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1、1FLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYFLEXIBILITY&STORAGEGRIDSPOLICYECONOMICS&MODELLINGAI ELECTRICITYCCS&HYDROGENELECTRICITY&GAS Electricity,renewables generation,and grids through to 2050ENERGY TRANSITION OUTLOOK NEW POWER SYSTEMSFOREWORDElectrification,a

2、nd more specifically,decarbonized electricity,is pivotal to the ongoing energy transition and central to the fight against climate change.It is also vital to the wellbeing of humanity:we are entering an era where electricity will bring clean,efficient,and modern energy to almost every individual on

3、this planet.We forecast that wind and solar are likely to supply 50%of the worlds electricity by 2040.By mid-century,that share will rise to almost 70%.By then the amount of electricity consumed globally will have doubled compared with todays use.These are some of the central findings in DNVs Energy

4、 Transition Outlook,now in its seventh edition.Behind that forecast is a comprehensive system dynamics model of the energy supply,use,and trade within and between 10 world regions through to 2050.The model is designed to capture dynamics that occur on an annual scale or longer.However,as you will di

5、scover in this report,the power market aspect of our forecast addresses supply and demand dynamics on an hourly basis.For example,we are able to show you what goes on with the new power system in the UK in Remi EriksenGroup President and CEO DNV2050 during a hypothetical two-week period of adverse w

6、eather conditions and no wind power.We expect to see an average 60%rise in GDP per capita between now and the middle of this century.As households become more prosperous,they will increasingly electrify their end uses.In doing so,they will take advantage of the large efficiencies that electricity br

7、ings for example to mobility and heating and in general we find that households will be spending less and less of their income on their energy needs.At a macro level,the world will be spending roughly half as much on energy as a percentage of global GDP in 2050 than it does at present.Getting to tha

8、t green prize is challenging and requires investment and bold policy underpinned by a sound understanding of energy technology.New market models must be implemented that ensure demand follows supply and not the other way around,which is the case at present.These are themes we explore in depth in thi

9、s report.Variable renewables need to be paired with adequate storage.Changing patterns of demand,and especially new sources of power demand in transport,heat pumps,and electrolysis-based hydrogen must be anticipated and responded to.The power grid must more than double in capacity,and to the extent

10、that new build trans-mission and distribution will take time,grid enhancing technologies(GETs)should be implemented to get the most out of the existing grid.This is one of a number of areas where investment in digitalization is critical across new power systems,including,as we show,investment in and

11、 deployment of artificial intelligence.Our forecast is not insensitive to the present difficulties facing the renewables industry,particularly wind power,caused by tight supply chains and inflation.But these immediate pressures will only have a small dampening effect on the renewable share in the po

12、wer mix by 2050.The main lines of development are clear.The rate at which the new power reality is embraced by countries will have a profound influence on the competitiveness of their economies.Clearly,though,it is not just economic efficiency which is at stake.The successful electrification of our

13、energy system is the single most important step we can take in bringing the world closer to the ambitions of the Paris Agreement.I hope this report inspires action.As ever,I look forward to your feedback.New power systems systems where most of the electricity is generated by solar and wind are poise

14、d to become the new energy reality for almost every country in the next three decades.About this reportThis report expands upon our electricity forecast Chapter 2 of our Energy Transition Outlook,2023.Experts in DNVs Energy Systems unit have contributed additional material to this report in the fiel

15、ds of demand modelling,grid operations,digitalization and AI,and new market models and funding mechanisms for flexibility.In this report we deepen coverage in particular of:Demand response and associated technical and financial considerations Modelling power systems by the hour to gauge the impact o

16、f adverse weather,including a case covering a windless fortnight in the UK power market Grid enhancing technologies The impact of digitalization,with a focus on resistance to change,cyber security,and AI The sensitivity of the flexibility market to heightened participation of the global EV fleet in

17、providing vehicle-to-grid services,and to varying assumptions about the average duration of utility-scale Li-ion battery storage Market designs to promote flexibility and long-term investment in decarbonization of power2DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIG

18、ITALIZATIONELECTRICITYFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYCONTENTS!Click on the section you want to explore Foreword 2 Highlights 4 Executive summary 51 Electricity demand and supply 111.1 Electricity demand 121.2 Securing electricity supply 19 Regional o

19、verview 21 Nuclear and new power systems 23 Hydrogen 252 Policy and affordability 262.1 Power Markets 272.2 Cost trajectories 292.3 Near-term challenges 312.4 Long-term challenges 342.5 Modelling power hour by hour 36 The impact of prolonged wind drought 383 Digitalization and AI 403.1 Artificial in

20、telligence in new power systems 41 Examples of AI at work in the new power system value chain 433.2 Building trustworthy industrial AI solutions 454 Grids 484.1 Grid forecast 494.2 Congestion 53 Resilience 56 Stability 564.3 Digitalized grid operations 575 Flexibility and storage 615.1 Flexibility 6

21、2 Green hydrogen 655.2 Electricity storage 66 Price arbitrage and Li-ion battery storage 686 Policy,flexibility,and affordability 706.1 Promoting and facilitating flexibility 716.2 Investments for decarbonized electrification 73 Specific issues in non-liberalized markets 756.3 Solving the energy tri

22、lemma 76References 79The project team 81100110100110100010101101001110010111011001100110100101010100001001111011100110100110100010101101001110010110AIGridSources of flexibilitySolar&windTrilemmaDemand responseProsumerSources of demandUsual consumptionPeak clippingValley fillingOptimized consumptionS

23、USTAINABILITYAFFORDABILITYSECURITYPOLICYHIGHLIGHTS Growing and greening of electricity Global electricity demand will double by 2050 By 2040,50%of the worlds electricity will be supplied by solar and wind;by 2050 that share will rise to 70%Electricity will be almost 90%decarbonized by 2050 New deman

24、d patterns and flexibility The need for short-term flexibility will double by 2050 Li-ion batteries will dominate flexibility needs worldwide by 2050,providing three times more storage than hydropower&pumped storage Enabling demand to follow supply will be a critical aspect of new power systems Inno

25、vative new market designs are needed to spur the rapid development of flexibility markets,demand response,and long-term investment in the decarbonization of power Robust cyber security and building trust into AI-enabled systems are critical enablers of digitalization The grid is key to the success o

26、f the new power system Globally,grid capacity will grow by a factor of 2.5,with annual expenditure on grids more than doubling through to 2050,reaching USD 970bn Grid enhancing technologies(GETs)in combination can expand existing grid capacity by between 10%and 50%in the short to medium term while n

27、ew wire buildout accelerates GETs and new connections are contingent on a major digitalization upgrade The new power system will be affordable for society and for individuals Despite higher grid investment,grid charges passed on to consumers will remain stable or decline in most world regions Unit c

28、osts of electricity for consumers are likely to remain stable;electrification will lower overall household energy expenditure New power systems are likely to deliver a substantial green dividend not only for households,but also for cities and nations,strengthening the case for a deeper and faster tr

29、ansition12344DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYEXECUTIVE SUMMARYgenerated was 13%.By 2040,those two sources will be responsible for 50%of electricity generation,moving rapidly to 70%by 2050.In 2050,82%of all electricity will come fr

30、om renewable sources i.e.hydropower,geothermal,and biomass in addition to solar and wind.Nuclear will constitute just 6%of electricity generation by 2050(falling from its present 9%share),despite a 41%growth in absolute terms from today,an indication of just how vast the coming changes to the power

31、mix will be.That leaves just 12%of the worlds electricity coming from fossil sources by 2050 a remarkable reversal for coal,gas and oil,but still at distinct odds with a net-zero emission trajectory.These changes will play out differently across the worlds regions.A snapshot of regional power mixes

32、in 2040 illustrates this(Table 1).By 2050,all regions are well above the 50%mark for solar and wind in their power mixes,with just North East Eurasia still heavily reliant on fossil-fired generation.Figure 2 illustrates the phenomenon of growing and greening electricity in the three largest regional

33、 electricity markets:China,North America,and Europe.This remarkable expansion and decarbonization of power is driven both by policy and dramatic and ongoing reductions in the costs of wind and solar generation.The levelized cost of energy(LCOE)for solar generation is expected to halve between now an

34、d 2050,making solar the cheapest source of elec-tricity at some USD 21/MWh.The LCOEs for wind are expected to drop by 44%(onshore),36%(offshore fixed),and 75%(offshore floating)to 2050.Just 12%of electricity will come from fossil sources in 2050 a remarkable reversal,but a result at odds with a net-

35、zero trajectory.Rapid change:growing and greeningIn the next 25 years,global electricity demand is set to double.In 2022,electricity represented 20%of world final energy use.By mid-century this will be 37%.At the same time,electricity will be greening(Figure 1).Last year,the share of wind and solar

36、in electricity TABLE 1Wind and solar share of regional and global power mixesNorth AmericaLatin AmericaEuropeSub-Saharan AfricaMiddle East and North AfricaNorth East EurasiaGreater China Indian Sub-continentSouth East AsiaOECD PacificWorldShare wind and solar 202316%16%24%5%6%2%13%7%6%13%16%Share wi

37、nd and solar 205080%62%76%56%56%30%75%66%62%67%69%Year share crosses 50%20372039203320452045after 2050204020402045203620405DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYAs households steadily electrify around the world,electricity takes an incr

38、easingly larger share in the buildings energy mix,up from 34%in 2022 to 52%in 2050.Electricity use in manufacturing will almost double in absolute terms with particularly strong growth in the industrial heat pump market for the production of manufactured goods and a rise in the share of electric arc

39、 furnaces in steelmaking from 26%now to 49%by 2050.New sources of demandGlobal electricity demand will surge from 33 PWh to 68 PWh in 2050.This growth is largely driven by the burgeoning demand for existing applications as well as whole new categories of demand.The electrification of transport,three

40、 quarters of the worlds vehicle fleet will be electric in 2050,adds 7 PWh as new demand.Electrolysers connected to the grid will use 3.4 PWh/yr(Figure 3)to deliver green hydrogen and e-fuels.As the climate warms,greatly expanded demand for space cooling will add an additional 7.5 PWh/yr of demand by

41、 mid-century.New patterns of demandEnabling demand to follow the supply of variable renewable electricity generation will be an essential element in the future electricity system.This involves a reversal of the established paradigm that supply should always be aligned with demand.While taking into a

42、ccount the limitations of a given network,demand can be shifted to absorb spikes or troughs in renewable generation in the absence of storage or as an alternative to expensive storage options.The potential for demand response is very large.However,the financial gain for consumers should outweigh the

43、 effort,which is not always clear in the present power system.Automated activation of demand response by means of smart metering(with options for override decisions)along with advanced tariff schemes are prerequisites for effective demand response to scale among both residential and industrial consu

44、mers.Demand response is likely to lead to new patterns of synchronous behaviour,which together with EVs and the electrification of heat,will make demand more correlated.This introduces challenges for electricity suppliers to adequately forecast the necessary production levels.However,the wider adopt

45、ion of smart meters and other monitoring devices will make more data available for ever more sophisticated data-driven models to cope with shifting demand patterns.6DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYNew markets for flexibility and s

46、torageAs the share of variable renewable energy sources(VRES)grows in the energy mix,a major new market for flexibility of both supply and demand will emerge.We estimate that with the 8-fold growth in VRES,the global need for short-term flexibility will almost double(Figure 4).Flexibility markets wi

47、ll vary across geographies,depending on factors like renewables penetration and the availability of interconnectors within and between countries.Li-ion batteries emerge as the primary source of flexibility worldwide,and we anticipate a surge in their capacity to 1.2 TWh by 2030,further expanding to

48、27 TWh by 2050.These batteries will either be integrated with renewables or operate as standalone systems.The continued viability of thermal plants will increasingly be determined by their ability to operate with(rather than instead of)renewable generation.The ability to ramp power production up and

49、 down rapidly will become critical,as will operating costs during extended periods where cheap renewable power predominates.EVs will play an increasingly prominent role in the flexibility market.As smart metering schemes take hold along with incentives for vehicle-to-grid charging apparatus,we model

50、 that 10%of EVs corresponding to about 15 TWh by 2050 will be available at any given time to provide flexibility to the grid.By 2030,costs for utility-scale Li-ion battery systems are projected to dip below USD 200/kWh,further reducing to approximately USD 140/kWh by 2050.As costs reduce,the average

51、 storage duration of Li-ion battery systems will increase.However,require-ments for longer duration storage up to 24-hours will likely be met by different battery chemistries,with vanadium flow batteries showing promising techno-economic prospects.Pumped hydropower will continue to play a prominent

52、role in long duration storage,however it is limited by geographical constraints.Finally,the production of green hydrogen with electrolysers powered by surplus renewable power will add an important additional element of flexibility.FIGURE 4Unlocking the grid“No transition without transmission”was rep

53、eated mantra-like at COP28 in the United Arab Emirates(UAE).We forecast that global grid,transmission,and distribution combined will double in length from 100 million circuit-km(c-km)in 2022 to 200 million c-km in 2050 to facilitate the fast and efficient transfer of electricity.The same grid will g

54、row 2.5 times in capacity globally.A small but important part of this buildout is the rapid development of the offshore grid growing some 14-fold,from 0.2 million c-km to 2.6 million c-km.A vast newbuild programme lies ahead,and this is recognized in a host of policy packages in the US,China,the EU,

55、Japan,and so on.There is also growing recognition of the importance of regional interconnection using HVDC lines,which hold the potential not only bolster energy security and flexibility,but also avoid a great deal of generation,storage,and related infrastructure investment in individual nations.In

56、the short term,the transition faces the challenge of gridlock,a term that broadly describes the growing queue of renewable projects and major demand centres applying for connection to the grid,as well as the looming problem of congestion,where demand and supply of electricity exceeds the(peak load)c

57、apacity of the grid infrastructure.A massive focus on new grid buildout is needed in almost every country.However,a very large potential exists 7DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYfor grid enhancing technologies(GETs)to address conge

58、stion by using the present grid infrastructure more efficiently adding anything from 10%to 50%additional capacity buying time for the massive newbuild programmes that need to be accelerated.However,we show that a major contingency for both GETs and newbuild is the pace and(cyber)security of the digi

59、tal transformation of the grid control centres and infrastructure.Digitalization and artificial intelligence(AI)Present power systems are already among the largest and most complex cyber-physical networks in the world,with millions of interconnected devices acting in synchrony.New power systems will

60、 be greatly more complex still,with the introduction of vast quantities of variable renewables,storage,and demand-response.There is consensus among the power professionals we surveyed that investment in IT and operational technology(OT),including power AI-enabled systemsAsset information modelling f

61、rameworkCyber securityDigital twinsSimulation modelsData quality managementSensor systemsMachine learning applicationsData driven applicationselectronics,sensors,and smart meters,will escalate in the coming years.The WEF(2023b)has estimated digital technologies can save USD 1.8trn of grid investment

62、 globally through to 2050,while failure to upgrade and digitalize network infrastructure carries cascading economic costs amounting to USD 1.3trn.From a security perspective,the cyber-attack surface of digitally-steered generation,grids,and demand is growing by the day.A great deal is at stake.Globa

63、lly,a raft of new cyber security legislation and regulation is already in place and expected to tighten considerably.The building blocks of advanced digital systemsDesign,building,and production/captureAsset/storageCalculation/processing/modellingAnalysis&decision making8DNV New Power SystemsFLEXIBI

64、LITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYAIs energy demandIn this report,DNV does not present a forecast of the power demand of data centres serving AI appli-cations globally.We will present an estimate in our 2024 Energy Transition Outlook later this year.Initial re

65、search suggests additional power demand of low-to mid-single digit EJs by 2050 shifting our overall energy demand forecast by roughly a percentage point.We observe there are many compensating factors,not least that AI itself will enable significant energy efficiencies not only in new power systems b

66、ut myriad end-use applications.Designing in robust cyber security covering all IT,OT,and contingent connectivity aspects of the wind farmPolicymaking at a national and regional level must be informed by a systemic understanding of the perfor-mance and demands placed on new power systems over time,in

67、cluding changes in the climate system.For example,regions with a fast-growing industrial sector,such as Sub-Saharan Africa will see an increase in load factor due to the continuous nature of industrial power consumption.Conversely,regions such as Greater China that have an increased share of fluctua

68、ting residential usage especially very seasonal end-uses like space heating and cooling,combined with a reduced share of industrial demand and very high penetrations of solar and wind will experience a continued increase in the peak load and declining load factor throughout the forecast horizon.The

69、need for a systems perspectiveThis report covers the entirety of new power systems from new quantities and sources of demand through grid networks serving that demand,and ultimately the power plants supplying increasingly decarbonized electricity.Our forecast proceeds on the basis of a system dynami

70、cs model that considers many feedback loops and interconnected relationships across the power system.DNV promotes energy systems thinking,where all parties in the energy industry need to see the bigger picture when connecting and pursuing various tech-nologies.For example,investment in a new wind fa

71、rm has to consider many systems issues:Biodiversity and ESG impact Forecasts of other generation sources serving the intended market and the probability of price cannibalization Forecasts of demand and potential to supply hydrogen(or heat)with curtailed power The permitting system;access to data and

72、 AI to optimize design,siting,and operation of the farm itself The availability and timing of a grid connection for the farm In addition to cyber security,we set out here our advice for a digitalization strategy across new power systems to focus on the building blocks of complex,digital systems.This

73、 includes,but is not limited to,adhering to standards and recommended working practices around:data quality management,assured data collection and transmission in sensor systems,digital twins and simulations models,asset infor-mation modelling frameworks,and finally assurance of machine learning and

74、 AI-enabled systems.In our view,the impact of AI in new power systems is overestimated in the short-term and under estimated in the long term.We are very far away from a situation where power flow management of connected variable generation and unmodelled demand is entrusted to black box AI,with att

75、endant explainability and hallucination issues.However,AI is already making an impact in many ways across the value chain of power systems,and will play an important role in accelerating decarboni-zation.Chapter 3 details some of the more mean-ingful applications of AI,including optimization of rene

76、wable power generation,grid maintenance and outage prediction,dynamic line rating,and demand response management.In the medium term,AI will play an increasingly critical role in more accurate demand forecasting,enabling distribution network operators to react with greater precision and security to t

77、he evolving complexity of new patterns of demand,storage,and renewables infeed from prosumers.9DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYdouble the electricity they currently carry,we find that these charges are either stable or fall across

78、 most world regions and at a global level.Modelling future electricity prices is challenging because of compensatory developments:grid cost recovery charges in tariffs might be stable because gener-ations costs will fall with renewables penetration but flexibility costs may rise.Moreover,the tax com

79、ponent of consumer bills will vary across juris-dictions and may eventually include compensation paid by governments to renewables generators in cases where a high renewables penetration leads to low or even zero capture prices.With all these AffordabilityWe forecast annual global grid investments t

80、o double from USD 450bn in 2023 to USD 970bn by 2050.Grid expenditures will account for a little more than a quarter of total energy expenditures by 2050,while at present they only comprise 15%.The grid share is increasing due to the combination of grid expansion costs and the future reduction in fo

81、ssil fuel expenditures.Rising grid costs will be passed on to consumers,but since grids will effectively be selling at least factors considered,we find it reasonable to assume that,in general,electricity prices are likely to remain fairly stable per kWh during our forecast period.Of equal importance

82、 to electricity prices is the fact that as households electrify their end use,energy efficiencies(e.g.in electric transport or heat pumps)will lead to energy and cost savings.Our modelling suggests that average household energy expendi-tures will fall relative to rising GDP per capita levels across

83、the world through our forecast period.This efficiency dividend holds true at city,regional,and national levels.Transitioning quickly,intelligently,and securely to new power systems will be critical to the competitiveness of cities and states,and is vital in the context of the climate emergency.FIGUR

84、E 6As households electrify their end use,the resulting efficiencies will lead to energy and cost savings.10DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITY1ELECTRICITY DEMAND AND SUPPLY Electricity is pivotal in the ongoing global energy transiti

85、on,shaping innovation and strategies in both supply and demand sectors.In many,if not most,national power systems,this transition involves a complete role reversal between renewable and conventional power sources,with the former becoming dominant and the latter playing complementary or secondary rol

86、es.At the same time,there will be scene-changing shifts in consumption patterns,investment flows,and technology advancements steering the future trajectory of global energy dynamics and environmental sustainability.11DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITA

87、LIZATIONELECTRICITYWorld electricity demand has been growing by about 3%per year since the 1980s,in line with economic growth.By 2050,we anticipate a surge in global electricity demand,more than doubling from 33 PWh demanded in 2023 to reach 68 PWh in 2050.These numbers include the energy sectors ow

88、n use and transmission and distribution losses(Figure 1.1).Electricity will constitute 37%of the worlds final energy demand in 2050,up from 20%in 2023.This growth is largely driven by the burgeoning demand for existing applications as well as whole new cate-gories of demand,for example the electrifi

89、cation of transport and new energy solutions like green hydrogen production.In 2022,nearly 50%of global electricity was consumed in residential and commercial buildings.Energy demand from the buildings sector is set to rise by 30%by mid-century,driven by population growth and higher living standards

90、,with electricity taking an increasingly larger share in the buildings energy mix,up from 34%in 2022 to 52%in 2050.This reflects the growing dominance of more-efficient electric appliances in buildings,most notably heat pumps greatly expanding access to air conditioning,adding 8 PWh of annual electr

91、icity demand between 2023 and 2050 in the form of both space heating and cooling.Manufacturing will remain the second-largest consumer of electricity,almost doubling in absolute terms between now and 2050 with particularly strong growth in the industrial heat pump market for the production of manufa

92、ctured goods and a rise in the share of electric arc furnace in steelmaking from 26%now to 49%by 2050.As Figure 1.1 shows,it is in transport where the real scene-shift occurs over the next three decades.The electrification of mobility introduces 7 PWh/yr of demand growth between 2023 to 2050,primari

93、ly due to the charging demands of an expected 2.6 billion EVs.As we approach 2050,electrolysers connected to the grid will use 1.4 PWh/yr of electricity to deliver 28 Mt/yr of hydrogen,while another 1.7 PWh/yr will serve the production of fuels like ammonia or e-methanol.Not shown in Figure 1.1 is 1

94、0 PWh/yr of dedicated renewable electricity that will be applied to onsite hydrogen production from renewables.1.1 ELECTRICITY DEMAND20 MW industrial heat pump for district heating in Mannheim.Image,courtesy SiemensElectricity will constitute 37%of the worlds final energy demand in 2050,up from 20%i

95、n 2023.12DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYThe global growth in electricity demand is by itself remarkable,but the global numbers mask the life-changing aspects of electrification in regions where electricity access is currently lag

96、ging,such as the Indian Subcontinent and Sub-Saharan Africa.For example,we forecast the residential space cooling electricity demand in the Indian Subcontinent growing seven-fold from 2023 to 2050,a 7%year-on-year growth,bringing relief to many millions of people from the potentially lethal effects

97、of global warming towards 2050.Similarly,access to electricity and household appli-ances which use electricity is an important factor in ensuring access to education(lighting),convenient clean water(water pumps),indoor air-quality(electric stoves),and freedom of movement(street lighting).In fact,in

98、the last century,access to electricity and electric devices have probably been the single-most important contributing factor to gender equality in low-and middle-income regions,freeing up time for children,girls and women,who are generally burdened with labour and time-intensive household chores,to

99、engage in often life-changing educational and recreational activities.Significant variations exist in electricity-related levies among nations,with some European regions having taxes and levies amounting to over half of the electricity bill.We anticipate a tax shift away from electricity,but deviati

100、ons from this trajectory,particularly in low-income countries,might hinder our electrification forecasts realization pace.Importantly,the efficiencies inherent in switching from fossil sources are forecast to have a positive effect on average household energy expenditures,reducing energy bills in ab

101、solute terms in high income regions and in relative terms(measured against rising prosperity)in middle-and low-income regions.These effects are explored more fully in the concluding chapter of this report.Clearly,much is at stake with electrification:affordability,energy security,and,to the extent t

102、o which supply is renewably generated,sustainability.Investing in,planning for,and optimizing new power systems the focus of the rest of this report should therefore be high on the agenda for all policymakers.Changing regional electricity demandGreater China is the leading consumer of electricity as

103、 of 2023,accounting for 32%of global demand.While it is poised to maintain its leading position to 2050,its demand share will decrease to 26%.In contrast,we anticipate the Indian Subcontinent to leapfrog both Europe and North America by 2050,commanding 14%of the global electricity share.Up until 203

104、5,the Indian Subcontinent and South East Asia are set to showcase the fastest growth in electricity demand.From their existing low elec-trification rates across pivotal sectors including cooling,appliances,and manufacturing we predict extensive electrification initiatives and substantial demand grow

105、th within these regions.Fast-forwarding to the timeframe between 2035 and 2050,Sub-Saharan Africa emerges as the global front-runner in electricity demand growth,aver-aging an impressive 5.8%annually.Factors such as potential economic advancements and an anticipated population surge underline Sub-Sa

106、haran Africas monumental electricity demand growth.This evolution underscores the vast opportunity awaiting the region in harnessing renewable energy sources and electrifying a multitude of its end use sectors.High-income regions like North America,Europe,and the OECD Pacific will have slower growth

107、 trajectories,attributable to their already-high rates of electrification coupled with modest economic expansion.However,the advent of new electricity-consuming sectors,notably transport and hydrogen production,ensures that growth in electricity demand in these regions remains above stagnation even

108、by 2050.Diving deeper into recent trends in Greater China,we have observed its electricity demand growth rate,which has been above 5%annually,is predicted to decelerate to 3.2%by 2035 and then further diminish to less than 1%in the subsequent 15 years.Such a shift is anticipated due to Chinas impend

109、ing population growth slowdown,and Chinas economy essentially restructuring to less energy-intensive manufacturing processes.13DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYBy 2050,we envisage a nearly complete transition to EVs in China,leavin

110、g a negligible scope for electrification in the transport sector by the late 2040s.Unlike its western counterparts,Greater China might not heavily invest in grid-connected electrolysers,further stabilizing its mid-century electricity demand.Lastly,in the Middle East and North Africa,there is a surge

111、 in the electrification of buildings,predom-inantly driven by the rising GDP per capita and consequent expansion in space cooling.This trend,combined with similar developments in South East Asia and Latin America,suggests an acceleration in electricity demand post 2035.In stark contrast,North East E

112、urasia might trail,with the slowest growth due to static population metrics and delayed electrification compared with its global peers.It is important to assess the quality of electricity demand growth by region from the perspective of whether such growth is supplied by new and low-carbon sources of

113、 generation.Figure 1.3 shows the electricity demand and low-carbon electricity supply growth for the ten different ETO regions under three distinct time periods.Additionally,the right axis shows the average share of low-carbon electricity in total electricity generation in the time-period.New power

114、generation technologies are going to revolutionize the electricity systems in all regions of the world,regardless of the current status of power systems in those regions.In no region,in any of the time-periods analysed,does the electricity demand growth outpace the low-carbon electricity supply grow

115、th.In fact,in all regions(except South East Asia)in the time-period of 2023-2030,the growth of low-carbon electricity is double that of electricity demand growth,signifying that for every kWh of new demand,two kWh of low-carbon electricity is generated.This occurs even in regions such as Latin Ameri

116、ca and Europe,with already-high rates of low-carbon electricity share.While in the 2030s and 2040s the low-carbon electricity growth reduces,it never dips below that of the demand growth.This implies that new power generation technologies are going to revolutionize the electricity systems in all reg

117、ions of the world,regardless of the current status of power systems in those regions.14DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYChanging electricity demandAddressing trends in peak electricity demand,not just the annual averages,is crucial

118、.Peak demand critically affects both power generators and the regional transmission and distribution grids.We need to bolster and expand the grid infrastructure,ensuring it can effectively transfer peak power from generators to consumers,even in areas without a rise in annual average demand.To under

119、stand the relationship between peak and average demand,we focus on the load factor the ratio of average load to the systems peak load.This metric showcases the electrical loads consistency and variability.Our global estimate shows a 78%load factor in 2023,but we project a slight decrease to 77%by 20

120、50(Figure 1.4).Growth in peak load is slightly outpacing annual average demand,suggesting a trend towards increased variability.However,this very slight change is the result of many opposing significant factors happening simultaneously and at various rates across the world.Firstly,integrating renewa

121、bles,especially variable sources like wind and solar,magnifies electricity generation variability and impacts the load factor.However,advancements in both energy storage and grid management will buffer and even reverse 15DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDI

122、GITALIZATIONELECTRICITYthese variations in many high-income regions.The drive towards electrifying transport,mainly the rising adoption of EVs,is set to redefine electricity demand patterns.Although concentrated EV charging could heighten variability,EVs introduce flexibility through controlled char

123、ging and vehicle-to-grid mechanisms.Moreover,demand-side management,through innovations like smart grids,real-time pricing,and demand-response schemes,will need to strike a balance between the needs of variable generation,demand and transmission,and distribution,pushing the needle towards a more bal

124、anced electricity consumption.Concurrently,strides in energy efficiency will induce steadier electricity usage,affecting the load factor.Regions with escalating industrial operations such as Sub-Saharan Africa will see an increase in load factor due to the continuous nature of industrial power consu

125、mption.Conversely,regions such as Greater China that have an increased share of fluctuating residential usage,especially very seasonal end-uses like space heating and cooling,combined with a reduced share of industrial demand and very high penetrations of solar and wind,will experience a continued i

126、ncrease in the peak load and declining load factor throughout the forecast horizon.These developments are described more fully in DNVs recent report on Chinas energy transition.Notably,extreme weather events triggered by climate change could produce stark demand peaks,especially during events like h

127、eatwaves an element not included in our prediction.Enabling demand to follow variable renewable elec-tricity generation will be an essential element in the future electricity system.Demand response involves providing incentives to shift or decrease electricity consumption of end users to assist in b

128、alancing the grid.This added flexibility will become increasingly important as grids become progressively more dominated by variable power generation such as PV and wind.Key facilitators for the broadening of demand response are smart meters and variable tariffs,incentivizing customers to shift or r

129、educe consumption.Nonetheless,this process also brings new challenges to energy suppliers,balance-respon-sible parties(BRPs),and distribution system oper-ators(DSOs)(see sidebar on settlement).Dealing with unpredictable demand patternsHistorically,aggregated demand exhibited very stable and repeatab

130、le daily,weekly,and seasonal patterns.Consequently,even relatively simple models based on historical data could reliably forecast the demand patterns for a sufficiently large consumer base.However,the adoption of auton-omous control algorithms making use of the variable tariff system disrupt these l

131、oad patterns and result in synchronous behaviour.This phenomenon is further exacerbated by the electrification of heating,EVs,and residential PV generation and storage,making demand more corelated.As a result,the statistical averaging out of a large number of consumers will become less prominent in

132、the future.Unpredictable demand patterns have economic implications for electricity suppliers and BRPs by impeding their ability to adequately forecast the necessary production levels.Moreover,simultaneous load behaviour leads to voltage fluctuation and over-loading of the grid,complicating the role

133、 of DSOs in reliably transferring and distributing energy.Never-theless,the wider adoption of smart meters and other monitoring devices results in more available data and ever more sophisticated data-driven models.These models will provide more insight into the consumption patterns of different cons

134、umer groups,their correlation with environmental factors,and shifts in patterns resulting from the adoption of new technologies.Enabling demand to follow variable renewable electricity generation will be an essential element in the future electricity system.Opportunity demandThe development of oppor

135、tunity demand is important in power systems that are dominated by variable renewable generation.This demand has the ability to switch between energy carrier,and thus has very clear opportunity costs set by the alternative carrier.Opportunity demand will bid to be dispatched for prices just below the

136、 alternative carrier and will mainly run during times of surplus production of variable renewable generation.With sufficient quantities in the system,this demand will be price setting.Examples are power to heat and power to hydrogen.In our model,the quantities of these demand subcategories are such

137、that they become price setting.This effect is amplified by the short-and long-duration energy storage in the system.16DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYSettlement in electricity systemsAn essential enabler of demand response is the

138、remuneration between the consumer and the electricity system,as well as the remuneration between the different parties in the electricity system itself.In a vertically integrated power system(where there is one utility that generates,transport/distributes,and supplies electricity to its customers),t

139、he utility usually does not,and does not need to,take into consideration a sophisticated differentiation in time of use.Small,residential uses in general behave rather uniformly and distributing the overall cost of the infrastructure and generation proportionally based on annual use usually suffices

140、.However,when the system grows and multiple inde-pendent power producers(IPPs)start to sell electricity to the utility,the utility will have contracts with the IPPs about prices and when to dispatch.Electricity cannot be stored in large quantities,so the utility essentially contracts a generation se

141、rvice from the IPP that will be called upon when its customers need it.When the utility loses its monopoly,IPPs can become suppliers and start selling electricity directly to end-users.Thus,the situation starts to become more profile of these users that is used for the allocation of energy use to th

142、e responsible BRPs.At the end of the year,the allocation of electricity demand between BRPs is corrected and remunerated,based on the collected annual metering values,which are also used to bill the consumers.Sometimes meters have two counters that run depending on a switch that toggles by a frequen

143、cy signal on the grid.This allows for a differentiation between two tariffs,such as a day/night tariff,i.e.during the day one counter is counting,at night the other counter is counting.In a system with such traditional meters,the benefits of a demand response scheme beyond a day/night tariff will be

144、 shared proportionally between all BRPs and cannot be claimed by the BRP that initiated it.With the introduction of smart meters,i.e.telemetry meters that are read every ISP of 15 to 30 minutes,the allocation of demand can be done with actual demand.Not only does this allow for more advanced tariff

145、schemes towards the consumer,such as prices adjusting hourly based on the day ahead wholesale market,but even more importantly,it also allows for the remuneration of the actual demand between BRPs,thus making it more worthwhile for them to engage in demand side management and demand response plex.No

146、 longer can costs be aggregated by a single utility and distributed to its customers based on a general key measure like total annual usage.Instead,the generation services of each independent producer need to be tuned to the specific demand of their customers,so these customers are supplied with the

147、 electricity generated by the IPP and not by other generators.Because all the electricity is supplied through the same grid infrastructure,each IPP needs to make sure that their generated electricity meets the forecast electricity demand of their clients for each predefined timestep(called a program

148、me time unit,PTU or imbalance settlement period,IPS,which is usually 15 or 30 minutes).The IPP thus becomes a supplier as well as a balance responsible party(BRP)ensuring that the generation and demand in their portfolio are matching.Deviations from this balance(called imbalance)can occur because of

149、 forecast errors and are solved by the system operator,an independent party responsible for the power system(which is often combined with the responsibility for the transmission network).The system operator has contracted generation and possibly demand capacity to reestablish the balance.The bill fo

150、r activating these reserves is sent to the BRP(s)that caused the imbalance.Demand from residential consumers without a smart meter is not known.Their meter is usually manually read once per year.Providers establish an average 17DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODE

151、LLINGDIGITALIZATIONELECTRICITYFor residential consumers,smart metering combined with time-of-use tariffs create the foundation of remuneration for changing demand patterns.The potential for demand response is large.However,it requires effort to change behaviour.The(financial)gain should outweigh the

152、 effort,which is not always clear in the current power system.Non-automated demand response demand response based on behaviour is limited because people have limited attention and interest in energy.This means demand response is either:Embedded in structural behavioral changes,such as triggered by d

153、ay/night tariff e.g.people turning on the washing machines at night at the start of the low tariff period;or,Triggered by exceptional high incentives,such as critical peak prices,so it becomes worthwhile to pay attention and consciously change behaviour.Unfortunately,the variability of VRES is neith

154、er exceptional nor does it follow a clear pattern(except for solar uncoupled with storage).This means that for demand response to be truly effective there needs to be automated activation.Consumers should ideally be able to overrule this and have some control in their desired strategies,which could

155、include adapting their flexible demand to minimize the electricity bill,minimizing the use of electricity generated by fossil fuels,or to use as much locally generated electricity as possible.The implementation of automated demand response of flexible demand,such as air-conditioning,EV(dis-)charging

156、,and heat pumps can have different aggregation levels.It can be very local,such as an EV deciding to charge when(previously commu-nicated)prices are low or a thermostat taking electricity prices into account.More coordinated demand will use HEMS(Home energy management system)or BEMS(Building energy

157、management system)and can incorporate the size of the grid connection and power generation behind the meter.Coordination on a higher level by an aggregator will allow access to other,more volatile and potentially profitable,value pools such as the intraday wholesale market,balancing,and ancillary se

158、rvices markets.For industry,automated demand response is a prerequisite for the same reasons.Today,this results quite often in a constant demand pattern,incentivized through several measures,from reduction in connection tariffs to lower taxation.Curtailment of industrial demand is a practice that ha

159、s existed since the start of the electricity sector;it is an expensive measure that is primarily appli-cable for industry where electricity is a main costs driver.With the available IT,OT,and incentive structures available,industrial flexibility can be guided towards following variable generation an

160、d we include that in our modelling.At the same time,demand response in industry risks disruption of the core industrial process.This limits demand response to utility and ancillary processes that hold limited hazards to core processes and those which can be standardized across multiple plants and in

161、dustries.Demand responseA consequence of the shift from dispatchable to variable,weather dependent,electricity generation is that a large portion of gener-ation can no longer follow demand and,besides storage,demand will need to follow electricity generation while taking into account the limitations

162、 of the network.18DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYThe global electricity landscape is on the brink of monumental change,driven primarily by significant advancements and declining costs in solar,wind,and storage technologies.Howeve

163、r,the infrastructural transformation involved is historically unprecedented and subject to physical and financial constraints.Thus,although we are currently seeing solar and wind being installed at record levels,it will take a decade for the power mix to start changing fundamentally.1.2 SECURING ELE

164、CTRICITY SUPPLYFrom its 2022 baseline of 9 PWh/yr,renewable electricity generation worldwide is set to grow a further 16.3 PWh/yr through 2035(Figure 1.5).Yet,a corresponding increase in demand during the same period presents a challenge:while the growth in renewables is impressive,it might primaril

165、y meet the growing electricity demand rather than significantly curtail fossil-fuel reliance.It is only after the mid-2030s that we anticipate renewables will genuinely start surpassing new demand and begin a massive displacement of fossil-fired generation.The evolution of the global electricity sup

166、ply to 2050 involves a game-changing shift to renewable energy sources.This transition is primarily driven by significant advancements and declining costs in solar and wind technologies.As Figure 1.5 shows,by mid-century,solar is expected to claim a substantial 40%of the global power mix,bolstered b

167、y increasingly efficient storage solutions that enable energy utili-zation round the clock.Wind energy,though slightly more expensive,is not far behind and is expected to make up 30%of the energy landscape with signif-icant contributions from both onshore and offshore installations.The integration o

168、f floating offshore wind farms marks a significant innovation,tapping into wind resources in deeper waters previously inacces-sible.As renewable technologies mature and scale,their incremental deployment will lead to markedly reduced utilization of coal and natural gas plants,19DNV New Power Systems

169、FLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYparticularly after 2040.Nuclear power,discussed more fully below,will expand but at nowhere near the rate of variable renewables.Opportunities and challengesThe increasing share of renewables introduces several opportun

170、ities.The decline in operational costs for renewables compared with fossil fuels can lead to lower electricity prices and greater energy security.Additionally,the ability to harness local energy sources reduces dependence on imported fuels,which is particularly advantageous for energy-importing regi

171、ons.The integration of smart grids and advances in energy storage technologies are primarily responses to the intermittent nature of renewable energy sources,facilitating investment in new technologies and improving data management to handle the variability associated with renewables.This global shi

172、ft towards renewables,also brings forth challenges in integration,reliability,and economic viability.The evolving energy landscape requires robust strategies to manage the variability of renewable sources and ensure a consistent energy supply,necessitating innovative approaches in tech-nology,policy

173、,and market design to fully realize the potential of a renewables-dominated grid.Our next chapter discusses these challenges in more detail.This transition also faces sensitivity to short-term economic fluctuations,notably in investment and operational costs.A prolonged hike in the cost of materials

174、,such as the steel needed for wind turbines,and disruptions in the supply chain can significantly alter the cost trajectories of renewable technologies.Our analysis suggests that without the current supply chain and permitting delay disruptions,a smooth continued cost reduction path would have resul

175、ted in the cost of renewables being up to 4.5%lower in 2050.Offshore wind is particularly sensitive to these disruptions,as shown in Table 1.1.A prolonged hike in the cost of materials and disruptions in the supply chain can significantly alter the cost trajectories of renewable technologiesTABLE 1.

