcompensation,” the report said.

About 14% of all necessary global investment in BNEF’s 2050 projection would be directed toward upgrades that respond to the influx of electric cars, heat and cooling.

“I wouldn’t say one of these sources is more of a problem than the other,” said Sanghera. But the challenge of meeting rising demand, on a reshaped grid, is new.

“The network can either handle it or not. If you can’t handle it, generally, you can’t continue to grow [renewable] generation,” he said.