The (Slow) Evolution of the Global Energy System

The global excitement around intermittent electricity-generating resources is palpable but overstated, perhaps reflecting a limited understanding of physics, engineering, and math on the part of the media and most politicians. One recent example is a series of breathless news reports on China’s progress in adding renewable capacity to its vast electric supply mix.

According to some of these stories, intermittent renewables (i.e., wind and solar) are on the cusp of becoming the largest sources of electricity in China. While they have indeed made gains, and we should hope for a day when China’s electricity system is no longer reliant on fossil fuels, intermittent renewables will not come remotely close to powering China’s electric system – let alone its U.S. $17 trillion economy – in the foreseeable future. To understand why, we need to look at the bigger picture of energy demand and supply and study the history of energy system evolutions — prolonged affairs lasting multiple decades or longer.[1]

First, note that electricity — a secondary form of energy — meets less than 20 per cent of total global energy demand. In China the share is just 17 per cent, comparable to Canada. This is important context for thinking about governments’ economy-wide electrification aspirations, whether in China or elsewhere, and as a counterfactual to the implied conclusions in recent reports about trends in China’s electricity production.

Chinese government statistics show that intermittent (wind and solar) renewable resources met about 12% of the country’s electric demand in 2021.[2]

Together with traditional hydro and nuclear resources, all greenhouse gas-free electricity sources combined provide just over one third of China’s electricity. Even with impressive growth in 2022, renewables in the Chinese electricity system do not make up most of the installed capacity, and the share of wind and solar in the country’s overall supply mix has in fact risen only modestly. For Canada, non-greenhouse gas emitting sources of electricity meet 82 per cent domestic demand, among the highest shares in the world. Wherever it is occurring, the growing role of less GHG-intensive sources of electricity is welcome.

Figure 1

But often overlooked is that 75-80 per cent of total global energy consumption, including in China, is still provided by fossil fuels. This shines a light on the gap between reality and feasible pathways for electrification of national economies; it also underscores the challenges that will arise amid a broad push to electrify the wider energy system — including spatial, materials and materials use, and embedded energy considerations.

Figure 2

Second, it is misleading to look just at quantities of new renewable electric capacity being added in China (or elsewhere). What ultimately matters is the maximum amount of electricity that different types of generation assets can produce, reliably. Capacity is important, but more important is the flow of electricity to enable real-time consumption — measured in kilo-, mega-, giga-, or tera-watt hours (multiples of each other). The flow of electricity is a combination of capacity multiplied by time (usually measured in hours over a year), together with the efficiency of various types of fuel conversion. Politicians and the media typically refer to capacity instead of flow when discussing electricity. This can cause confusion, because intermittent renewables have low conversion efficiencies — they are not always available, and they may not be producing when needed due to the vagaries of weather and the inconvenient fact that a significant portion of every 24-hour day is spent in darkness.

At the global level, total electric capacity in 2021 was about 8 terawatts (TW),[3]generating about 26,000 tera-hours (TWh) per year.[4] Readers need to understand the difference between the units of measurement, because the media and others tend to cite very small units (i.e., kilowatts and kilowatt hours) to give the impression that intermittent renewables are quickly coming to dominate the electric system, when the truth is otherwise. The International Energy Agency’s September 2022 report references expected additions of 340 GW of new renewable capacity across the world.[5]

This is an impressive number, but it represents less then 5 per cent of total global installed generation capacity. Oddly, the same IEA report does not mention electricity flow at all.

For its part, the Chinese government highlights 1.2 billion installed renewable kilowatts (or 1.2 TW) and claims 125 million kilowatts (0.125 TW) will be new renewables by 2025,[6]There is no mention of actual electricity produced, just capacity. Compared to Canada’s 0.149 TW of installed capacity, China indeed boasts a huge quantity of installed renewable energy, although its population is 35 times bigger, and its economy is roughly 10 times the size of our own.

Third, as noted, conversion efficiency and reliability are crucial. On the former, solar is about 24 per cent efficient and wind 35 per cent, while nuclear is 92 per cent, natural gas is between 45 and 57 per cent, and hydroelectricity can be greater than 90 per cent efficient, depending on the type of facility. This means the amount of electricity flow produced is considerably less when electric systems rely on intermittent renewables. Moreover, reliability is vital to consumers. Intermittent resources need other kinds of resources as back-up, or some sort of storage, to ensure flow in a world that demands 24/7/365 electricity supply. Batteries are one promising option, but they face a host of issues, including constrained supplies of critical minerals, the time required to develop new mines, human rights concerns in countries where most of these resources are located, and materials disposal. Battery technologies are improving, and batteries certainly will play a bigger role in an evolution of the global energy system. But they will not miraculously allow a full shift to a non-greenhouse gas emitting electric system within the span of a 1-2 decades. Do any of these caveats mean we should pull back from developing more renewable power? Certainly not. The caution, however, is to make sure the math, physics, and engineering are understood and aligned with policy decisions. It is necessary to avoid being bamboozled by the big numbers and misleading references to generation capacity in most reports touting the growth of intermittent renewables. Reliable and affordable flows of electricity is what consumers need and want; arguably, governments do, too. Intermittent resources are an important part of the electric supply mix; but so are all the other types of fuels.

[1] Smil, Vaclav. Energy Transitions: History, Requirements, Prospects. Praeger; Illustrated edition (May 26, 2010).[2]https://chinaenergyportal.org/2021-electricity-other-energy-statistics-preliminary/.[3]https://www.statista.com/statistics/267358/world-installed-power-capacity/.
[4]https://www.statista.com/statistics/280704/world-power-consumption/, https://iea.blob.core.windows.net/assets/255e9cba-da84-4681-8c1f-458ca1a3d9ca/ElectricityMarketReport2023.pdf.
[5]https://www.iea.org/commentaries/for-the-first-time-in-decades-the-number-of-people-without-access-to-electricity-is-set-to-increase-in-2022.
[6]http://english.www.gov.cn/statecouncil/ministries/202302/14/content_WS63ead393c6d0a757729e6b8c.html.