The power challenge

Meeting the growing demand for electricity while minimizing environmental impact

The thirst for energy continues and the demand for electricity as a preferred energy source is growing at an even faster pace. There are still more than 1.3 billion people in the world without access to electricity and fast growing emerging markets like China and India whose per capita consumption is well below world average, are adding large amounts of power generation capacity and transmission and distribution infrastructure to meet growing needs. Electricity consumption is set to double in the next 20 years mainly driven by economic and social development in emerging countries.

Energy demands continue to rise but at the same time climate change concerns are also increasing. The big challenge is to meet these growing needs while minimizing environmental impact. Renewables (led by hydro, wind and solar) and energy efficiency are together expected to account for more than two thirds of the reduction in CO2 emissions required to keep us within the sustainable temperature tolerance zone. Recent concerns over nuclear energy have further accelerated the renewable push in many parts of the world.

The increasing contribution of renewable energy to reduce dependence on fossil fuels and minimize environmental impact is a clearly recognized opportunity. The generation focus is on efficiency, financial viability and technology developments to bring renewable energies closer to traditional fuel sources in terms of production costs and tariff parity, as governments struggle to continue subsidizing the sector.

But there are also some challenges when it comes to their integration, transmission and distribution. To start with, renewables are intermittent by nature and usually found or produced where best available for instance in remote locations, at great distances from consumption centers. Large hydro in the mountains, remote offshore wind farms hundreds of miles out at sea or large scale solar sources in deserts are some obvious examples. So, integration of renewables often requires transmission over long distances, or across challenging terrain, in a safe and reliable way, with minimum losses.

Renewables are also accelerating the trend towards more distributed energy sources closer to their fuel source as opposed to the traditional ‘large power plant’ supply points often located far from their fuel sources requiring transportation of fuels like coal and gas. With many types of renewables such as solar PV (photovoltaic ) , almost anyone can have their own little power plant by installing solar cells on the rooftop and feeding it into the grid. This means we now have millions of geographically distributed generation sources compared to the hundreds we were used to. And then there is the ‘control’ challenge driven by the need to manage these intermittent inputs while maintaining the stability of the grid and ensuring steady, reliable and quality power flow to consumers.

If these are the major supply challenges , the demand side is not far behind. Increasing need for energy efficiency is driving demand management efforts by industrial, commercial and household consumers. There are also new types of loads with new demands – for example data centers requiring vast amounts of high quality power or electric vehicles – another evolving trend that will test the grid.

To sum up, some of the key focus areas for power generation include the handling of distributed generation sources, the changing energy mix and the push for renewables, energy optimization and efficiency of power plants, and the minimization of environmental impact.

The transmission and distribution (T&D) sectors have been under-invested over the years but cannot be neglected any longer. T&D infrastructure to help evacuate new generation capacity in growing economies, strengthening and upgrade of aging grids in mature markets, integration of renewables and the emergence of more flexible , interconnected and smarter grids are some of the key factors shaping the power sector.

In conclusion, it would be fair to say that despite the need for significant investment and the current economic challenges, the fundamental market drivers for the power sector are still intact and given the growing demand for electricity, will continue to drive infrastructure development across the generation, transmission and distribution value chain.

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About the author

Harmeet Bawa

I am Global Head of Communications for ABB's Power Grids division based at the Group headquarters in Switzerland. I've served in the UK, Sweden, India and South-Asia Pacific region across a range of functions spanning business and market development, strategy and corporate planning, communications, sustainability and investor relations.
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