Global Energy Outlook: Next-Gen Clean Energy for a Greener Future

Five global energy trends were unveiled at our annual Global Energy Outlook (GEO) webinar, opening up dialogue on current and next-generation energy transition opportunities. This blog is part of a ‘Q&A roundup’ series based on questions posed at the webinar. Missed the webinar? Download the on-demand recording here.

Elody Samuelson & Serina Lesnar, Senior Consultants of Renewable Energy and Carbon Advisory, Schneider Electric’s Sustainability Business, explore the driving forces behind the rapid evolution of clean energy technologies.

What key factors are driving the global advancement of next-generation clean energy technologies?

Reflecting on the global stocktake agreement set forth at COP28, it's evident that renewable energy is the key to our decarbonization journey. The agreement underscores the imperative of tripling renewable energy capacity and doubling energy efficiency by 2030, emphasizing a transformative and equitable shift in the global energy sector.

Policy Initiatives: In 2022, the United States achieved a significant milestone in clean energy legislation with the passage of the Inflation Reduction Act (IRA), the largest clean energy bill in history. This legislation restored key tax credits for clean energy projects, including the production tax credit and the investment tax credit, leading to renewed funding for renewable energy initiatives and added new technology to the scope.

A notable provision within the IRA is the introduction of the transferability clause, which allows buyers to purchase transferable tax credits, unlocking billions of dollars in renewable energy financing. These incentives encompass a wide range of clean energy solutions, from wind and solar to battery energy storage, and even emerging technologies such as clean hydrogen, sustainable aviation fuels, and zero-emission nuclear generation. Recently, Schneider Electric announced a groundbreaking tax credit transfer agreement with ENGIE North America, allowing us to get closer to our own 100% renewable energy goal in North America. This innovative policy demonstrates the potential of strategic partnerships in driving clean energy adoption and aligns with efforts to rapidly decarbonize the grid.

In Europe, the EU Green Deal serves as a cornerstone for achieving carbon neutrality by 2050, highlighting a steadfast commitment to sustainable energy. The plan sets ambitious targets for renewable energy expansion, particularly focusing on onshore and offshore wind power. To meet the 42.5% renewable capacity target, a significant addition of 300 gigawatts by 2030 is crucial, alongside 60 gigawatts of offshore wind by 2030 and 300 gigawatts by 2050. Initiatives such as the Repower EU Plan, developed in response to natural gas spikes and geopolitical challenges, have driven a remarkable 27% increase in solar energy capacity in 2023 alone. The growing interest in energy storage solutions further underscores Europe's dedication to accelerating renewable energy adoption, with projected capacities expected to reach 200 gigawatts by 2030 and an impressive 600 gigawatts by 2050, signaling a transformative shift towards sustainable energy sources.

Grid investment and modernization: As the momentum towards renewable energy heightens, there is an increasing need to upgrade and innovate existing grid infrastructure. Despite moderate increases in grid spending between 2015 and 2022, these investments fall short of addressing the demands imposed by aging grids. To align with net-zero emission targets, substantial financial commitments are required. Notable global initiatives, such as the EU's action plan and significant investments announced by China and Japan, emphasize the importance of strengthening grid modernization efforts.

Microgrids emerge as a promising solution to efficiently balance supply and demand. These decentralized systems offer greater resilience and flexibility in managing energy distribution, vital for accommodating evolving energy needs and accelerating the transition toward sustainable energy sources. A prime example of an innovative infrastructure project is the collaboration between Schneider Electric and the US Air Force. The implementation of a $406 million infrastructure improvement project at Yokota Air Base in Japan demonstrates the integration of combined heat and power plants with microgrid controls, capable of generating over 10 megawatts of power. This initiative not only enhances the base's energy resiliency but also mitigates potential disruptions to the grid caused by extreme weather events, reinforcing the significance of modernizing energy infrastructure to meet future challenges.

Innovative solutions and emerging technologies: Innovations in fuel type, particularly the emergence of green hydrogen, are shaping the future of clean energy. By 2050, hydrogen is projected to meet 14% of global energy demand, with many countries adopting national strategies to harness its potential. For instance, the EU has integrated low-carbon hydrogen into legislative frameworks, while India and Japan pursue distinct strategies to advance green hydrogen adoption.

However, caution is warranted, as rapid hydrogen production without concurrent growth in emissions-free electricity could exacerbate environmental challenges. This underscores the importance of aligning energy production with sustainability goals.

Next steps

In conclusion, achieving a sustainable future relies on collective action, policy measures, and continuous innovation in clean energy. As we navigate this transformative journey, it's crucial to prioritize investments in grid infrastructure, technological breakthroughs, and strategic partnerships to expedite the uptake of next-generation clean energy solutions.