176、1Sensitivity of the average investment cost of renewable energy in 2030 and 2050 to removal of current supply chain disruptions and grid delays20302050Solar PV-2.0%-3.9%Onshore wind-1.4%-3.0%Offshore wind-2.6%-4.5%20DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITAL

177、IZATIONELECTRICITYin production and supply chains through government support.Conversely,in regions like the Middle East and North Africa,despite a high solar potential,the shift is slower due to ongoing reliance on natural gas.The Indian Subcontinent and Southeast Asia are poised for rapid growth in

178、 renewable capacity,building from a lower base and driven by escalating local and international investment in clean energy.Sub-Saharan Africa is also expected to follow a similar trajectory as those regions,primarily driven by its growing electricity demand.North East Eurasia,a region with a stable

179、population,relatively low electricity demand,and abundant fossil resources,will trail significantly behind the pack.While the share of solar and wind in electricity generation global is set to exceed 50%in 2040,there are considerable regional variations(Figure 1.6).Europe has been a leader in solar

180、and wind from early on and will keep its leading position until the 2040s.While North America and Europe has have been strong in regulatory support and advanced technological infrastructure to accelerate the adoption of renewables,Greater China has been equally successful in renewables by heavily in

181、vesting North America(NAM)The region continues to rely significantly on natural gas,due to existing infrastructure and challenges in transmitting renewable energy from remote loca-tions.However,a substantial increase in renewable energy share is expected by 2050,with solar and wind projected to prov

182、ide 80%of grid-connected electricity.The region faces a significant place problem for solar and wind energy,where the best resources for these renewables are far from demand centres,complicating transmission particularly across state lines and integration into the grid.Latin America(LAM)This region

183、already has a high share of renew-ables,predominantly hydropower.Investments are increasing in solar and wind capacities,particularly in countries like Brazil and Chile,and are expected to significantly reduce reliance on fossil fuels by 2050.Chile,harnessing its geographical advantage,is investing

184、heavily in solar power and green hydrogen,while Brazil aims to add wind to its already advanced bioenergy supply.Regional characteristics of power systems around the worldREGIONAL OVERVIEW North America(NAM)Latin America(LAM)Europe(EUR)Sub-Saharan Africa(SSA)Middle East and North Africa(MEA)North Ea

185、st Eurasia(NEE)Greater China(CHN)Indian Subcontinent(IND)South East Asia(SEA)OECDPacific(OPA)21DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYEurope(EUR)Europes electrification is driven by stringent regu-lations and renewable energy policies.Th

186、e shift towards electric vehicles and increased industrial demands will significantly raise electricity needs,met largely by renewables,with solar and wind being predominant sources by 2050.A unique characteristic of Europes electricity system is its extensive interconnected power networks,which are

187、 among the most developed in the world.This interconnectivity allows for a robust energy trading system that can balance surpluses and deficits across borders.Sub-Saharan Africa(SSA)Electricity plays a minor role currently,but a shift towards renewables is expected,driven by global investment in dec

188、arbonization.Solar and wind capacities are projected to rise,aiding in closing the electricity access gap without high-carbon phases.However,there is a pressing need for investment in transmission infrastructure,with economic opportunity costs associated with unreliable or absent power mounting alar

189、mingly.New transmission lines are also needed to transition South Africa from reliance on its coal-fired power,which is responsible for a quarter of the continents carbon emissions.Middle East and North Africa(MEA)This region will see a marked increase in solar and wind contributions to the electric

190、ity mix,with significant growth expected from the mid-2040s onwards as these technologies become more feasible and integrated with storage solutions.The region is ideal for solar power with integrated storage due to its high solar irradiance,abundant uninhabited land,alignment of solar generation wi

191、th peak energy demand for cooling,and the opportunity to enhance exports by reducing domestic reliance on fossil fuels.North East Eurasia(NEE)The region will continue to benefit from low domestic gas prices in the near term.This economic advantage makes natural gas a competitively priced source of e

192、nergy,continuing to shape the regions energy landscape even as it slowly transitions towards more renewable sources by 2050.Reliance on natural gas is especially pronounced in Russia,which has one of the largest natural gas reserves in the world,impacting the entire regions energy strategy.Greater C

193、hina(CHN)China leads the world in both renewables production and uptake.Renewable energy is set to dominate its electricity production by 2050.China also leads in the manufacture and deployment of renewable energy equipment.Chinas power mix shifts from 30%renewables today to 55%by 2035,and 88%by 205

194、0,when the combined share of coal,gas,and oil in the power mix will be reduced to less than 7%.Nuclear power also remains a significant part of the energy mix due to Chinas ability to rapidly scale construction and reduce costs through centralized planning and large-scale state-backed financing.Indi

195、an Subcontinent(IND)Despite the deep entrenchment of coal in the energy infrastructure of the Indian Subcontinent,particularly in India and Bangladesh,there is strong momentum towards renewable energy.Significant investments in solar and wind capacities are planned,set to accelerate in the 2030s.By

196、2050,these efforts aim to enhance electricity access and reliability across the region,reducing coal dependence and addressing persistent issues such as load shedding and uneven power distribution.South East Asia(SEA)South East Asias heavy reliance on hydropower exposes the region to vulnerabilities

197、 to climate variability,such as droughts and floods,which can impact the reliability of power supply.To mitigate these risks and enhance energy security,countries are increasingly turning towards integrating more climate-resilient renewable energy sources like solar and wind.The expansion of these r

198、esources is expected to reduce dependence on hydropower,diversify energy mixes,and improve the sustainability of electricity systems in the face of climate change.This shift not only promises a more stable power supply but also aligns with global efforts to reduce carbon emissions.OECD Pacific(OPA)W

199、e expect significant growth in renewable energy capacity particularly solar PV and wind which will help make this region the world leader in electrifi-cation with a close to 50%electricity share in final energy.In Australia and New Zealand,the ample floor area per household makes these countries par

200、ticularly suited for rooftop solar installations,unlike the more limited opportunities in densely populated urban landscapes like Japan and South Korea.Nuclear energy will also continue to contribute to the regions energy mix.Despite global debates about the future of nuclear energy,countries like J

201、apan and South Korea will continue to rely on nuclear power.22DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYAny discussion of future power systems is incomplete without considering the role of nuclear energy.The sheer scale of the growth of sol

202、ar and wind generation masks our forecast that nuclear generation will,in fact,grow considerably by 41%in 2050 compared with 2022 levels.Our prediction for nuclear is,however,considerably below the Declaration to Triple Nuclear Energy by by George Washington University(Squassoni,2024)highlights that

203、 nuclear energy is vulnerable to the widening of geopolitical tensions and war.The main reason why a nuclear renaissance similar to the 1970s is unlikely to reoccur has to do with cost:while DNV expects nuclear costs to be almost flat,the cost of solar wind,and batteries will continue to fall throug

204、hout our forecast period.The inexorable penetration of wind and solar disrupts the business case for nuclear.Nuclear plants need to run continu-ously to be economical,with any reduction in oper-ating hours leading to increased levelized costs.Nuclear energy cannot be run cost-effectively with suffic

205、ient flexibility to optimally partner the variable renewables in the power mix,at least not at a level which matches the techno-economics of other sources of flexibility in the form of battery storage or purpose-built gas peaker plants.For a more in-depth discussion of challenges facing nuclear,we r

206、efer readers to our Energy Transition Outlook(DNV,2023a).Inter alia,we cover there the non-proven promise of Small Modular Reactors(SMRs):promising in the sense that the proliferation of SMR designs offers potential scale,cost,flexibility and other benefits;non-proven in the sense that SMR is a tech

207、nology which does not yet exist in a non-mil-itary setting and the first reactors are likely only to be available around 2030 at the earliest.A critical issue is that SMRs would need to be produced at scale to take advantage of their modular characteristics:scale is needed for scale.Business cases f

208、or SMRs sometimes rely on the assumption that the plant may power hydrogen electrolysers directly when the plant power is curtailed by an abundance of cheap variable renewable power fed to the grid.However,running electrolysers intermittently presents separate economic challenges.For these reasons,t

209、he uncertainty of the commercial viability of SMR is high,and DNV finds it likely that most new nuclear towards 2050 will be conventional design,but with an increasing degree of SMR design towards the end of the forecast period,and with regional variations.Electricity generationOur current Outlook r

210、eflects the renewed interest in nuclear energy sparked by energy security concerns (discussed in the sidebar).Our forecast shows nuclear energy output stable at todays levels for the coming years,but growing from the late 2020s(Figure 1.7).From today towards 2030,most added capacity will be based on

211、 site-built,large-scale reactors that are already in the pipeline.Beyond 2030,additional capacity will most likely be a mix between site-built and factory manufactured SMR power plants.Nuclear energy output peaks at almost 3500 TWh per year by 2047 then stays flat until 2050,but at a level 41%higher

212、 than today.North America,Europe,Greater China,and North East Eurasia are currently the top four nuclear energy regions.However,within a decade,Greater Chinas output will have grown to almost the same level as Europe and North America.Japan and South 2050,signed by 20 countries at COP 28(with the no

213、table absence of China and Germany among the signatories).Such a plan would necessitate the installation of 800 gigawatts of additional capacity by mid-century,the equivalent of bringing 30 large new reactors online every year by then(Tirone,2024).We find less than half of that.A buildout at such sc

214、ale is unlikely in our view,even given the renewed interest in nuclear energy sparked by energy security concerns in the wake of Russias invasion of Ukraine.Indeed,with the prolonged war in Ukraine,and ongoing tensions in the Middle East,a counter view is also emerging:a recent report issued NUCLEAR

215、 AND NEW POWER SYSTEMS23DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYKorea will double output from today by bringing new capacity online as well as reopening currently dormant plants.South East Asia will add 70 TWh of nuclear by 2050,but start

216、ing only in the late 2030s.The Indian Subcontinent will see the biggest increase of all regions,growing from todays 64 TWh to 260 TWh by 2050,with over 50 GW of installed capacity representing almost 10%of the world nuclear fleet.Despite solar and wind penetration,the global average capacity factor

217、of nuclear power plants will remain at its historical average range of 60-65%.However,there will be regional variations.North America,with its ageing fleet of reactors and increasing renewable share will see its nuclear fleets capacity factor to drop from above 90%now to just above 60%by 2050.Despit

218、e losing the cost war against solar and wind,one advantage nuclear will maintain over variable renewables is the revenue side of the equation.Unlike solar and wind,which will suffer from declining revenues compared with the average electricity market price,nuclear reactors will continue to enjoy an

219、annual average income that is near and above the average.However,this revenue advantage will not be large enough to allow any meaningful competition with low-cost technologies in the energy capacity newbuild markets.Finally,the worsening biodiversity crisis is also lending strength to the case for n

220、uclear,which has a smaller physical footprint as most other low-carbon energy sources.We take this factor into consideration when weighing the future of nuclear.Capacity build-out and decommissioning Several nations such as Bangladesh,Belarus,Turkey,and the UAE are just starting to pivot towards nuc

221、lear.However,the future of nuclear capacity will also be determined by what happens to existing power stations.Half the worlds installed nuclear capacity is over 30 years old,and many reactors are approaching the end of their original design lifetimes.Some countries are likely to follow through with

222、 decommissioning rapidly,as Germany has done,but elsewhere the renewed focus on energy security coupled with the high cost of nuclear decommissioning,the relatively low cost of nuclear lifetime extension,and the difficulty of rapidly replacing large capacity retirements with low-carbon alternatives,

223、have led some govern-ments to consider extending nuclear plant lifetimes through upgrades and life-extension measures.For example,Belgium and Spain extended their nuclear decommissioning timetable from 2025 to 2035.France and Sweden are postponing their nuclear decommissioning plans,but with increas

224、ing debate over re-invigorating nuclear research and building new plants(Hernandez et al.,2023).South Koreas president has vowed to reverse phase-out plans,and Japan adopted a new plan in December 2022 that will maximize the use of existing reactors by restarting as many of them as possible and prol

225、onging the operating life of ageing ones beyond the current 60-year limit(Reynolds,2022).The changes in the geopolitical landscape,disruptions to natural gas supplies,and increased focus on energy security have prompted nations to reconsider their energy portfolios.Nuclear energy,which can provide a

226、 stable,domestic source of power,is an attractive option in this context but will come at a higher cost compared with alternative energy options.In our current model,we have included such policy choices for regions dependent on energy imports and where nuclear energy already exists.Based on these fa

227、ctors,we find that regions are willing to install more nuclear.Compared with a world without such considerations,there will be 22 GW more installed nuclear capacity and 3.2%more electricity generated by 2050.However,this is achieved by additional support by governments/authorities in the range of 8%

228、to 20%of the levelized cost of nuclear energy from 2023 to 2050.The additional support governments are willing to give nuclear to secure energy supply is difficult to disentangle from other parameters affecting support for different power generation options for example,the clean energy tax credit in

229、 North America.Also,it is worth bearing in mind that it is not only nuclear contributing to secure energy,but renewable options as well,which also will incur subsidy benefits from governments prioritizing local energy options.Nevertheless,slightly more nuclear generation is likely to be made availab

230、le to satisfy energy security concerns,even though the subsidized buildout adds between 8%and 20%to levelized costs.UAE banknote depicting the Barakah nuclear power plant in Abu Dhabi,which went into commercial operation in 2020.Nuclear investments due to energy security24DNV New Power SystemsFLEXIB

231、ILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYHydrogen is often described as bringing balance to new power systems.This is sometimes thought of in terms of storage and back-up capabilities.In our view,the main balancing role of hydrogen will not be physical(storage and r

232、e-electrification)as much as it will be economic(revenue from green hydrogen production from a superfluity of cheap VRES power in the grid).HYDROGEN25DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYPower and seasonal storageIn regions characteriz

233、ed by significant penetration of VRES,hydrogen serves as a viable option for balancing peak demand and storing excess electricity for extended periods.However,it is important to acknowledge that this approach entails large energy losses and substantial storage requirements.When assessing the hierarc

234、hy of hydrogen applications,the utilization of hydrogen for re-electrification is likely to be the last in line.Nonetheless,starting from 2030,we anticipate the gradual incorporation of hydrogen into power generation facilities,albeit in limited quantities.Initially,this will primarily involve injec

235、ting hydrogen into natural gas grids.Subsequently,the share of hydrogen in power generation will expand,driven in part by the need for peak demand management.We forecast the leading regions in this transformative journey to be OECD Pacific,followed by Europe and Greater China.These regions will incr

236、easingly harness hydrogen for electricity generation,with North America also joining in from the mid-2040s.By the middle of the century,we envision these regions collectively consuming nearly 10 Mt hydrogen per year for power generation purposes.Green hydrogenDedicated renewables-based electrolysis

237、is currently too expensive,averaging USD 5/kgH2 globally.However,by 2030,costs are expected to drop significantly,with dedicated solar or wind electrolysis averaging around USD 2/kgH2.Key drivers of this cost reduction include a 40%decrease in solar panel costs and a 27%decrease in turbine costs.Fur

238、thermore,improvements in turbine sizes and solar panel technologies will increase annual operating hours by 1030%,varying by technology and region.Additionally,the capital cost of electrolysers is anticipated to decrease by 2530%due to reduced perceived financial risk.For grid-connected electrolyser

239、s,the primary cost component is electricity,particularly the availability of affordable electricity.In the long term,the proportion of VRES in power systems will be the main factor influencing future electricity prices,with more VRES leading to more hours of very cheap or even free electricity.Howev

240、er,before 2030,the penetration of VRES in power systems will not be sufficient to significantly impact electricity price distribution.Therefore,any cost reduction in grid-connected electrolysers in the next few years will primarily result from government support and declining capital expenditures.As

241、 variable renewables become more prevalent in the energy system,the number of hours when hydrogen from electricity and electrolysis is cheaper than blue hydrogen will increase.Looking towards 2050,two main trends will affect annual operating hours:increased competition from alternative hydrogen prod

242、uction methods and more hours with cheap electricity due to higher VRES integration.As VRES become more prevalent in the energy system,the number of hours when hydrogen from electricity and electrolysis is cheaper than blue hydrogen will increase.Consequently,grid-connected green hydrogen is expecte

243、d to claim a similar market share as blue hydrogen.Close to 130 MtH2/yr will be produced by mid-century from dedicated renewables,more than a third of the worlds total hydrogen demand by then.2POWER ECONOMICS AND MODELLINGHere we explore capacity and flexibility markets and provide insight into the

244、expected cost and revenue developments for renewables.We also analyse near-term challenges including clogged supply chains,inflation,and permitting delays and provide a glimpse into industry sentiment on these issues.In the longer term,key themes are exposure to price cannibalization,particularly fo

245、r solar energy,which places a premium on flexibility and storage,and the need to address issues of adequacy,the ability to consistently meet demand.We show how these trends play out in our simulated modelling of power by the hour in 2050 compared with today.In this report,we go further than the anal

246、ysis presented in our annual Energy Transition Outlook,by presenting a simulation of hourly dynamics of the UK power market during adverse weather weeks(with wind capacity reduced by 80%)in the year 2050.DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECT

247、RICITYThe configuration of power markets varies widely,reflecting different regulatory frameworks,generation profiles,and policy objectives.Energy-only markets operate on the principle that generators are paid only for the electricity they produce,a model that incen-tivizes efficiency and market-res

248、ponsive behaviour but can lead to volatility during periods of high demand or supply scarcity.In contrast,long-term and short-term markets exist within the framework of many national systems,facilitating more stable financial planning and allowing for adjustments to short-term fluctuations in supply

249、 and demand.On the spectrum of market models,centrally planned systems often seen in state-controlled economies directly dictate production and distribution,which can ensure consistent supply but may lack the flexibility and inno-vation fostered by more competitive environments.Outside of these mark

250、ets,Power Purchase Agree-ments(PPAs)have emerged as pivotal instruments,particularly in the renewable sector,by securing long-term contracts between electricity generators and purchasers,which stabilizes revenue streams and fosters investment in new technologies.In addition to these existing framewo

251、rks,the advent of renewable energy sources has prompted discussions around innovative market structures like capacity markets and flexibility markets.Capacity markets are designed to ensure that sufficient power generation capabilities are available to meet demand peaks,compensating generators for t

252、heir readiness to supply power regardless of actual electricity production.This system aims to maintain reliability and stability as variable renewable sources,such as wind and solar,become more prevalent.Capacity markets around the world differ in their structure and operation,tailored to the speci

253、fic needs and energy profiles of their regions.For instance,in the US,markets like PJM Interconnection hold annual or multi-year auctions where generators bid to meet estimated future capacity needs,ensuring long-term grid reliability.Meanwhile,in France,the market is based on capacity certificates

