The global energy grid – a step towards the energy transition

Energy transition and supply
There is an obstacle to solar energy. The recent drop in prices has been generated by economies of scale rather than improvements in performance. Solar panels are value competitive as a limited source, their efficiency is in fact inversely related to the number of panels generating electricity. The reason is that they cannot be switched on and off, so in abundance of sunlight they overflow the market with electricity, reducing the price. In other words, the higher supply reduces the fare as demand remains constant. A solution could be batteries, which enable to store power when production is higher than the market’s request and to deploy it when the opposite scenario occurs. Yet, batteries today are not capable of stocking electricity for long periods of time, hence they cannot reduce gaps in variations of sunlight. The rise in popularity of electric vehicles could provide another solution. Indeed, they would represent both a way to store the excess energy production and to provide more sustainable transportation. However, the electrification of the automobile sector is a panacea. 

The global energy grids
In order to incorporate increasing amounts of renewables, global grids are necessary as they allow countries overproducing clean energy to share it with those who have higher demand. There are four driving factors to consider when evaluating this solution towards the energy transition: technological development, economic incentives, sustainable output and international cooperation.

UHVs: a technological development to foster the transition
To start with, electricity can be transported through Ultra-High-Velocity (UHV) power lines. The origin of UHV grids resides in High Voltage Direct Current (HVDC) lines, systems which use direct current for the transmission of power and which are less affected by energy dispersion than alternated current. The technological development, instead, enables UHVs to transmit gigawatts of energy across thousands of kilometres. Take, for example, China, where hydroelectric power produced in the Western regions of the country is transported to the Eastern coastline cities, thirsty in electricity. The development of UHV grids will, therefore, even allow to transport sustainable energy efficiently across different countries. In fact, the electricity transported in these lines is programmed to be green, sourced from sunlight, wind, water, and to be directed where demand is higher or consumed later in case of excess production.

UHVs: economic incentives
Secondly, UHVs will enable states to trade electricity. The result? Agreements can be established to sell or buy excess energy and providers could lower costs by shutting down inefficient power stations and importing power at lower prices. Another economic incentive is comparative advantage. As some countries have higher supply of non-renewable energy sources, other have more land or favourable climate conditions that support green energy springs. This means that the more excess sustainable electricity is produced, the more other nations can take advantage of sustainable electricity and the more profit is made by supplying countries. Higher profits will then drive higher investments and a faster transition. Furthermore, energy costs could drop due to economies of scale. Large power stations are able to produce energy at lower costs compared to small ones; thus, several countries could produce an average quantity of energy internally and import through UHVs the surplus demand from a constant, cheap international location. Limiting production to an average quantity would reduce costs as smaller less efficient plants could be closed.

UHVs: sustainable output and international cooperation
Thirdly, trading of renewable energy would help many countries respect the commitments of the Paris Agreement. Indeed, a shift towards greener energy transported via UHVs would make it possible to reduce the footprint of companies in the service and in the manufacturing sector, which usually require more electricity for production.
Finally, the last driver towards UHVs is politics. The possibility to build a system to transport clean energy throughout different countries is parallel to improving relations and gradual harmonization of standards. This could bring to more open economies in the long run and more stability in terms of sustainable energetic supply. Moreover, politics could respond to the growing public support for reducing the effects of climate change.

The role of supply in the transition
UHVs represent the supply chain of the energy transition. Further incentives from governments and change in consumer behaviours will be needed in order to shift the entire economic system to a green energy production. However, the construction of a global energy grid could be a critical incentive in the race to respecting the Paris Agreement.

Written by Riccardo Casarin

Suggested reading to develop on the topic: