“Confronting Challenges in the Energy Transition”

The shift towards renewable energy, essential for the ‘Energy Transition’, has significantly accelerated in the last decade as nations strive to reduce carbon emissions and combat climate change. Despite the clear advantages of renewables, substantial obstacles continue to impede their widespread adoption. This article delves into the principal challenges that restrict the broader embrace of these sustainable energy sources. Moreover, it discusses viable strategies to surmount these hurdles, aiming to hasten our journey towards a more sustainable and cleaner energy future.

Intermittent Nature

Intermittent renewable energy sources (IRES) are energy sources that are not dispatchable due to their fluctuating nature, such as wind and solar power. In contrast, controllable renewable energy sources, such as hydropower and biomass, or constant sources, such as geothermal power. The use of insignificant amounts of intermittent power has a negligible effect on grid operations. Using larger amounts of intermittent power may require upgrades or even redesigning the grid infrastructure. The main option to integrate large shares of renewable energy into the grid is using energy storage. Also, it includes the improved interconnection between different variable sources to smooth out supply such as hydropower. 

The penetration of intermittent renewables in most power grids is low. In 2021, Wind power share in global electricity generation was 7% while solar power share was 4%. However, Denmark, Luxembourg and Uruguay generated over 40% of their electricity demand in same year from wind and solar. Characteristics of variable renewables include their unpredictability, variability, and low running costs. These challenging aspects force grid operators to ensure matching supply and demand. Solutions include energy storage, demand response, availability of overcapacity and sector coupling. Smaller isolated grids may be less tolerant to high levels of penetration intermittent renewables.

High Upfront Cost

Many clean energy projects, especially renewable energy generation and larger energy efficiency projects, require significant capital investments. The installation cost of largescale solar power system is around $2,000/kW. Likewise, the installation cost of a small-scale residential system is around $3,700/kW while for a new gas-fired plant is $1,000/kW only. Project developers and residential and commercial end users may not have sufficient cash on hand to fund the initial installation costs of a clean energy project. This may include project assessment and feasibility, equipment purchases, and project construction. Therefore, financing in the form of a bond, loan, lease or power purchase agreement may be essential to amortize the costs over multiple years.

Future of Infrastructure is Uncertain

In recent years, off-grid technologies leveraging renewable energy have gained significant prominence for their capacity to conveniently electrify remote communities. These technologies are implemented in the form of mini-grids, which are scaled-down versions of larger transmission grids serving dozens or hundreds of households, or as standalone systems designed for individual homes or small groups. However, the expansion of the main power grid poses a challenge to these off-grid solutions, as customers often opt for the reliability and perceived benefits of the main grid. This shift can undermine the viability and expectations of mini-grid developers and sellers of standalone systems, presenting a critical hurdle in the ‘Energy Transition’ towards sustainable energy solutions.

While investing in fossil fuel-based energy has become riskier, there are also unique investment risks with small-scale renewable systems. In developing countries, the infrastructure in many sites relying on off-grid or mini-grid electricity faces the risk of becoming a “stranded asset” — abandoned infrastructure that no longer holds value — which may work against efforts to limit climate change.

In addition, another issue is that the existing energy infrastructure is built for fossil fuel and nuclear power plants. This existing infrastructure needs urgent reform as it is not capable of handling substantial amounts of renewable energy.

Must have Energy Storage

Renewable energy sources often produce electricity at specific times of the day, which may not align with peak demand hours. This intermittency means that renewable energy cannot provide a constant, on-demand power source around the clock. To effectively bridge this gap and support the ‘Energy Transition’, various energy storage methods are essential. These storage solutions are key to balancing supply and demand, ensuring that energy generated from renewable sources can be stored and used when it is most needed.

• Lithium-ion batteries. Best short-term solution; disadvantages – expensive, shorter service life, higher maintenance requirement and risk of fire.
• Pumped hydroelectric storage. During periods of off-peak electricity demand, pumped hydroelectric storage facilities store energy in the form of water in an upper reservoir, pumped from another reservoir at a lower elevation. This method is considered as the cheapest energy storage method.
• Pumped thermal electricity storage. Pumped thermal electricity storage works by turning electricity into heat using a large-scale heat pump. This heat is then stored in a hot material, such as water or gravel, inside an insulated tank. When needed, the heat is then turned back into electricity using a heat engine.
• Compressed air energy storage. Compressed air energy storage (CAES) is a way to store energy generated at one time for use at another time. At utility scale, energy generated during periods of low energy demand (off-peak) can be released to meet higher demand (peak load) periods.
• Hydrogen storage. While an excellent medium for renewable energy storage, hydrogen itself is hard to store. Hydrogen has enormous potential and is a leading option for long-term energy storage in future. Most importantly, hydrogen can replace fossil fuels for all those purposes without emitting carbon dioxide.

Monopoly of Non-Renewable Energy

Despite various incentives and rebate programs aimed at promoting renewable energy, particularly solar, the fossil fuel industry continues to receive substantial backing from governments. This support significantly impedes the adoption of renewable energy solutions, which are crucial for managing the impacts of climate change. Addressing these challenges is vital for accelerating the ‘Energy Transition’ towards more sustainable and cleaner energy sources.

Lack of Policies and Regulations

The absence of supportive policies and regulations is a significant barrier to the widespread adoption of renewable energy technologies. For the renewable energy sector to flourish and attract more private sector investment, it requires a framework of clear and robust policies and legal guidelines. Governments need to establish and enforce policies that bolster the renewable energy market. Furthermore, integrating renewable energy into the existing power grids poses challenges that demand enhanced coordination among utilities, grid operators, and regulatory bodies. Obstacles such as corporate lobbying, political pressure, and a deep-rooted reliance on fossil fuels continue to hinder the shift towards renewable energy. Despite these hurdles, advancing the ‘Energy Transition’ through the adoption of clean, renewable energy represents a critical stride towards achieving a more sustainable future.

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