Authored by Rim Berahab, Senior Economist at PCNS, this publication indicates that increased private sector engagement, supported by strong regulatory frameworks and appropriate incentives, is necessary to overcome current challenges.
The successes already observed in certain regions of the world show that innovative approaches and public-private partnerships can catalyze the necessary investments, underlines the same source, estimating that by combining the efforts of the public and private sectors, it is possible to create robust electricity networks that drive a global energy transition.
According to this publication, the transition to cleaner energy sources globally will require the addition or renovation of more than 80 million kilometers of grid infrastructure by 2040.
The current network capacity deficit therefore represents a major risk for international climate and energy objectives. To achieve these commitments, it is therefore imperative to triple investments in networks over the next 15 years, with a five-fold increase to achieve zero emissions scenarios.
In this publication, Ms. Berahab notes that investments in electricity networks represent a challenge for both advanced and developing economies. In “mature” markets such as the US and Europe, existing grids are facing unprecedented demand from electric vehicles and heating systems, leading to delays in connecting wind and solar projects advances.
In developing economies, particularly in least developed countries, inadequate or outdated grids lead to frequent power outages that affect essential systems such as hospitals, food production and business operations.
In Africa, where the need for energy infrastructure is particularly acute, financial constraints limit the ability of utility companies to invest in grid expansion and modernization.
Furthermore, many African state-owned enterprises face poor financial health and high network losses, which averaged 15% on the continent in 2020, compared to a global average of 7%.
As a result, these companies are unable to finance the expansion and modernization of networks that the influx of renewable energy requires.