Focus On Avoiding Renewable Curtailments-IEA Prescriptions

Highlights :

  • Every 1 percent increase in curtailment could result in billions of dollars in lost revenue globally: IEA report
  • Rapid rise of renewables is facing a critical set of bottlenecks, including grid congestion, curtailment, and inadequate infrastructure, posing challenges to renewable integration in grids
Focus On Avoiding Renewable Curtailments-IEA Prescriptions

Renewable energy sources such as solar and wind power are growing at a rapid pace. Naturally, the transition is also driving significant transformation for the global energy landscape. In 2024, global renewable energy capacity is expected to increase by almost 20 percent, building on the record growth of 60 percent seen in 2023. While this expansion is crucial for decarbonising power generation and meeting climate goals, it also presents significant challenges to variable renewable energy (VRE) integration into existing power grids. 

According to the International Energy Agency (IEA) Renewables 2024 report, the rapid rise of renewables is facing a critical set of bottlenecks, including grid congestion, curtailment, and inadequate infrastructure. 

IEA details these key challenges and the implications they have for the future of renewable energy integration.

The Rising Tide of Renewable Energy: A Snapshot of 2024

The global renewable energy capacity is expected to add nearly 680 GW in 2024, driven primarily by solar PV and wind energy. As it stands, China is a leader in renewable capacity additions, contributing to about 60 percent of global growth. The European Union, the United States, and India are also making significant strides, doubling their pace of deployment. However, the integration of this new capacity into existing power systems is proving to be a challenge.

Renewable electricity net capacity additions by country/region, 2023-2024

Solar PV and wind energy account for nearly 95 percent of all new renewable capacity added in 2024. Solar PV alone is expected to contribute nearly 400 GW of new capacity, while wind adds another 150 GW.

However, with the increase in renewable capacity, there is increasing strain on transmission and distribution networks, leading to higher curtailment rates and grid congestion, particularly in regions with limited infrastructure investment.

Curtailment: A Growing Concern in High Penetration Markets

Curtailment occurs when the grid is unable to absorb all the electricity generated by renewable sources, leading to waste of energy. While high renewable penetration indeed is an achievement, the grids of countries who achieved this feat are now struggling to manage the variable output from solar and wind farms.

In markets such as China, Germany, and the United States, curtailment rates for wind and solar have reached between 5 percent and 15 percent of total generation. For instance, in China, the curtailment rate for solar PV increased in the first quarter of 2024 to nearly 3 percent due to grid constraints in regions with rapid capacity additions.

The impact of high curtailment rates have economic implications too. High curtailment rates translate into lost revenue for renewable energy producers and inefficiencies in energy markets. The IEA report estimates that every 1 percent increase in curtailment could result in billions of dollars in lost revenue globally.

Grid Congestion and Connection Delays

One of the primary bottlenecks in 2024 is the congestion in transmission networks. The congestion limits the ability to transport electricity from regions which are renewable hotspots to demand centres.

The IEA report highlights that at least 1,650 GW of renewable capacity is currently at advanced stages of development but is waiting for grid connections, a 150 GW increase compared to 2023. This capacity includes solar and wind projects in regions such as the United States and Europe, where long permitting processes and regulatory hurdles slow down grid expansion.

Consequently, there are delays in connecting new projects. In the United States, for example, over 50 percent of new solar and wind projects face connection delays of more than two years. These delays result from the time needed to secure permits, conduct environmental reviews, and build the necessary transmission infrastructure.

In 2024, the European Union introduced new regulations to simplify the permitting process for renewable energy projects, reducing the average time required for approvals by 25 percent. Despite this, many projects still face delays due to local opposition and administrative challenges.

Notably, the EU has invested in cross-border interconnections to enhance the integration of renewable energy across member states. For example, the construction of the North Sea Wind Power Hub aims to connect offshore wind farms across Denmark, Germany, and the Netherlands, creating a more integrated power market. However, these projects require significant investment and coordination among countries.

The Need for Grid Flexibility: Energy Storage and Demand Response

As more variable renewable energy is integrated into power systems, maintaining grid stability requires new sources of flexibility. Energy storage systems and demand response measures are crucial for balancing supply and demand, especially during periods of low renewable generation or peak demand.

In 2024, global battery storage capacity is expected to increase by 30 percent, adding around 60 GW of new capacity. This growth is driven by declining battery costs and increased deployment in markets like the United States, China, and Europe. However, the total storage capacity remains far below what is needed to balance the variability of solar and wind energy.

Notably, Demand Response, which involves adjusting electricity consumption in response to grid needs, is emerging as a valuable tool for managing variability. In Europe, demand-response programs have helped reduce peak demand by 5 percent in 2024, easing pressure on the grid and reducing the need for curtailment.

Infrastructure Investment Gap: A Barrier to Long-term Growth

A key challenge highlighted by the IEA is the gap in infrastructure investment needed to support the rapid deployment of renewables. While investments in renewable generation have surged, spending on transmission and distribution networks has lagged behind, creating imbalances in the energy system.

As per IEA estimates, an additional USD 200 billion in annual investment is needed globally to upgrade and expand transmission networks through 2030. This investment would help reduce congestion and enable the connection of new renewable projects.

Investment needs are particularly acute in emerging markets and developing economies, where high financing costs and weak policy frameworks hinder the development of new infrastructure. In contrast, regions like Europe and the United States have begun to address some of these gaps through targeted policy support, such as the EU’s REPowerEU plan and the United States’ Infrastructure Investment and Jobs Act.

Addressing the Bottlenecks for a Sustainable Future

The challenges of renewable energy integration into the grid are complex and multifaceted, but they are not insurmountable. By addressing bottlenecks such as curtailment, grid congestion, and the investment gap, countries can unlock the full potential of renewable energy. The IEA’s Renewables 2024 report underscores the need for coordinated policy efforts, increased investment in grid infrastructure, and innovative solutions like energy storage to create a resilient energy system.

As the world strives to meet its climate goals, tackling these renewable integration challenges is essential for ensuring that the rapid growth of renewables translates into real progress towards a low-carbon future. With the right investments and policy frameworks, the vision of a cleaner, more sustainable energy system is within reach.

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Junaid Shah

Junaid holds a Master of Engineering degree in Construction & Management. Being a civil engineering postgraduate and using his technical prowess, he has channeled his passion for writing in the environmental niche.

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