The state of global net zero goals is dire.
According to BloombergNEF’s latest New Energy Outlook report, out this week, there’s no longer a clear path to limiting warming to 1.5 degrees celsius by 2050. And limiting temperature rises to 1.75 degrees is a “tough stretch.”
But the report also offers glimmers of hope for decarbonizing the power sector, including the promise of rapidly scaling demand and supply-side flexibility for the grid.
- The top line: Though wind and solar remain the “workhorses” of power sector decarbonization, BNEF said scaling flexible supply and demand technologies is essential to their success. And batteries will be key; the report projected that the path to net zero by 2050 will require overall battery storage to jump 50 times over 2023 levels, and the number of batteries used specifically for intra-day balancing must quadruple.
- The nuts and bolts: BNEF’s “Net Zero Scenario” isn’t a prediction. Rather, it’s an analysis of the current least-cost path to reaching net-zero emissions by 2050. Under that scenario, electrolyzers to produce green hydrogen are the largest source of new electricity demand, the report said. Even though green hydrogen would contribute 3% toward emissions abatements between now and 2050, production would make up 19% of electricity demand during that time.
Sufficient flexibility will require a combination of demand response, interconnections, batteries, peaker plants, pumped storage, and smart EV charging, the report said. As 2050 draws closer, the need for demand-side flexibility increases over flexible supply, particularly via flexible EV charging (which some utilities are already experimenting with), and flexible green hydrogen production.
But it’s not a light lift. By 2050, BNEF found, around a third of total power demand must be flexible, enabled by an “extensive grid” and managed via “the latest digital technologies.”
And much of the needed battery scale-up must happen in the relatively near term. The report estimates 1.3 terawatts of batteries will be needed for intra-day balancing by 2030, and by 2050 that number needs to more than quadruple. Meanwhile, the scenario’s fifty-fold jump in overall installed battery storage has that capacity hitting four TW by 2050.
That scenario also requires 1,200 TWh of electrolyzer flexibility, a capability whose potential currently splits the industry as the U.S. considers strict renewables requirements.
General demand flexibility is less influential than flexible EV charging, but still makes up a considerable amount of necessary demand-side flexibility by 2050. The BNEF scenario assumes that demand can be shifted within a six hour window via demand response programs, smart appliances, and time of use tariffs.
The AI angle
The power sector remains one of the biggest barriers to the Net Zero Scenario, in part because the scenario requires electricity demand to more than triple in the next two decades. The report doesn’t specifically call out data centers, though, which by some accounts will demand around 800 terawatt hours of electricity by 2028.
One of the key ways experts agree new data center load growth can avoid the need for new gas plants is through flexible demand response capabilities.
Mimicking flexible loads with new data centers has come to the forefront of conversations about AI energy needs, in part because the largest AI companies are becoming concerned that utilities won’t be able to meet their rapidly expanding power demands. While some in the industry are doubling down on batchable workloads, others say traditional data centers that have been optimized for 24.7 power needs, are also poised to serve as grid resources.
“They have generators, they have batteries, those can be optimized, and they can be expanded, and they can be used to provide flexibility back to the grid,” Brian Janous, co-founder of Cloverleaf Ventures said at a recent Latitude Media event.
And while some data centers can be built alongside renewable generation, that’s not something that’s happening at scale.
“They have to really think about how they can become more part of the grid, and part of the grid in the future means becoming more flexible and more dispatchable,” Janous said. “We’re starting to see some of that, and I think that trend is going to increase dramatically in the next few years.”
