We are in the midst of a global energy crisis. But in our frantic efforts to fix the situation in the short term with fossil fuels, we can’t lose track of the long-term solution: a full energy transition in line with the United Nations sustainable development goals (Goal 7: Affordable and Clean Energy).

In fact, the current energy crisis might help accelerate the drastic changes needed to make the transition to clean energy. In this article, we’ll examine necessary policy measures, the available pathways to fully renewable energy systems, a possible road map to net zero, and the progress the global community has made so far.

Necessary policy measures

The International Energy Agency (IEA) argues in its World Energy Outlook 2022 that “faster clean energy transitions would have helped to moderate the impact of the crisis, and they represent the best way out of it.”

This is an important point for framing any discussion about potential economic barriers to wide-scale implementation of renewable energies.

The IEA report underscores that the current energy crisis promises to be a turning point for the transition to renewables based on stated policies and increased investment into clean energy by governments worldwide. Apart from the clear advantages for the environment and energy security, the economic case for the energy transition is getting stronger. According to the IEA, higher shares of renewable energy correlate with lower energy electricity prices.

IEA’s Stated Policies Scenario (STEPS) predicts government investments in renewables will grow to more than $2 trillion by 2030, approximately 50% higher than today, according to the report. This scenario also foresees a peak or plateau for global fossil fuel demand within the next few years, which would be a singular turning point.

The current energy crisis might help accelerate the drastic changes needed to make the transition to clean energy.

Pathways to fully renewable energy systems

A combination of solar, wind, and limited nuclear power will be the primary drivers of the renewable energy transition.

However, solar and wind energy fluctuate and are not universally available. Energy storage technologies like power-to-X (P2X) are a central component of fully renewable energy systems. P2X enables the production of various fuels, like green hydrogen, which can be transported to locations where renewable energy sources aren’t readily available. With this option for long-term storage and flexibility, strengthening the networking of electricity, heat, and mobility sectors is also possible.

The P2X Principle

Power based on renewable energy (P) is converted into (2) another energy carrier (X) for long-term storage, such as power-to-gas (P2G).

An analysis by McKinsey and Company and the Hydrogen Council notes that the race for green hydrogen has begun, even though production still needs to grow and supply chains have yet to be established. The report counts 680 large-scale project proposals worth a combined $240 billion, 10% of which have received a final investment decision.

A road map to net zero

There is still a long way to go to reach our net-zero ambitions, as a closer look at the Electricity Maps app reveals.

It’s all the more refreshing and inspiring, then, to read a recent study from nearly 20 researchers and scientists around the world who developed a possible road map to net zero emissions by 2050.

The route they outline goes far beyond the existing energy scenarios of the Intergovernmental Panel on Climate Change reports. The interdisciplinary research team takes into consideration opportunities and challenges connected to grid congestion, energy storage, sector coupling, electrification of transport and industry by using P2X, and approaches to removing carbon dioxide from the atmosphere. Their conclusion is that a global 100% renewable energy system by 2050 is technically feasible and economically possible.

Progress on the energy transition

How far have we come on this journey?

Renewable energies accounted for more than 80% of all new electricity capacity added in 2020, according to Tracking SDG7: The Energy Progress Report 2022. The report also states that IEA and International Renewable Energy Agency (IRENA) scenarios show that solar photovoltaic (PV) and wind will contribute the most growth in electricity production by 2030.

To show the opportunities of the transition pathway for renewables, let’s look at the European energy market. According to a status quo report of energy think tanks E3G and Ember, wind and solar power accounted for 24% of the European Union’s energy mix from March through September 2022. Their contribution mitigated the effects of energy supply issues caused by unavailability of nuclear capacity and reduction in hydroelectricity generation during a period of drought. The year-on-year increase of 39 TWh, or 13%, comes at a time when the EU is stepping up its measures to implement the REPower EU proposal to reduce its dependency on Russian gas.

Aled Jones, director of the Global Sustainability Institute at Anglia Ruskin University, confirms that the tipping point for the shift to solar and wind as dominant technologies has already been reached in Europe. While the energy transition will cause job losses for roughly 3 million people, more than 12 million new jobs will be created as a result of this change by 2030. This is an immense opportunity.

Innovation drivers

Business leaders should focus on the following three innovation areas to significantly accelerate the energy transition.

1. Business networks

By leveraging business networks, key players and organizations can make full use of existing infrastructure and the latest technology innovations to accelerate their energy transition efforts.

Use case: CEO Alliance

Green hydrogen can play a significant role in creating a carbon-neutral future for energy-intensive industries such as building materials, chemicals, glass, nonferrous metals, paper, and steel. Leveraging business networks and organizations can help create an industrial-scale green hydrogen value chain. One example for cross-industry collaboration in this matter is the CEO Alliance, an action tank of 14 top European companies. This industry business network aims to build up renewable energy production in Southern Europe to supply green hydrogen and ammonia to industrial hubs in Central and Northern Europe.

2. Decentralized energy systems

Future energy systems will be increasingly decentralized. Today's consumers are future producers, so-called prosumers, who own rooftop solar panels, battery storage, and electric vehicle chargers. The goal is to make the interaction between energy supplier, grid, and prosumer seamless.

Use case: Integrating prosumers into the grid

Solar energy is an essential part of the energy transition. Integrating prosumers into the grid will make it possible to sell surplus solar energy to any local consumer, helping to decrease regional dependence on imported energy carriers. To do this, all stakeholders require digital systems and technologies that help collect data from sensors, analyze consumption profiles, and predict, simulate, and balance energy grids. Utility providers profit by integrating prosumers into the grid, because they can offer their smart metering hardware to new customers. An example for a community-centric software approach is Exnaton’s energy community solution, which enables utility companies to track all relevant energy data and easily bill these energy exchanges.

3. Digitalization

Digitalization is central to creating future intelligent and resilient energy systems. The energy transition will go hand in hand with digital transformation. In the future, energy service providers and information and communications technology companies will offer a range of services that go well beyond generating, transmitting, and distributing energy. We’ll see new business models, like energy as a service. IRENA identifies these additional services offerings in its 2020 innovation landscape brief as energy advice, energy assets, and energy management.

Use case: Large real estate and infrastructure owners

Energy management affects more than utility providers, including large real estate and infrastructure like hotels, retail stores, and warehouses; airports; and train stations. Digitalization can help those stakeholders address challenges with energy efficiency and financial resilience. To better assess financial risks in real time, real estate and infrastructure owners must be able to forecast energy demand and simulate results from fluctuating energy prices. Future digital products and services will support these stakeholders’ net-zero goals by tracking energy assets and their overall energy mix. In addition, they can manage their green purchase agreements and calculate greenhouse gas emissions.

From the tenant’s point of view, automated billing based on real consumption can provide an incentive to reduce energy use.

These are just some approaches to clean energy. There are many that will help us get to net zero. All will require political interventions by international organizations, technological innovation, regional initiatives, action from public and private companies, and a full commitment from each one of us.

Business leaders must pursue innovative solutions to accelerate the transition to net zero. The need to use business networks and understand how decentralized energy systems and digitalization might be vital for resilient and sustainable intelligent enterprises.

Regardless of which routes we might take, they will only be viable if we pursue them together – and if we act now. Especially when faced with current energy crises, there is no time to waste in our collective efforts to speed up the transition to renewable energy systems.

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