Anja Frada takes a look at how the world’s energy systems evolved in 2022 and what we can look forward to in 2023.
The past year has been a year of transition in the energy sector. On one hand, 2022 has been marked by instability which has caught everyone off guard at times. But 2022 has also been a year of progress and hope. Despite the unpleasant events, I am pleased to see that we will be closer to a 100% renewable energy future on the last day of the year than we were on the first.
The big energy story of 2022 was price volatility and energy insecurity. Energy prices have skyrocketed, driven by Russia’s invasion of Ukraine in particular. High prices and supply fears have encouraged some forms of energy, like coal, to remain in use when we should be working hard to phase them out.
The perils of business as usual was made clear when the UN Environment Programme announced in October there was “no credible pathway” in place to keep global warming to 1.5 degrees Celsius. It is critical for countries to make ambitious plans to reach net zero emissions and to also implement them.
This year Wärtsilä has shown how we can build credible pathways, for example with reports for how Africa, Europe and Southeast Asia can reach a 100% renewable energy future. Our advanced power system modelling shows we can not only rapidly reduce CO2 emissions, but we can do it while improving safety and reliability, and lowering costs.
This year has proven the era of renewables has arrived. Compared to baseload fossil fuels, renewables like wind and solar are cleaner, more secure and, in many cases, cheaper. The world urgently needs to keep adding renewable generation to secure local energy supplies and stabilise prices for businesses and consumers.
In December 2022 the IEA forecasted that the global renewable capacity growth is set to double over the next five years. We will add 2,400 GW, equivalent to China’s total energy production today. Renewables will surpass coal and become the largest source of global electricity generation by 2025. Although cheaper renewable prices is one driver, the demand is mostly growing because of global concerns about energy security.
Adding more renewables is fantastic news, but we have to do it right.
Looking ahead at 2023, Wärtsilä will continue championing the flexibility provided by fast-starting grid balancing engines and energy storage systems. Solar PV and wind power provide energy intermittently, so we need to add these balancing solutions to our renewable-reliant energy systems.
We also need to address continuing policy and administrative shortfalls. Technology and markets move faster than regulations, and this is a gap we need to close. The IEA’s Renewables 2022 report says global renewable capacity could expand by an additional 25% by 2027 if countries adopted encouraging policies, regulations, permitting and financing.
Turbocharging our adoption of renewables will increase energy security, create new jobs and lower the price of energy for businesses and consumers. However, adding solar and wind must be matched by energy storage, balancing engines and advanced optimisation software like GEMS. This will enable us to finally retire baseload fossil fuels like coal.
As we enter 2023 I am optimistic for our future. We have a lot of work to do and there will be bumps on the road, but we look forward to working with policy makers and our customers to accelerate towards our 100% renewable energy future.
Anja Frada is Chief Operating Officer at Wärtsilä Energy.