A monumental global energy transition is underway.
We see that the transition to 100% renewable energy systems is set to accelerate at an eye-popping rate. It is no longer a question of if we’ll make the journey, but when we’ll arrive at a decarbonised future.
Wärtsilä’s ‘Front-loading Net Zero’ report models cost-optimal pathways to 100% renewable power systems in different markets with vastly different socioeconomic dynamics, distinct energy systems, and challenges to overcome. In the lead up to COP26, the results show leaders how global energy systems can be transformed to avert the climate crisis and create a blueprint for every country in the world to reach net zero power before 2050, or even 2040, at the lowest cost.
The pathways modelled show that reaching 100% renewables does not increase the cost of electricity and can in fact slash total energy costs, in comparison to today.
How can these regions reach net zero in the very near future in an economically achievable way?
A call to leaders by Sushil Purohit, President, Wärtsilä Energy and EVP, Wärtsilä.
Our analysis shows that net zero is feasible in every region as we already have all the technologies needed. The key is to front-load and start now.
What are the key steps for countries to build their paths to 100% renewable electricity systems?
See our summary for each region in the report
A global transition pioneer on a legally binding trajectory to build a 100% renewable energy system by 2045, California must rapidly accelerate its adoption of wind and solar to unlock significant savings, both in terms of energy cost and CO2 output. California’s significant inter-dependence with other energy networks in the United States provides a blueprint for other sub-states.
Our analysis makes clear the economic case for front-loading the introduction of renewable energy to create a 100% carbon neutral grid in California and other U.S. states as early as possible. The study concludes that hitting 100% RPS in 2045, as currently planned in California, would cost an extra $14 billion USD due to increasing carbon taxes, 5% more than if the RPS target is achieved in 2040.
Our analysis finds:
- Wind power needs to increase by 300%, from 10 GW in 2020 to 40 GW in 2045.
- Solar PV needs to increase by 276%, from 29 GW in 2020 109 GW in 2045.
- Energy storage capacity needs to increase by 800% from 4 GW in 2020 to 36 GW in 2045.
An average of 3.2 GW of solar PV and 1.2 GW of wind must be added every year to reach these targets – significantly more than California’s current record of 2.7 GW of non-rooftop solar power or 1 GW of wind power in a single year.
An economy on an astonishing growth trajectory, India must align its net zero ambition with its rapidly rising demand for energy. Existing legacy coal-fired power plants in the power system provide a hurdle for renewable energy, but India has some of the lowest solar generation costs in the world.
India can cut its overall cost of electricity in half and reach net zero before 2050 by developing a 100% renewable energy power system. The country's decarbonisation can provide a pathway for other developing and emerging economies.
Our modelling shows a clear, actionable pathway to achieve a net zero electricity system that can bring enormous environmental and economic benefits to India, one of the world’s largest and fastest growing economies:
- Increasing renewable energy from 25% today to 100% before 2050 cuts the cost of India’s electricity by 48%, from $88 USD per megawatt hour in 2020, to $46 USD in 2050.
- A flexible 100% renewable system provides large levels of excess power that can address India’s rising energy dependency, forecast to double by 2030.
- Increasing renewable energy could also generate major new revenues from hydrogen production, creating a technology market worth $39.8 billion USD.
Germany lies at the centre of a spiders’ web of national interconnections. Germany’s ability to decarbonise is pivotal to the decarbonisation of Europe. A country with world-leading experience of scaling up renewables and ambitious climate targets, Germany now faces the monumental challenge to phase out coal by 2030, before fully decarbonising – setting a blueprint for coal phase-outs in countries worldwide.
We modelled two scenarios to show the most affordable path to a net zero power system in Germany. Both prioritise the lowest cost renewable and flexible capacity technologies, i.e. wind and solar, plus energy storage and thermal balancing engines,
in the energy mix:
- The “Baseline 2045” net zero scenario modelled Germany’s plan to phase-out coal in 2038, adding up to 13.5 GW of renewables each year until the energy system is carbon neutral by 2045.
- An alternative “Supercharged 2040” net zero scenario, with Germany phasing out coal by 2030 by building renewable energy capacity at an increased rate of up to 19.5 GW annually.
Market Development Manager Jan Andersson discusses how a rapid transition can unlock system-wide benefits for Germany.
