国际能源署-低碳燃料在电力部门清洁能源转型中的作用（英）-2021.10-116正式版

TheRoleofLow-CarbonFuelsintheCleanEnergyTransitionsofthePowerSectorTheRoleofLow-CarbonFuelsintheCleanEnergyTransitionsofthePowerSectorINTERNATIONALENERGYAGENCYTheIEAexaminesthefullspectrumofenergyissuesIEAmembercountries:IEAassociationcountries:includingoil,gasandcoalsupplyandAustraliaAustriaBelgiumCanadaCzechRepublicDenmarkEstoniaFinlandFranceGermanyGreeceBrazilChinademand,renewableenergytechnologies,electricitymarkets,energyefficiency,accesstoenergy,demandsidemanagementandmuchmore.Throughitswork,theIEAadvocatespoliciesthatwillenhancethereliability,affordabilityandsustainabilityofenergyinitsIndiaIndonesiaMoroccoSingaporeSouthAfricaThailandHungaryIrelandItalyJapan30membercountries,8associationcountriesandbeyond.KoreaLuxembourgMexicoNetherlandsNewZealandNorwayPolandPortugalSlovakRepublicSpainPleasenotethatthispublicationissubjecttospecificrestrictionsthatlimititsuseanddistribution.ThetermsandconditionsareavailableonlineatSwedenSwitzerlandTurkeyUnitedKingdomUnitedStates/t&c/Thispublicationandanymapincludedhereinarewithoutprejudicetothestatusoforsovereigntyoveranyterritory,tothedelimitationofinternationalfrontiersandboundariesandtothenameofanyterritory,cityorarea.TheEuropeanCommissionalsoparticipatesintheworkoftheIEASource:IEA.Allrightsreserved.InternationalEnergyAgencyWebsite:Theroleoflow-carbonfuelsinthecleanenergytransitionsofthepowersectorAbstractAbstractGovernmentsaroundtheworldarefacedwiththechallengeofensuringelectricitysecurityandmeetinggrowingelectricityuseswhilesimultaneouslycuttingemissions.Thesignificantincreaseinrenewablesandelectrificationofend-usesplaysacentralroleincleanenergytransitions.However,duetothevariablenatureofsolarPVandwind,asecureanddecarbonisedpowersectorrequiresotherflexibleresourcesonamuchlargerscalethancurrentlyexiststoday.Theseincludelow-carbondispatchablepowerplants,energystorage,demandresponseandtransmissionexpansion.Theavailabilityandcostofthesetechnologiesdependsonlocalconditions,socialacceptanceandpolicies.Thepossibilitytocombusthighsharesoflow-carbonhydrogenandammoniainfossilfuelpowerplantsprovidescountrieswithanadditionaltoolfordecarbonisingthepowersector,whilesimultaneouslymaintainingallservicesoftheexistingfleet.Therelevanttechnologiesareprogressingrapidly.Co-firingupto20%ofammoniaandover90%ofhydrogenhastakenplacesuccessfullyatsmallpowerplants,andlarger-scaletestprojectswithhigherco-firingratesareunderdevelopment.Ultimately,usinglargevolumesoflow-carbonhydrogenandammoniainthepowersectorwillhelpestablishsupplychainsanddrivedowncoststhrougheconomiesofscaleandtechnologicalimprovements,therebycomplementingandmutuallyreinforcingtheuseoflow-carboninfuelsinotherhard-to-abatesectorssuchaslong-haultransportandindustry.PAGE|3Theroleoflow-carbonfuelsinthecleanenergytransitionsofthepowersectorAcknowledgementsAcknowledgements,contributorsandcreditsThisstudywaspreparedbyacross-agencyworkinggroupdrawnfromseveraldirectoratesoftheIEA.ThestudywasdesignedanddirectedbyPaoloFrankl(HeadoftheRenewableEnergyDivision).Theanalysisandproductionofthereportwereledandco-ordinatedbyIlkkaHannula.TheworkbenefittedfromstrategicguidancebyKeisukeSadamori(DirectorofEnergy,MarketsandSecurity).Themaincontributorswere:IlkkaHannula,PaoloFrankl,NielsBerghout,KeithEverhart,PeerapatVithayasrichareon,LuisLopezandSaraBudinis.OtherIEAcolleagueswhomadecontributionstothisworkinclude(inalphabeticalorder):JulienArmijo,ElisaAsmelash,JoseBermudezMenendez,CarlosFernandezAlvarez,AlexandreGouy,AsthaGupta,TakuHasegawa,CesarAlejandroHernandez,ZoeHungerford,JavierJorquera,RandiKristiansen,PeterLevi,RaimundMalischek,SamanthaMcCulloch,GergelyMolnar,TomasdeOliveiraBredariol,UweRemme,NicoleThomasandBrentWanner.Thereportbenefittedalsofromcontributionsfromfollowingexternalconsultants:AlfonsoChinnici(UniversityofAdelaide),GrahamJ.Nathan(UniversityofAdelaide),andCédricPhilibert(IFRI)Valuablecomments,feedbackandguidancewereprovidedbyotherseniormanagement,includingKeisukeSadamori,PeterFraser,AadvanBohemenandTimurGül.ThispublicationwasproducedwiththesupportoftheJapaneseMinistryofEconomy,TradeandIndustry(METI).WeappreciatethecontributionsofspeakersattheIEAonlineworkhopthe“Roleoflow-carbonhydrogenandammoniaindecarbonisingthepowersector”heldinApril2021(inalphabeticalorder):MohitBhargavaTobiasBirweNTPCRenewableEnergyThyssenKruppEnelPaolaBrunettoAndrewDicksonToshiroFujimoriCWPGlobalIHIPAGE|4Theroleoflow-carbonfuelsinthecleanenergytransitionsofthepowersectorAcknowledgementsJitendraGuptaShellAhmadAlKhowaiterThierryLepercqTorbenNørgaardSaudiAramcoHyDealMærskMc-KinneyMøllerCenterforZeroCarbonShippingAkihikoTaniguchiJERASammyVanDenBroeckStephanieQueenYaraCleanAmmoniaGEPowerTheIEAwouldalsoliketothankthefollowingexpertswhoprovidedessentialinputstotheunderlyinganalyticalworkandreviewedthereport:KenjiAkiyoshiInpexCorporationSiemensGamesaIRENAHenrikBachMortensenHeribBlancoJohnBøgildHansenPaolaBrunettoHaldorTopsøeEnelJoseChavesComillasPontificalUniversityDepartmentScienceandTechnology,SouthAfricaCosmasChitemeFernandodeSisternesGniewomirFlisToshiroFujimoriTimoGerresWorldBankAgoraEnergiewendeIHIUniversidadPontificiaComillasSolarPowerEuropeIEAHydrogenTCPUSDOEWalburgaHemetsbergerMarinaHolgadoAyakaJonesEmmanouilKakarasJohnLauMitsubishiHeavyIndustriesEMEAIndependentexpertEnagasPharoahLeFeuvreFranzLehnerNOWThierryLepercqPaulLuccheseHyDealCEA&IEAHydrogenTCPNaturalResourcesCanadaEnelFoundationLauraMartinGiuseppeMontesanoSamMurakiTokyoGasManabuNabeshimaCarloNapoliMinistryofForeignAffairs,JapanEnelFoundationYasushiNinomiyaDariaNochevnikInstituteofEnergyEconomics,JapanHydrogenCouncilPAGE|5Theroleoflow-carbonfuelsinthecleanenergytransitionsofthepowersectorAcknowledgementsTorbenNorgaardMærskMc-KinneyMøllerCenterforZeroCarbonShippingIEABioenergyTCPIFRILucPelkmansCédricPhilibertAttilioPigneriH2U-TheHydrogenUtilityVattenfallTobiasRehnholmHisahideOkudaDavidReinerJERAUniversityofCambridgeJudgeBusinessSchoolSnamXavierL.RousseauNicolo’SartoriEnelFoundationEPRIRobertSteeleToshiyukiSudaEmanueleTaibiHeinovonMeyerMasashiWatanabeIHIIRENAInternationalPtXHubMinistryofEconomy,TradeandIndustry,JapanAkiraYabumotoDeepakYadavJ-PowerCEEW–Councilonenergy,environmentandwaterMærskMc-KinneyMøllerCenterforZeroCarbonShippingMadsZachoThanksalsototheIEACommunicationsandDigitalOffice(CDO)fortheirhelpinproducingthepublication,especiallytoJadMouawad,HeadofCDO,AstridDumond,MariamAliabadiandThereseWalsh.WethankElspethThomsonforcopy-editingthemanuscript.PAGE|6Theroleoflow-carbonfuelsinthecleanenergytransitionsofthepowersectorExecutivesummaryExecutivesummaryUsinglow-carbonhydrogenandammoniainfossilfuelpowerplantscanplayanimportantroletohelpensureelectricitysecurityincleanenergytransitionsGovernmentsaroundtheworldarefacedwiththechallengeofensuringelectricitysecurityandmeetinggrowingelectricityuseswhilesimultaneouslycuttingemissions.Thesignificantincreaseinrenewablesandelectrificationofend-usesplaysacentralroleincleanenergytransitions.However,duetothevariablenatureofsolarPVandwind,asecureanddecarbonisedpowersectorrequiresotherflexibleresourcesonamuchlargerscalethancurrentlyexiststoday.Theseincludelow-carbondispatchablepowerplants,energystorage,demandresponseandtransmissionexpansion.Theavailabilityandcostofthesetechnologiesdependsonlocalconditions,socialacceptanceandpolicies.Thermalgenerationisthelargestsourceofpowerandheatintheworldtoday,alsoprovidingkeyflexibilityandothersystemservicesthatcontributetothesecurityofelectricitysupply.Theseplantsarealsolong-lasting:By2030,79%ofthecoalandgas-firedplantsinadvancedeconomieswillstillhaveusefultechnicallife,beforedecliningto43%in2040.Inemergingeconomies,duetorecentinvestments,thesefiguresare83%in2030and61%in2040.Countriesthatrelystronglyonfossilfuel-basedpowergenerationwillberequiredtomakeverysignificanteffortstoachievedecarbonisationobjectivestocomplywiththeParisAgreementorNetZerotargets,whereapplicable.Thepossibilitytocombusthighsharesoflow-carbonhydrogenandammoniainfossilfuelpowerplantsprovidescountrieswithanadditionaltoolfordecarbonisingthepowersector,whilesimultaneouslymaintainingallservicesoftheexistingfleet.Therelevanttechnologiesareprogressingrapidly.Co-firingupto20%ofammoniaandover90%ofhydrogenhastakenplacesuccessfullyatsmallpowerplants,andlarger-scaletestprojectswithhigherco-firingratesareunderdevelopment.Thevalueoflow-carbonfuelsinthepowersectordependsonsystemcontextsandregionalconditionsThevalueoflow-carbondispatchablepowercapacitydependsonseveralvariables,suchasmarketdesign,availabilityofotherflexibilityoptions,energymixandthepriceofcarbon,whichcanvarygreatlyacrossregions.By2030,thermalpowerplantsusinglow-carbonfuelscouldplayagrowingroleasadispatchableresourceforcoveringpeakdemandperiodswhenthevalueofPAGE|7Theroleoflow-carbonfuelsinthecleanenergytransitionsofthepowersectorExecutivesummarytheproducedelectricityishigh,andforprovidingarangeofsystemservicestoensureenergysecurityandcapacityadequacytoavoidcostlydisruptionsintheenergysupply.Forexample,dispatchablethermalpowerplantsinIndiaareexpectedtoprovide40%ofenergy,50%ofsysteminertia,almost60%ofpeakcapacityandover70%oframpingflexibilityservicesintheIEASustainableDevelopmentScenario(SDS)by2030.Low-carbonfuelscanplayanespeciallyimportantroleincountriesorregionswherethethermalfleetisyoung,orwhentheavailabilityoflow-carbondispatchableresourcesisconstrained.Inthesesettings,theycanallowexistingassetstocontinueoperatingevenwhenclimateregulationsaretightened,therebydiminishingtheriskofcreatingstrandedassets.ThisisparticularlythecaseintheEastandSoutheastAsia.Thisreportprovidesadetailedassessmentofthreesupplychaincategoriesforusinglow-carbonhydrogenandammoniainthepowersectorin2030:importinglow-carbonfuelstoanadvancedeconomy(Japan);importinglow-carbonammoniatoanemergingeconomy(Indonesia);andusingdomesticallyproducedlow-carbonhydrogeninanemergingeconomy(India).Productioncostsoflow-carbonfuelsmustdecreasefurtherNaturalgaswithcarboncapture,utilisationandstorage(CCUS)iscurrentlythelowest-costproductionrouteforlow-carbonfuels.Costestimatesfor2030aregenerallyintherangeofUSD8-16/GJ(USD0.9-1.9/kg)forhydrogenandUSD12-24/GJ(USD230-440/t)forammoniainregionswithaccesstolow-costnaturalgasandavailabilityofCO2storage.Productioncostsfortheelectrolyticroutearedecreasingrapidlyduetocontinuingreductionsinthecostofrenewableelectricityandeconomiesofscaleinelectrolysermanufacturing.By2030,costsareestimatedtobeintherangeofUSD13-19/GJ(USD1.5-2.2/kg)forhydrogenand22-33/GJ(USD400-620/tNH3)forammoniainregionswithexcellentwindandsolarresources.By2030thecostoflow-carbonhydrogenandammoniaforuseaschemicalfeedstockbecomescomparabletothoseofunabatedproductionfromfossilfuels.However,foruseasafuel,theyareexpectedtoremainsignificantlymoreexpensivethanprojectedpricesofcoalandnaturalgasin2030intheSDS.PAGE|8Theroleoflow-carbonfuelsinthecleanenergytransitionsofthepowersectorExecutivesummaryFullvaluechains,includingtransportandstorage,mustbeconsideredwhencomparingthecostofusinglow-carbonfuelsfromdifferentsourcesAnextensivetransportandstorageinfrastructureisaprerequisiteforestablishingglobalvaluechains,andconnectinglow-costproductionregionswithusersoflow-carbonfuels.Transmissionofhydrogenandammoniaviapipelinesisamaturetechnologyandrepresentsarelativelysmallproportionoftheoverallsupplycost.Intercontinentalammoniatransportisalsowelldeveloped,relyingonchemicalandsemi-refrigeratedliquefiedpetroleumgas(LPG)tankers.Formarinetransport,hydrogencanbeliquefiedinamannersimilartowhatisdonefornaturalgas.However,liquefactionisaveryenergy-andcapital-intensiveprocess.Transportingfuelsviashippingoveradistanceof10000kmisestimatedtocostUSD14-19/GJforliquidhydrogen,whileitisonlyUSD2-3/GJforammonia.Theresultingtotalsupplyprojectedcostsin2030,includingproductionandmarinetransport,arerespectivelyUSD22-35/GJ(USD2.6-4.2/kg)forhydrogenandUSD14-27/GJ(USD260-500/t)forammonia.Theuseoflow-carbonfuelsinfossilfuelpowerplantsmustleadtosignificantandmeasurablelife-cycleemissionreductionsSubstantialgreenhousegas(GHG)life-cycleemissionsreductionscanbeachievedbysubstitutingfossilfuelswithlow-carbonhydrogenandammoniainthermalpowerplants.Indicatively,switchingfromnaturalgas-basedpowergenerationtohydrogenderivedfromfossilfuelswith95%CO2capturedeliversabout70%GHGreduction,whileelectrolytichydrogenfromrenewablesreducesemissionsby85-95%.Similarly,switchingfromcoal-basedpowergenerationtolow-carbonammoniadeliversabout80%reductioninemissionswhenammoniaisproducedfromfossilfuelswith95%CO2capture,and90-95%whenammoniaisproducedfromwindandsolar.TherearecurrentlynointernationallyagreedrulesorstandardsonthemaximumallowableGHGemissionsassociatedwiththeproductionofhydrogenand/orhydrogen-derivedfuels.InthecaseoftheCCUSroute,suchstandardswoulddictateminimumeligibleCO2captureratesandplacelimitsonthemaximumallowableupstreamemissions.Atthesametime,suchrulesandstandardsarealsorelevantforelectrolysersifgridelectricityisused,asthepowermixwillsignificantlyinfluencelife-cycleemissions.Goingforward,standardsareneededtocreateend-userconfidencetowardsfuelsthatarecarbon-freeatthepointofconsumption,butmightproducesignificantPAGE|9Theroleoflow-carbonfuelsinthecleanenergytransitionsofthepowersectorExecutivesummaryGHGemissionsduringproduction,transportandfinaldistribution.Forexample,switchingfromcoaltounabatedfossilammoniacandoublelife-cycleGHGemissions,andeventripletheminthecaseofswitchingfromnaturalgastounabatedfossilhydrogen.Aversatilemixofsupplyroutesforlow-carbonfuelswillenhancediversificationandsecurityofsupplywhilecontributingtocostpredictabilityAdiversemixofsupplylocationsandtechnologiescanhelpensuresecuresuppliesshouldproducersstruggletomeetrapidlygrowingdemand.Costsforrenewablesandtheelectrolyticroutearemorepredictableandcanhelptobalancepossibledisruptionsinthesupplyandpriceswingsofnaturalgasandcoal,whichaffecttheproductioncostsofthefossilfuelwithCCUSroute.Low-carbonhydrogenandammoniaproductioncanbekickstartedinplaceswhereproductioncanbuildonexistinginfrastructureanddemand.TherearealsopossibilitiestointegratetheelectrolyticandfossilfuelwithCCUSprocessesintoahybridplantthatcanofferincreasedefficiencyandpotentiallylowercapitalinvestmentrequirements.Ifthebiomassfeedstockissustainablyproduced,carbon-negativehydrogenandammoniacanbeproducedbycapturingby-productCO2fromabiomassconversionplant,aparticularlyinterestingoptioninhigh-pricecarbonjurisdictions.Theoverallstrategiesandpoliciestoincentivelow-carbonfuelsshouldbekeptopenfordifferenttechnologyoptionsaslongasbasicsustainabilitycriteriaaremet.Thisislikelytoincreasecompetitionandacceleratecostreductions,whileincreasingdiversificationandsecurityofsupply.AportfolioofpoliciesisrequiredtocompensateforcostgapsandfosterusesthatmaximisesystemvalueBy2030,low-carbonhydrogenandammoniaarelikelytoremainexpensiveenergycarriersforpowergeneration.However,inJapanthegapbetweenthegenerationcostandthevalueoftheproducedelectricityismoderatedbythewholesaleelectricitymarketthatallowshigherpricesduringpeakdemandperiods,andbythehighcarbonpriceassumedintheSDSforadvancedeconomiesby2030.Ouranalysissuggeststhatco-firing60%oflow-carbonammoniainaJapanesecoalpowerplantin2030wouldleadtoagenerationcostthatis30%higherthanenergymarketvalueinbaseload,butjust15%higherinpeakloadconditions.Inaddition,thesegeneratorswillbeabletocompeteonJapan’scapacitymarket,strivingforanadditionalsourceofrevenue.Bycontrast,usingthesamelow-carbonammoniainIndonesiawouldleadtoafour-foldincreaseinPAGE|10Theroleoflow-carbonfuelsinthecleanenergytransitionsofthepowersectorExecutivesummarygenerationcostscomparedwiththevariableoperatingcostsofacoalpowerplant.Theimpactwouldbefullyfeltduetotheabsenceofbothawholesaleelectricitymarketandacarbonprice.Tosupporttheuseoflow-carbonfuelsinthepowersector,electricitymarketsshouldberedesignedtorewardflexibility,capacityandothersystemservicecontributionsprovidedbylow-carbonthermalpowerplants.Thiscouldbeaccompaniedbysupportmeasuressuchascarbonpricingand/orothercomplementarypolicies,aswellasregulatoryframeworkstofurtherdecreasetheremainingcostgapwithincumbentgeneration.Supportmeasuresshouldbetailoredtowardscost-effectivesystemintegrationandmaximisingthevalueoflow-carbondispatchablegeneration.Theyshouldalsoaimatfosteringcompetitionandimprovingenvironmentalperformanceovertime.Inanycase,givenexpectationsofincreasedcompetitionfromotherformsoflow-carbondispatchableresourcesandotherflexibilityandstorageoptions,aswellasfrompossibleretrofittingoffossilfuelplantswithCCUS,thefeasibilityandcompetitivenessoflow-carbonthermalpowerplantswillneedtobecontinuouslyandcarefullyassessed.Developingmarketsforlow-carbonfuelsandtheirsupplychainsby2030willestablishsignificantopportunitiesinmanycountriesandeconomicsectorsItisvitalthateconomieswithstrongdriversforusinglow-carbonfuelssuccessfullycreatedemand,bringdowncostsandstabilisevaluechainsby2030.Onlytheirsuccesswillopenupopportunitiestoexpandlow-carbonfueluseinemerginganddevelopingeconomies.Thisisparticularlyrelevantforcountrieswithyoungfossilfuelfleets,afterhavingimplementedandutilisedmostoftheirexistingflexibilityresources,suchasgridsandinterconnections,storageanddemand-sideresponse.Forexample,low-carbonfuelsuseisapossiblelong-termoptionforemergingeconomiesinSoutheastAsia.Powersystemsinthisregionalreadyhaveconsiderableotherlatentflexibilitythatcanbeactivatedbytargetedpolicymeasurestoaddressflexibilityneedsintheshortterm,whileinthelongertermthereareopportunitiesforusinglow-carbonfuelsintheexistingthermalpowerplantfleet.Displacingmeaningfulamountsoffossilfuelsfrompowergenerationwillrequireamajorexpansionofthesupplyinfrastructure.Thisimpliesnotjustmassiveinvestmentsbutalsoconcertedandcoordinatedeffortsacrossmanystakeholders,includingdulyaddressinghealth&safetyrisksrelatedtothehandlingofhydrogenandammonia.PAGE|11Theroleoflow-carbonfuelsinthecleanenergytransitionsofthepowersectorExecutivesummaryElectrolyserandhydrogentransportcapacityespeciallyneedtomassivelyexpandmanytimesovertheircurrentsize.Despitealreadybeingwidelytraded,transportvolumesofammoniaarealsosmallincomparisontotheneedsofthepowersector.Forexample,co-firing60%ofammoniainacoalpowerplantfleetofjust10GWe–about10largecoalplants--wouldmobiliseanamountalmostequivalenttothetotalammoniatradedworldwidetoday.Whiletheexpansionofthesupplyinfrastructureisaconditiontodevelopmarketsforlow-carbonhydrogenandammoniainthepowersector,itisalsoanimportantinvestmentopportunity.Ultimately,usinglargevolumesoflow-carbonhydrogenandammoniainthepowersectorwillhelpestablishsupplychainsanddrivedowncoststhrougheconomiesofscaleandtechnologicalimprovements,therebycomplementingandmutuallyreinforcingtheuseoflow-carboninfuelsinotherhard-to-abatesectorssuchaslong-haultransportandindustry.PAGE|12Theroleoflow-carbonfuelsinthecleanenergytransitionsofthepowersectorChapter1.TheroleofthermalgenerationincleanenergytransitionChapter1.TheroleofthermalgenerationincleanenergytransitionHighlights

Thermalpowerplantshavesuppliedthebulkofincreasingelectricitydemandinthelasttwodecades,particularlyinChinaandemergingeconomies.Thecapacityoftheworldwidefleetofcoalandgasplantsdoubledfrom2000to2019,from1.8TWto3.7TW.Morethanhalfoftheseplantshavebeeninservicesince2005,andmorethanhalfofthoseinChinahavebeeninservicesince2008.InIndia,plantswhichhavebeeninservicesince2012comprisemorethanhalfofthefleet.