254、that suppliers must hold in proportion to their customers peak demand,promoting an ongoing balance between supply and demand.Similarly,flexibility markets are gaining attention as tools to manage the variability of renewable energy sources.By financially valuing the ability to quickly ramp up or dow

255、n production,these markets incen-tivize the development of agile energy sources and storage solutions.In the UK,National Grid operates various flexibility markets such as the Balancing Mech-2.1 POWER MARKETSFlexibility markets are gaining ground as a way of managing the variability of renewables by

256、valuing the ability to quickly ramp up or down production.anism,which allow for short-term adjustments to balance supply and demand and keep the grid stable.Germany has also been exploring similar concepts through its Regelenergie market(regulating power market),which utilizes rapid response sources

257、 to balance the grid.The California Independent System Operator(CAISO)in the US has developed markets for ancillary services and demand response that contribute to grid flexibility.All these mechanisms provide compensation for resources that can quickly ramp up or down their output.Another concept g

258、aining traction is implementing of mechanisms to address the drop in capture prices in markets saturated with renewable energy,where the abundance of low-cost generation can depress market prices during periods of high supply,potentially deterring further investment in capacity.Contracts for Differe

259、nce(CfD)mechanisms,such as those utilized in the UK,effectively serve this role.Under this arrangement,a subsidy compensates for the gap between the market price and a predeter-mined reference price,known as the strike price.This subsidy adjusts in response to real-time market prices,offering a fina

260、ncial safety net to generators when market prices are insufficiently low.27DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYAs we look towards 2050,the challenge will lie in crafting market mechanisms that not only ensure economic efficiency and s

261、ystem reliability but also align closely with environmental goals and the integration of increasingly sophisticated energy systems and continued profitability of the power systems.This will require continuous adaptation and thoughtful regulation to balance market incentives with the broader public i

262、nterest,ensuring that the shift towards a more sustainable and resilient energy landscape is both equitable and effective.Market designs in our forecastIn the Energy Transition Outlook(ETO)Model,we have incorporated a three-part market design to drive investment in the power sector:1.The first compo

263、nent,the energy market,assesses the regional electricity demand against the available supply,inclusive of a safety margin,for all hours of the year.Discrepancies between the supply and demand catalyse new investments.The choice of technology for these investments hinges on each technologys revenue-a

264、djusted Levelized Cost of Electricity(LCOE),which factors in the annual average revenue deviation from the norm across all technologies.Increasingly,solar and wind are becoming the preferred choices within this market despite potential future revenue declines.2.The second market,the capacity market,

265、is engineered to guarantee sufficient reliable capacity to counterbalance the intermittency of renewable energy sources like solar and wind.This market activates investments when there is a shortfall between the peak electricity load(again,including a safety margin)and the available reliable capacit

266、y.The evaluation for new investments considers the availability of dispatchable generation,accounting for maintenance downtime,and statistically assesses the contributions from renewables and storage throughout the simulation.Investment decisions are predominantly influenced by the cost per unit cap

267、acity,with low-CAPEX dispatchable technologies such as gas turbines and diesel reciprocating engines often being the most viable options.3.The third market,called the flexibility market,addresses the need for hour-to-hour flexibility,necessitated by the variance in residual load,which includes both

268、the load and the supply from variable renewables.This market assesses how the variability in the system,influenced by load fluctuations and renewable output,can be miti-gated.It statistically evaluates the contribution of each technology to system flexibility,including options such as dispatchable g

269、eneration,storage,demand response,electrolysers,and intercon-nections.New investments are triggered when there is a gap between the required flexibility and what is available,with decisions based on the levelized cost of flexibility a metric that averages the investment and operational costs of flex

270、ibility technologies over their lifespan.Storage technol-ogies frequently emerge as top contenders in this market due to their operational characteristics.28DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYThe LCOE is essential for determining the

271、 cost-effectiveness and appeal of power station investments.The global average LCOE of technologies,which represents the cost of producing a megawatt-hour of electricity throughout a power stations lifespan,is depicted in Figure 2.1,illustrating its evolution across various power station types.Solar

272、 PV and wind have already secured the most competitive LCOE in many areas.Their downward LCOE trajectory is due to technological learning rates and driven by technological advancements,economies of scale,and improved manufacturing and deployment practices.From 2020 to 2050,we project these rates at

273、12%for solar PV,13%for onshore wind,and 15%for fixed offshore wind.This means every doubling in global capacity corresponds to a respective LCOE drop by these percentages.RenewablesSolar PV is set to break the USD 30/MWh mark by 2030 at the global average,with on-site storage adding another USD 22/M

274、Wh to the levelized cost.Average onshore wind LCOE will follow solar PV with a five-year delay in reaching USD 30/MWh.We foresee 2030 global LCOE for fixed offshore wind to be around 68 USD/MWh,and for floating offshore to be at 140 USD/MWh.From 2030 to 2050,the global weighted average of solar PV L

275、COE will reduce by 1.5%per year,reaching USD 22/MWh.Onshore wind will experience an average 1.1%/yr reduction with a mid-century cost of USD 27/MWh.Fixed offshore wind will stay above the USD 51/MWh mark on average,but will be as low as USD 32/MWh in ideal locations.Floating offshore will maintain a

276、n average USD 16/MWh cost premium from bottom-fixed in 2050,but sites with consistent high winds and short distances to shore will 2.2 COST TRAJECTORIESTechnology cost learning rates for renewablesTechnology learning rates are driven by technological advances,economies of scale,and improved manufatc

277、uring and deployment practices.The rate is given as a percentage change in the Levelized Cost of Energy(LCOE)for every doubling in global capacity.In our forecast,the rates projected for renewable technologies is as follows:12%Solar PV13%Onshore wind15%Offshore wind19%EV batteries29DNV New Power Sys

278、temsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYbe competitive in terms of LCOE.Hydropower costs are dependent on site-specific geological conditions,project scale,engineering challenges,and environ-mental and regulatory considerations.The global average cost is

279、to remain around USD 75-100/MWh.Conventional power stationsOn the other hand,conventional power stations face limited scope for further technology-driven cost reduc-tions.Consequently,factors like fuel costs,carbon pricing,and operational duration(capacity factors)will determine their future costs.W

280、hile coal-fired power stations are observing an upward LCOE trend due to declining capacity factors,gas-fired power maintains a relatively steady capacity factor and a steady LCOE in the USD 50-120/MWh range,thanks to its lower carbon footprint and strategic shifts to regions with more affordable ga

281、s.The cost data for nuclear is scarce and a small number of projects can skew the data,but the general trend in OECD countries has been increasing cost due to cost overruns.With the balance shifting to China and Indian Subcontinent,and the emer-gence of small modular reactors,we expect average cost

282、of nuclear to reduce to USD 70-80/MWh,with a range as low as USD 50/MWh.The real-term cost of capital is a significant component in the LCOE equation as it represents the return required by investors to fund a power project.It reflects the risk perception of investors about various technologies and

283、regions.A higher cost of capital increases the overall financing cost of a power project,thereby raising the LCOE.Our projections on this can be found in Table 2.1.See Chapter 5 of our Energy Transition Outlook(2023a)for a more detailed discussion of our cost of capital projections across energy sou

284、rces.Energy-revenue adjusted LCOE While LCOE has been the main metric in assessing the competitiveness of technologies,its inability to reflect revenues makes it an incomplete measure for determining future investments.To overcome this problem,as shown in Figure 2.1,we use the energy-revenue adjuste

285、d LCOE.This metric accounts for the difference between a technologys annual capture price and the prevailing wholesale price.Such adjustments ensure that technology earnings align with market demands.Power stations also receive compensation for ensuring a certain portion or all of their capacity is

286、available during times specified by the system operator.This arrangement underpins grid reliability and ensures adequate capacity during peak demand.As variable renewables grow,we anticipate a rise in these capacity markets.Emerging flexibility markets,which are not yet widespread,will likely become

287、 key in future power systems.Such flexibility markets compensate power producers and storage operators for their ability to rapidly adjust electricity output in response to grid demands.In our model,we segment these markets energy,capacity,flexibility distinctly.When there is a gap between demand an

288、d supply of energy,it can spur new investments,with the revenue-adjusted LCOE acting as a guide to identify the most cost-effective technologies.We also compute similar metrics for capacity and flexibility to influence the mix of new investments.TABLE 2.1Cost of capital assumptions by power station

289、type and regionFossil-fuel firedNuclearMature renewables*Emerging renewables*2022203020402050202220302040205020222030204020502022203020402050NAM12%16%18%20%6%5%5%4%6%5%5%5%11%8%5%5%LAM12%18%18%20%10%9%9%8%8%7%6%6%13%10%6%6%EUR15%20%23%25%6%5%5%4%5%5%5%5%10%8%5%5%SSA9%16%18%20%10%10%10%10%8%7%7%6%13%

290、10%7%6%MEA12%16%18%20%6%6%6%6%8%7%7%6%13%10%7%6%NEE14%11%11%11%14%11%11%11%14%11%11%11%19%15%13%11%CHN6%10%15%20%6%5%5%4%6%6%6%6%11%9%6%6%IND9%16%18%20%8%8%8%8%8%7%7%6%13%10%7%6%SEA9%16%18%20%10%10%10%10%8%7%7%6%13%10%7%6%OPA12%16%18%20%6%5%5%4%6%6%6%6%11%9%6%6%*Mature renewables include hydropower,

291、bioenergy,solar,onshore wind,and bottom-fixed offshore wind.*Emerging renewables include floating offshore wind.30DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYDelays in planning and permitting,especially in regions like the US,Europe,and the I

292、ndian Sub-Continent,are becoming major roadblocks to the energy transition.Wind energy projects,notably offshore,can face up to a decade of delay,while complex grid infrastructures can take up to 15 years due to,for instance,intricate negotiations with local communities or cross-border permit consid

293、erations.These setbacks not only inflate project costs but also sow uncertainties,potentially dissuading future investments.Figure 2.2 describes the trajectory of new solar and wind capacity additions we forecast up to 2050,showing a steady but restrained growth in the short term.While some regulato