A potential renewable superpower, Australia has for the first time reached a consensus on its pathway to net zero – but to progress to a secure and clean future, fossil fuel-powered baseload power must be left behind.
For Australia to capitalise on its unparalleled renewable energy resources – over 10,000 MWh1 per capita per year – a flexible grid is needed which can smooth out peaks in supply and demand and allow solar power to become the dominant power source and fulfil a baseload role. Australia provides an insight into how these technologies can be deployed at scale.
An emerging leader in clean power production with remarkable natural resources, Chile must capitalise on its enviable renewable power capacity factors while accelerating its coal phase-out.
To illustrate the most affordable path to a net zero power system, Wärtsilä modelled scenarios for coal phase-out in Chile, including:
- Coal phase-out by 2040: which would require 21.8 GW of solar PV and 17.6 GW of wind, supported by 3.3 GW of flexible energy storage.
- Coal phase-out by 2030: the most ambitious scenario, which would require 19.3 GW of solar PV and 20 GW of wind, supported by 3.2 GW of flexible energy storage.
As the COP26 host, the UK has set a world-leading target for a net zero power system by 2035 – but to realise its ambition, it must double down on wind and flexibility this decade.
The UK needs to install 112 GW of wind power by 2035, well over double the 40 GW currently planned, to achieve a net zero electricity system and hit its goal of a 78% cut in carbon emissions by 2035.
In order to achieve a 100% renewable energy system, the UK will also need 52 GW of flexibility solutions, including 18 GW of battery energy storage and 35 GW of thermal balancing power plants. The synthetic fuel used in the thermal balancing power plants is produced from excess renewable power in 35 GW of power-to-gas converters.
Find out more about how a cost-effective renewable energy transition is possible for the UK from Tony Meski, our Senior Market Development Analyst.
AGL - Australia
When planning Australia’s cost optimal system, it is crucial to remember that energy storage and thermal balancing power plants are not competing technologies, rather they are complementary solutions for improving grid reliability and resilience. AGL, for example, has since 2019 used 12 Wärtsilä dual-fuel engines, providing 211 MW of capacity, at the Barker Inlet Power Station, Torrens Island, to balance the supply of energy from renewable sources in South Australia. Recently, AGL also announced that, by 2023, a Wärtsilä 250 MW / 250 MWh battery energy storage system will reinforce the balancing capabilities of the same island power plant – forming a hybrid combination of thermal balancing power plants and battery storage.
Christian Breyer - LUT University
“This valuable report from Wärtsilä shows very clearly what can be achieved by moving away from conventional fuels towards 100% renewable energy. Reducing electricity cost and CO2 emissions in parallel generates CO2 reduction benefits. The technologies available today offer the flexibility and rapid reaction time needed to balance renewables."
Eija Rotinen - the Finnish Ambassador to Chile
"In order for the world to meet its climate goals, international collaboration is essential. Finland has worked in partnership with countries such as Chile to develop ambitious climate policies and to co-create and scale up world-class solutions. Wärtsilä is a fine example of a Finnish company developing globally significant solutions to the climate crisis and creating a vision for our 100% renewable energy future.”
SSE Lerwick - Shetland Islands, Scotland
A microcosm of the UK’s increased integration of wind power onto the power system can be seen in the Shetland Islands, where Wärtsilä will this year complete an energy storage system and an engine installation, to keep SSE’s Lerwick Power Station in balance with the local loads. The energy storage solution will support the power station’s spinning reserve functionality and is able to provide black start back-up as needed. To underpin the energy storage system, our GEMS Digital Energy Platform will integrate multiple generation sources seamlessly, to reduce costs and protect stability.
About the modelling
Wärtsilä used Plexos, a leading power market simulation software, for the power system modelling presented in the report.
The modelling defined a cost-optimal energy system structure and operation mode for a given set of constraints in each region: power demand; available generation and storage and balancing technologies; financial and technical assumptions; and limits on installed capacity for all applied technologies.
The model is based on linear optimisation and performed on an hourly resolution for entire years. The costs of the entire system are calculated as the sum of the annualised capital expenditures including the cost of capital, operational expenditures (including ramping costs), fuel costs and the cost of GHG emissions for all available technologies.
For further details, see the report Methodology.