04 Apr 2023

Chasing Net Zero by simply switching to renewable generation is doomed to fail

By Jonathan Briggs, Solution Marketing Manger, Gentrack

Across the globe more than 70 countries, including the biggest polluters1 – China, the United States, and the European Union – have committed to striving for carbon neutrality. When considering the scale of the challenge to achieving Net Zero, it’s no surprise that the focus is often on closing fossil fuel power plants and switching to renewable generation. 

However, when we take a look at the impact this has had so far, it is clear that this strategy is not going to be enough in the ambitious race to zero. In fact, the needle is moving in the wrong direction. According to the UN2, current national climate plans – for 193 Parties to the Paris Agreement taken together – would lead to a sizable increase of almost 11% in global greenhouse gas emissions by 2030, compared to 2010 levels. Meanwhile, renewable electricity generation is not surging at the rate it needs to if we are to become a carbon neutral global economy. In 2021, 36.7% electricity was generated from low-carbon sources, while in 2000 this figure was 35.2%. As global investment in low-carbon energy technology soared to a record breaking $1.1 trillion in 20223, is this a too slow of a process or are we missing something?  

So, it is probably the latter. 

Simply put, installed renewable capacity may have increased significantly, but global electricity demand has increased in similar pace. In 2000 nearly 15,000 TWh electricity was generated around the planet but by 2021 this figure was almost double at 27,782 TWh. And as renewable capacity kept increasing, the gap has largely been met by burning fossil fuels4

For the sake of our planet, our reliance on fossil fuels needs to drastically drop. That is not a question up for debate. But as demand for power continues to grow, particularly as we begin to move to the electrification of transport, and heat in some regions, closing old power plants and switching to large scale renewable assets will not be enough. Generation from renewables will increase but cannot keep pace with the increasing demand. And there is another challenge: renewable generation is inherently intermittent, so finding a way to meet demand at times when renewable generation is down, without falling back on fossil fuels, is going to be fundamental to success.  

Energy retailers’ key to the Net Zero challenge and bridging the gap between generation and demand without falling back on fossil fuels, lies with the consumer. 

Retailers need to incentivise consumers to reduce demand at peak times and engage more consumers in Distributed Energy Resource Management (DERM) schemes – installing smaller, interconnected, power-generation systems for homes, businesses, and communities. It will require innovative business models to attract consumers but for energy retailers the opportunity is to be able to offer more engaging propositions to their customers. 

With electricity usage predicted to continue growing5 year on year, simply flipping generation source is doomed to fail. Effectively managed and implemented, DERM models and flexible tariffs are critical to achieving net zero and the role of energy retailers in this journey will be key. This is not simply about investing in technology or implementing new systems. A successful transition requires a mindset shift. Energy retailers need to think innovatively, using smart data and insights, and really understand their customers in order to engage with them and encourage them to alter their behaviours. Aside from making the world more sustainable, energy retailers that manage this will realise additional benefits of creating digitalised end to end customer experiences, increased revenues, and reduced churn thanks to a network of highly engaged, satisfied customers.  

Stay tuned as I will elaborate on my next blog on DERM schemes as well as other ways to incentivise customers to change behaviour and generate a sustainable future. 

1 www.un.org/en/climatechange/net-zero-coalition 

2 www.un.org/en/climatechange/net-zero-coalition 

3 www.weforum.org/agenda/2023/02/low-carbon-investment-record-2022/ 

4 www.theguardian.com/business/2022/jan/14/global-surge-in-electricity-use-could-bring-three-more-years-of-price-rises 

5 www.eia.gov/outlooks/ieo/consumption/sub-topic-01.php

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