Global Power

Monday 24 June 2024

The world is making a truly heroic effort to chase down the global electricity system with huge, new volumes of wind, solar, and storage. Growth of these clean technologies has been spectacular the past decade, and the storyline of good news keeps coming. Last year, for example, combined wind and solar generation grew by a total of 537 TWh which, frankly, is delightfully insane. If you are creating over 500 new TWh of clean power each year, even in a system that’s using 29925 TWh in total, then you are absolutely pursuing a transformation project.

The work of analysis, however, is to quantify the pace and scope of that transformation. Currently, the world has still not succeeded in catching up to the growth of global electricity using clean power alone. Unfortunately, this means that natural gas and coal continue to grow in global power. According to just released data in the EI Statistical Review, both fossil fuels are continuing to make new all time highs. We remain, therefore, in phase one of the energy transition. In phase one, we are locked into a fierce battle to cover 100% of total demand growth with clean sources. We are trying hard. But each year, we never quite get there.

Let’s illustrate with a partial view of the problem. In the chart below (interactive on the web), combined wind and solar generation has grown five-fold over the ten year period from 2013 to 2023, rising from 774 TWh in 2013 to 3967 TWh in 2023. But coal in global electricity continues advancing. Coal growth has absolutely been slowed way, way down by the growth of wind and solar around the world. But 2013, as it happens, was supposed to be the peak of coal consumption (not just in global electricity, but in total usage). Instead, coal slowly rose back up, matched its old high, and has now exceeded those previous highs. Last year, despite the amazing growth of combined wind and solar, total system growth advanced by an even larger amount, and thus the world had to call again on coal, which grew 188 TWh to a new all time high of 10513 TWh.

When the growth of clean power sources continues to make new all time highs, and fossil fuel power sources stop growing, then we will finally land in phase two of the energy transition. But phase two typically needs more time to unfold and languish before phase three can actually begin, with its outright declines. That’s why forecasters who insist on calling peak emissions in global power generation each year are making an easily avoidable error. Forecasters should generally wait until phase two settles in for a while, before stabbing away repeatedly, trying to call the top. (For those with financial market experience, you will recognize how often participants similarly lose themselves, trying to call tops).

We can also expand the battle raging in phase one to include all the other energy inputs to global power. Last year was a typical mixed bag, for example, with oil falling, coal and natural gas rising, hydro falling, and nuclear rising. This allows us to line up the collective growth in clean sources against the same growth in fossil fuel sources. The good news: total clean sources growth accounted for 70% of total system demand growth of 737 TWh last year. The bad news: fossil fuel growth accounted for the remainder, and we don’t break out of phase one until the remainder is not only gone for a year or two, but durably gone for good.

Here is the table version of how each energy source either grew or declined last year in global electricity. Doing the math, clean sources summed to a net 516.3 TWh of growth and fossil fuels summed to a net 220.35 TWh of growth.

Cold Eye Earth previewed the release of this new data in the last issue, pointing out that while popular discourse understandably follows the good news of clean energy growth, insufficient attention is paid to the system itself: how fast it’s growing, how much new demand we’re throwing at the global powergrid, and how challenging it can be to catch up to that growth and overtake it, solely with clean sources like wind and solar.

Last year for example, total global power grew by a healthy 2.5%—pretty close to the historical rate of the past ten years. But few if any expect this rate to obtain over the next ten years. Although AI data center growth occupies the center of the current discourse, almost to the point of mania, the big demand growth coming is collective, and goes far beyond data centers to electric vehicles, and electrification of buildings and industry. So again, if you are confident that fast growth of clean power sources will overtake system growth, at least reckon with the fact that in 2023, clean power sources grew heroically from an increasingly high base, and it still wasn’t enough to catch total system growth.

Why is that? Here’s a handy framing: a small thing growing at a fast rate will indeed eventually catch up to a large thing, growing at a much slower rate. But that large thing will continue to pump out massive volumes of growth in absolute terms each year, even at a low rate, because it’s so damn big already. This is how, while growing “at just” 2.5% each year, the total global power system advanced by 737 TWh last year. And, why its future growth rate matters at least as much if not more than the stellar growth of clean sources. Here is a chart of those possible futures:

Analysis by Cold Eye Earth suggests that 1. if total system growth is constrained to the rate of 3.00% or lower to the year 2030, and, 2. if combined wind and solar growth continues at the current pace, then fossil fuel growth could indeed be finally halted in global power as almost certainly by 2030. Other factors however include 1. whether global nuclear generation does in fact grow as agencies like the IEA predict, and 2. whether the volatility in global hydro generation settles down, and we get growth also from that energy source. Hydro power globally has been a drag on clean power growth recently, falling in 2021 and 2023.

If emissions from global power therefore are not likely to decline until next decade, then it doesn’t make much sense to be stabbing away now at trying to top-tick “peak emissions.” The global power sector is likely to sustain a peak level of oscillating emissions for several years, before any decline sets in. This is yet another way of understanding that calling for peak emissions has very low utility.