294、ry initiatives,like Europes RePowerEU plan and Indias Environ-mental and Social Impact Assessments framework,aim to address these challenges,a broader shift in the regulatory mindset that prioritizes proactive grid investments and upgrades is crucial for a seamless energy transition.Our sidebar on P

295、ermitting Delays at the end of this chapter explores this issue in more detail.In addition to the planning and permitting challenges faced by the renewables sector,renewable power confronts a set of pressing short-term challenges.The global uptick in interest rates,driven by major central banks,is s

296、et to inflate both debt and equity capital costs through 2023 and 2024,hampering the economic feasibility of projects.Manufacturers are grappling with dwindling profit margins due to surging raw material costs,especially steel for wind turbines,and accelerated technological evolution leading to comp

297、onent quality issues.Supply-chain bottlenecks have further exacerbated delays and costs for wind projects in particular.Concurrently,the rapid evolution in wind technology,marked by enhanced component designs and increasing rotor sizes,is temporarily curbing the traditional cost-saving benefits accr

298、ued from mass production.Furthermore,mandates for local content in emerging markets sometimes become impediments rather than incentives,as compliance proves overly costly or complex,leading to contract failures.We foresee the impact of this in the form of increased solar investment costs on the orde

299、r of 10%in Europe until the early 2030s as it shifts its supply from China to Europe.2.3 NEAR-TERM CHALLENGES31DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYIndustry sentimentDNVs Energy Industry Insights(DNV,2024a)research now in its 14th year

300、 explores the confidence,sentiment,and priorities for the energy industry in the year ahead.For our 2024 report,we canvassed the views of over 1,000 industry professionals in the opening months of this year.Nearly two thirds(64%)of renewables respondents believe that the year ahead will see more lar

301、ge,capital-intensive projects approved than in the past 12 months.Like other indicators,this is lower than last year(73%),but it suggests the growth of renewables will not slow down by much.As shown below,there has been some easement in negative sentiment regarding supply chain issues.However,permit

302、ting/licensing issues and inadequate infrastructure continue to be among the top 5 barriers to growth for renewables respondents,and 70%say that power grid infra-structure cannot yet adequately connect sources of renewable energy to areas of high demand.Just 21%say that current transmission capacity

303、 planning is sufficient to enable the expansion of renewables.FIGURE 2.4Supply related barriersDelays in renewable energy projects arise from several factors,including:Siting issues:Permission to build renewable energy projects meet contradictory energy,climate,environmental,and societal goals in sp

304、ecific areas,such as cultural or historical significance,biodiversity preservation,and the potential disruption of livelihoods on poductive land and water bodies.Interconnection challenges(gridlock):Permission to connect a renewable energy project to an existing transmission grid can be complex.If t

305、he grid is already heavily loaded,there may be insufficient capacity to accommodate the additional power unless upgrades or expansions of the grid infra-structure are made.Delays in expansion of grid infrastructure arise from several factors,including:Time-consuming processes to obtain permit to bui

306、ld high-voltage transmission lines,involving environmental impact assessments,public hearings,and negotiations with local communities.Lack of coordinated spatial planning and permitting process for generation sites,grids,and the related project infrastructure.Lack of anticipatory investment to accom

307、modate distributed energy sources at the distribution level.Lack of appropriate cross-border,inter-state/province collaboration on permit considerations.Gridlock and permitting delaysPlanning and permitting of power capacity and grid are increasingly a bottleneck,potentially acting as a barrier to t

308、he energy transition by delaying renewable capacity developments.It can take up to 10 years to build a wind energy project,especially offshore(WEF,2023a).Deploying grid infrastructure is complex,involves multiple stakeholders,and can take up to 15 years.Delays result in increased project costs,and u

309、ncertainties for both project developers and investors,thus potentially decreasing the flow of capital.Percentages show net optimism the sum of somewhat optimistic or highly optimistic about the growth prospects for(their part of)the energy industry in the year ahead.64%of renewables respondents bel

310、ieve that the year ahead will see more large projects approved.32DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYThe extent of delays and the dynamic between renewable capacity and grids were highlighted by BloombergNEF(BNEF,2023)as shown in Figu

311、re 2.5.Almost 1,000 GW of solar projects are stuck in the connection queue across the US and Europe,close to four times the amount of new solar capacity installed around the world last year.Over 500 GW of wind were also waiting to be plugged into the grid,five times as much as was built in 2022.Thes

312、e numbers are alarming,but we note that renewables projects tend to apply multiple times for the same wind/solar park in different locations.Moreover,a project may not be realized for a variety of reasons even if they receive a positive answer to a connection request from network operators.Neverthel

313、ess,there is a considerable and growing gap between the amount of renewable generation in the project development pipeline and transmission capacity.Delays are receiving regulatory attentionThe permitting and siting process for both renewable plants and grids has received extensive attention since l

314、ast years ETO.Policymakers in several ETO regions have taken significant steps to expedite permitting.In Europe,the RePowerEU plan,Council Regulation 2022/2577(December 2022),and the agreed upon Renewable Energy Directive(RED III)emphasize new,simpler permitting.For example,RED III details designate

315、d projects/areas of overriding public interest,digital processes,and swifter permitting deadlines(one year for pre-identified appropriate land/go-to areas,others with a two-year time frame,three for offshore wind construction permits).The Trans-European Energy Networks Electricity(TEN-E)regulation a

316、ims to better interconnect national infrastructure across Europe(Euroelectric,2022).In her recent State of the Union address,EC President Ursula von der Leyen unveiled a new EU Wind Power Package.It aims to fast track permitting even more by improving auction systems,skills development,and access to

317、 finance,as well as stabilize supply chains(Sanderson,2023).In the Indian Subcontinent region,the Environmental and Social Impact Assessments(ESIAs)framework has expedited the delivery of renewable energy projects(WEF,2023a).India has launched the National Single-Window System to provide investors a

318、nd businesses with a one-stop-shop for approvals,and for advancing investments in an interstate trans-mission network(Mercom,2022).In the OECD Pacific region,the Australian Energy Market Operator developed the Integrated System Plan(ISP)(AEMO,2022)which aims to broaden its scope from big transmissio

319、n projects and speed up planning and approvals decisions for clean energy,wind and solar projects.In the North America region,several steps at the federal level have been taken focusing on expediting permitting reform.We refer the reader to DNVs report Energy Transition North America 2023(DNV,2023b)

320、for further details.Editors note:for detail on how we reflect permitting delays in our supply forecast see discussion on page 52 and Figure 4.5.FIGURE 2.533DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYPrice cannibalizationPrice cannibalization

321、 is a looming challenge for the continued growth of variable renewables.Essen-tially,it refers to the phenomenon where revenues of variable renewables diminish due to a significant presence of solar and wind in the system,leading to more hours annually with prices dictated by these zero-cost technol

322、ogies.This potential for price canni-balization threatens the future appeal of renewables that do not integrate storage,with solar PV being especially vulnerable.From our studies,we have identified that solar PV starts feeling the pinch of price cannibalization once renewable penetration hits the 20

323、%mark.As the penetration of renewables escalates,the capture price for solar PV correspondingly diminishes.To put this into perspective,at a 70%variable renewables penetration,solar PVs capture price dwindles to half the typical wholesale electricity rate.In contrast,due to the reduced correlation b

324、etween wind generation patterns and electricity demand,wind energy feels a marginal cannibalization effect.Interestingly,opportunistic generation technologies,such as solar combined with storage,alongside traditional fossil-fired power plants,will witness a surge in their capture prices compared to

325、the regional average wholesale price.This trend is vividly illustrated in Figure 2.1,which showcases the disparity between LCOE and revenue-adjusted LCOE.Taking revenue adjustments into account,solar+storage emerges as the most promising electricity source,a conclusion further bolstered by its propo

326、rtion in overall investments.While revenue adjustments somewhat uplift conventional generations appeal over pure LCOE,the cost gap with renewables becomes overwhelmingly evident.FlexibilityFlexibility in power systems is becoming increasingly paramount,as evidenced by the 2022 European electricity d

327、emand shown in Figure 2.6.Here,demand fluctuates between 290 and 510 GW,with these variations mainly attributed to daily end-use activities such as the operation of appliances,lighting,and water heating.Additionally,distinct patterns emerge due to variations across days of the week and months,result

328、ing from factors like office closures over weekends and shifting electric heating and cooling demands throughout the year.2.4 LONG-TERM CHALLENGESThe curves display Europes aggregate supply and demand,organized by total load.For clarity,hours are grouped,not plot-ted individually.This grouping cause

329、s the appearance of solar PV output at all times,even during hours when Europe has no solar generation due to lack of sunlight.Curtailed output is not shown.34DNV New Power SystemsFLEXIBILITY&STORAGEGRIDSAFFORDABILITYECONOMICS&MODELLINGDIGITALIZATIONELECTRICITYWith the surge in variable renewables,w

330、e anticipate a more significant role for these flexibility markets.AdequacyEnsuring the future power systems adequacy the ability to consistently meet demand remains crucial,especially with the rising integration of variable renewable energy sources and changing consumption habits.Moreover,increased

331、 electrifi-cation of sectors such as transport and heating adds complexity to demand patterns.A representation of the core of this challenge lies is shown in Figure 2.6,which presents the simulated electricity supply and demand distributions for Europe in 2022 and 2050.Contrary to intuition,the most

332、 pressing adequacy challenges in 2050 will not emerge during the hours of peak demand.The reason?Solar output,for example,aligns well with high-demand hours.Instead,the challenge appears during hours with minimal solar and wind output.In our simulations,which use 2015 representative profiles for sol

333、ar and wind output,the hour show-casing the largest disparity between demand and the sum of solar and wind output the residual load demands no more than 772 GW from dispatchable generation sources.By 2050,combining dispatchable thermal generation(316 GW)and hydropower (606 GW)can surpass this residual load,even if some capacity is unavailable due to maintenance.Further bolstering this capacity,we