The global economy is aiming to be climate-neutral by 2050. This is the ambitious goal set out in the Paris Climate Agreement. It can only be achieved by rapidly electrifying the global economy and a corresponding expansion of the electricity supply system. According to estimates by the International Energy Agency (IEA), by 2030 global electricity consumption will increase 25 percent compared to 2021. The primary drivers will be population growth and economic growth, particularly in emerging countries, increasing e-mobility or replacing fossil heating with efficient heating systems requiring electricity, such as heat pumps. It is clear that this additional energy demand will in future have to primarily come from renewable sources if CO2 emissions are to fall.
The decarbonisation of the global economy is impossible without sufficient green electricity. Equally important is the global expansion of grids and electricity storage systems, as otherwise sustainably produced electricity will not reach consumers at the right time or in the right quantity. There is still a great deal of potential for investment here.
Investments in power grids will need to double
Globally, current investment in grids is still far behind the required level needed to achieve climate neutrality by the date envisaged. The IEA elaborated various scenarios to model the required annual investment needed. According to the Stated Policies Scenario (STEPS), the annual investment must double from around USD 300 billion annually between 2012 and 2021 to around USD 600 billion annually in the coming decades. In the Announced Pledge Scenario (APS), a significantly higher investment will be needed throughout the 2040s. The Net Zero Emission Scenario (NZE) requires USD 900 billion in 2030.