Wired to save the planet: rethinking energy in an electrified world

“Electricity has long been central to modern life. But the pace of electrification has accelerated in recent years. And to meet our net-zero target, it is crucial to decarbonise the power sector. Ahead of an event at the LSE Festival on 16 June Min-kyeong (Min) Cha asks how we can keep the lights on, cut emissions and keep energy affordable, all at the same time? Our lives run on electricity. We use it to check the time on our phones, to cook, to heat our homes and to do our jobs. Yet the power sector remains one of the significant sources of greenhouse gas emissions. The electricity supply sector is responsible for 10 percent of all such emissions in Britain and 25 percent in America . To meet our net-zero target, it is therefore crucial to decarbonise the power sector. The drive toward cleaner power, and renewable energy in particular, is coming from several directions. Governments have led the charge through a combination of carrots and sticks. On the “carrots” side, policies like the feed-in tariff, adopted in various forms across different countries, guarantee a fixed electricity tariff for renewable generators, thereby providing investment security. On the “sticks” side, renewable portfolio standards, also widely adopted, require electricity firms to source a minimum share of their generation from clean energy. The EU Emissions Trading System adds another layer by capping carbon emissions from electricity and heat generation plants, thereby aiming to reduce emissions from the sector. Utility companies that generate and distribute electricity to end users are also key drivers of this transition, not only because they are compelled to do so. Renewable energy sources have become cost-competitive , prompting utilities companies to invest in them. Households are active participants too. Many consumers now sign up for green tariffs, choosing to source their electricity from green energy and, in some cases, paying a small premium to support renewable investment. Others are installing rooftop solar panels and, where net metering policies allow, selling excess electricity back to the grid. The intermittency problem and beyond Progress on decarbonisation has been real. But several fundamental challenges remain. The most discussed is intermittency. Renewable sources are variable by nature. Solar panels need sunshine and wind turbines need wind and, unlike traditional coal or gas plants, neither can simply be switched on when demand spikes. Grid operators must balance supply and demand in real time. And variable generation makes that task considerably harder. A second is infrastructure. Renewables tend to be built where natural resources are abundant and often dispersed across different regions. Getting that power delivered where it is needed requires significant upgrades to transmission networks , many of which were designed around large, centralised fossil fuel plants. Thirdly, the clean energy transition is not free from supply chain vulnerabilities . Solar panels, wind turbines and energy storage all depend on critical minerals whose extraction is geographically concentrated. For businesses, it introduces procurement risk, price volatility and regulatory scrutiny around responsible sourcing. Soaring demand Electricity has long been central to modern life. But the pace of electrification has accelerated in recent years. Electric vehicles are replacing internal combustion engine cars, electric heat pumps are displacing gas boilers and industrial processes are increasingly being electrified. The aim of the electrification is moving away from dirtier sources and a way to reduce emissions, but new technologies increase electricity demand, making the decarbonisation challenge more difficult. Then there is artificial intelligence (AI). Data centres have proliferated around the world and their energy and water consumption have been a focus of much attention . While efficiency gains have so far kept their electricity consumption manageable, the next generation of AI infrastructure is a different proposition. Hyperscale data centres running large language models and training workloads are significantly more power-dense than their predecessors. Data center-driven electricity demand is expected to grow accordingly . What this means for business We need to decarbonise our power system. But we also expect ever-increasing electricity demand. This challenge requires all stakeholders – including businesses – to engage. Electricity utilities face the most direct challenge. Electricity generators must plan capacity expansions that are both clean and sufficient to meet surging demand, while operating under the pressure of affordable electricity for end-users. They also offer new products and tariffs, such as those for electric vehicles, to help customers participate in the transition. At the same time, the traditional model of a centralised electricity system should be reconsidered, since a decarbonised, high-demand grid will be more distributed, more dynamic and more complex to manage. For businesses in other sectors, the stakes are also rising. Energy costs and reliability, crucial components of business operations, are increasingly uncertain. Initiatives like RE100 , through which companies commit to sourcing 100 per cent renewable electricity, reflect growing recognition that corporate electricity procurement is both part of environmental, social, and governance obligations and a strategic issue. Companies that engage proactively with their energy supply chains, invest in on-site generation or enter long-term power purchase agreements with renewable developers are likely to be better prepared for the challenge. On 16 June Min Cha will take part in “Wired to save the planet: rethinking energy in an electrified world” , a public event being held as part of the LSE Festival: How to save the planet. Register to attend in person or here to attend online . This article gives the views of the author, not the position of LSE Business Review or the London School of Economics. You are agreeing with our comment policy when you leave a comment. Image credit: supamotion.co provided by Shutterstock. The post Wired to save the planet: rethinking energy in an electrified world first appeared on LSE Business Review .

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