Affordable and Clean Energy

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Browsing Affordable and Clean Energy by Subject "Electric power production"

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    Potential limitations of marginal pricing for a power system based on renewables
    (International Renewable Energy Agency (IRENA), 2022) Garcia-Casals, Xavier; Bianco, Emanuele
    Marginal pricing wholesale power markets could produce significant barriers for the energy transition, and on their own do not appear to be appropriate organisational structures for renewables-based power systems. Besides the well-known cannibalisation and merit order effects (depressing renewable generator revenues as the transition advances), under a marginal pricing-based power system organisational structure, the high difference in marginal costs of the technologies needed to operate a renewables-based power system (bulk renewable generation and flexibility) may lead to socio-political instabilities such as those experienced during 2022 as a consequence of high natural gas prices. A way to prevent the misalignments and transition barriers explored in this Technical paper is to change the power system organisational structure in such a way that it honours the different techno-economic characteristics of both bulk renewable electricity generation and flexibility. IRENA’s dual procurement proposal is an example of such an organisational structure. Marginal pricing can still play a role but with its scope limited to the procurement of flexibility.
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    Renewable energy market analysis: Africa and its regions
    (International Renewable Energy Agency (IRENA), 2022)
    Africa is at a crossroads. For many of the people of this vast and diverse continent, access to affordable, clean and sustainable energy remains an aspiration. The need for better and more abundant energy is evident in many walks of life, from households relying on dirty fuels for cooking and farmers lacking energy to harvest their crops, and from health clinics struggling to power operating rooms to businesses contending with power outages. Climate change is fast adding new challenges in the form of extreme weather events, rising temperatures and more variable rainfall. We know that renewable energy can help to resolve many of these social, economic, health and environmental challenges. Renewables are key to overcoming energy poverty, providing energy services without damaging human health or ecosystems, and enabling sustainable socio-economic development. As this report shows, a transition to a renewables-based energy system in Africa promises substantial gains in GDP, employment, and human welfare in each of the continent’s constitutive regions. Although Africa’s share of global renewable energy investments and capacity installations remained relatively small over the past decade, the continent can draw on a vast wind, solar, hydro, and geothermal resource potential. Falling costs are increasingly bringing renewables within reach, whether through grid extension, mini-grids or stand-alone applications. A profound energy transition centred on renewables and energy efficiency is increasingly understood as not only feasible but essential for a climate-safe future in which sustainable development prerogatives are met. In fact, a sophisticated understanding of the intimate connections between the energy system and the economy at large is essential in designing policies, along with an appreciation of the ways in which both are linked to the world’s ecosystems and human wellbeing. Experience around the world gives us a strong sense of what it takes to succeed. As this report makes clear, African policymakers can draw on a wealth of experience in planning, financing, and deploying renewable energy projects, and integrating them into energy systems. But as is true in other parts of the world, it is critical that each African country play to its own strengths and understand its weaknesses, whether in terms of its industrial capacities, commodity and trade dependencies, or skills base. Countries can and must learn from each other. Intra-regional and broader international cooperation can overcome drawbacks any individual country may face on its own. A wide-ranging challenge demands a comprehensive policymaking approach. This report illuminates the array of policy areas that may contribute to a successful energy transition. But rather than picking policies selectively, they all need to be part of an overarching, holistic framework that is more than just the sum of its parts. The growing discourse on a Green Deal in places like Europe and North America has spotlighted the importance of a bold, systemic approach. A Green Deal will of necessity look different in Africa, tailored to its own circumstances. But the key point is its transformative nature: pursuing synergies in resolving pressing social, economic, health, and environmental issues, recognising that because market-driven approaches alone will not suffice strong public interventions are needed, and placing people at the centre of the transition. The objectives of Africa’s energy transition are far-reaching economic diversification; the creation of decent jobs; environmental stewardship and climate resilience; and universal access to affordable, reliable, sustainable and modern energy. A comprehensive policy package, as detailed in this report, must be underpinned by strong institutions and adequate financial resources, assisted by international collaboration, and supported by communities on the ground. This report offers policymakers and the interested public a wealth of data, insights, and policy recommendations. It is my hope that it will also prove to be an inspiration, helping to spark the energy transition and driving the continent’s sustainable development.