Theseplantshavetechnicallifetimesthatextendwellintothefuture.By2030,79%ofthecoalandgas-firedplantsintheadvancedeconomieswillstillhaveusefultechnicallife,beforedecliningto43%in2040.Intheemergingeconomies,duetotheamountofrecentinvestmentsincoalandgas-firedcapacity,thesefiguresare83%in2030and61%in2040.ButtheemissionsfromcoalandnaturalgasusemustbereduceddrasticallyinordertoalignwiththeobjectivesoftheParisAgreementand–whereapplicable–withmorerecentNetZerocountrypledges.Alongsideusinglesscoalandgasbyoperatingtheplantsatlowerutilisationratesorbyretiringthemearly,theotherpathwaytoreduceemissionsistoretrofittheplantstogeneratewithlow-carbonfuelsortocaptureandstorethecarbonemissions.Anumberoffactors,includingthepaceofcostreductionsinthetechnologies,renewableenergyresourcepotentialandgeographiclocation,willdrivethebalancebetweenthetwopathways.

Meanwhile,massiveexpansionofsolarPVandwindisrapidlytransformingpowersystemsacrosstheworld,callingforaprofoundtransformationinthewaythatthesesystemsareplannedandoperatedtomaintainelectricitysecurity.IntheSDS,VREwillneedtoincreaserapidlyintheadvancedeconomies,risingfrom11%oftotalenergyin2019to50%in2040.Intheemergingeconomies,thissharewillriseevenmorerapidly,from6%in2019to43%in2040.Duetotheirvariablenature,ineveryregion,thisgrowthinVREgenerationwillentailasignificantincreaseintheneedforflexibilityfromothersourcesofsupplyanddemandinthepowersystem.

Low-carbonretrofittingofthermalpowerplantswouldallowthere-useofexistingassetsandtheirassociatedinfrastructureinthefutureaslow-emissionsourcesoffirmcapacity.Thermalplantscanbalancethevariabilityofwindandsolargenerationinthepowersystembygeneratingwhenthoseresourcesareunavailable,orbyadjustingupordownbasedoninstantaneousorhourlyanddailyfluctuationsinVREoutput.Therotationalmassofthermalplantssuppliesinertiawhichhelpsmaintainfrequencyforsecureoperationofthepowersystem.Currently,gasandcoal-firedgenerationaccountsforoverhalfofcurrentflexibilitycapacityglobally.Dispatchablepowerplantswilllikelycontinuetocontributetoelectricitysecurityinregionswithlargethermalfleets,inparticularthosewithlimitedotheroptions:intheSDSinJapanandASEAN,dispatchablecapacityisalmostequaltovariablerenewablecapacitystillby2040.PAGE|13Theroleoflow-carbonfuelsinthecleanenergytransitionsofthepowersectorChapter1.TheroleofthermalgenerationincleanenergytransitionThepowersectorisinrapidtransformationThermalgeneration,firedmainlybycoalandnaturalgas,dominatestoday’spowersystems.Fossil-basedthermalgenerationhashistoricallybeentheoneofthecheapestsourcesofelectricity,butitisalsodispatchableandflexible–itcansustainitsoutputoverlongperiodsandrespondtoexpectedandunexpectedchangestodemandandothergenerationsources.Thermalgenerationisthereforeabletocontributeaveryhighshareofitsinstalledcapacitytowardsmeetingpeakdemand,orsystemadequacy.Thermalgenerationalsoprovideskeysystemservicesinmeetingflexibilityneedsparticularlyinertia,akeysourceofgridstability,throughtherotatingmassofitsturbines.However,theresultingemissionsfromtheunabateduseofcoalandnaturalgasinthermalgenerationmustbereduceddrasticallyinordertoalignwiththeobjectivesoftheParisAgreementand–whereapplicable–withmorerecentnetzeropledges.Windandsolargenerationwillneedtoreplacethebulkofemissions-producingfossilfuelsduringthetransitiontocleanerpowersystems,risingrapidlyfrom7percentofelectricitygenerationin2019to29percentin2030and45percentin2040globallyintheSustainableDevelopmentScenario(SDS).Thiswillrequirepowersystemstoincreasesourcesofflexibilityinordertorespondtovariabilityanduncertaintyofthesesources.Investmentsinlarge-scaletransmissionnetworkupgradesandmeasurestoincreasedemand-sideflexibilitywillbeneeded.Investmentsintechnologiesthatprovidekeysystemserviceslike,likebatterystorageandlow-carbondispatchableenergytechnologies,willalsoberequired.Governm