Why we must build out energy infrastructure now to drive the energy transition
The energy transition demands more car chargers and other infrastructure. Image: Michael Marais/Unsplash
- To enable the energy transition, regulators and developers must proactively plan and invest in infrastructure before demand materializes.
- Pre-emptive infrastructure building raises important questions, however: Who should plan and build it, and who should bear the cost and the risks associated with it?
- Here are 10 principles to help the world build the 'fit for future' energy infrastructure needed to support the energy systems of tomorrow.
The energy transition is a global responsibility. To enable it, regulators and developers must proactively plan and invest in infrastructure before demand materializes. Without timely development, the deployment of renewables and electrification efforts may be delayed, leading to increased CO2 emissions and higher costs for energy consumers.
Pre-emptive infrastructure building raises important questions, however: Who should plan and build it? And who should bear the cost and the risks associated with it?
Setting the infrastructure requirements
According to the International Energy Agency (IEA), there are three main levers for reducing CO2 emissions rapidly by 2030:
1. Solar PV and wind capacity – Global capacity should triple, reaching 11.000 GW.
2. Electric vehicles (EVs) – Electricity consumption in the transport sector should increase fourfold, reaching 8 EJ.
3. Electrification of fossil-fuel-based energy uses – electrification of the economy should grow from the current 20% to 28%.
These rapid advancements require more robust power grids and a reliable charging network. Grid development, however, often lags behind the growth of renewables and electrification. Renewable energy projects usually take two to five years to complete and EV charging stations can take one to two years to build and connect, while transmission lines often take much longer, typically five to ten years. Sufficient grid capacity should be secured before renewables are installed or increased electricity demand arises.
What's the World Economic Forum doing about the transition to clean energy?
10 principles for 'fit for future' energy infrastructure investment
To guide infrastructure investments in support of the energy transition, here is a set of principles that can help the world build the 'fit for future' energy infrastructure needed to support the energy systems of tomorrow. These principles expand beyond the energy sector to the broader social and economic impacts of infrastructure investments.
1. Planning and prioritizing
Given the long lead times required to plan, develop and build infrastructure, advanced planning is required. Developers should design long-term plans (at least ten years), incorporating future user needs through public consultations and aligning projects with energy, industrial and environmental objectives. These plans shall further prioritize projects based on policy goals and socio-economic benefits. The assessment of projects should include the total cost over the asset’s life, including externalities.
2. Reliable demand creation
Infrastructure needs to be built before future demand arises. Predictable and visible demand, supported by clear policy targets and regulatory certainty, enables more effective planning and investment.
3. Efficiency of administrative processes
Often, infrastructure projects are delayed due to long waits for permits and authorizations. Administrative processes should be streamlined to reduce lead times for development and construction, including digitalization, standardization and resourcing public administration effectively. Active iterative learning processes will be key: agencies need to try out new approaches to increase the efficiency of their administrative processes.
4. Financing and capital provision
In the early stages of the energy transition, large amounts of funding will be necessary from public and private sources. To facilitate these investments at the lowest cost, regulatory certainty, robust business cases and collaboration among countries and multilateral banks are required. All levels of the public sector— national, regional and local — should collaborate and align their efforts toward common goals.
5. Addressing emerging markets and developing economies (EMDEs)
Most of the energy investments in clean technologies are currently allocated to China, Europe and the USA, which receive 85% of global clean energy capital. This is in stark contrast with the fact that most of the future energy growth will come from the rest of the world, notably EMDEs. This imbalance in resources and investments should be addressed through international collaboration and technological partnerships.
6. Role of state-owned enterprises (SOEs)
SOEs are significant actors that can shape the economy with their decisions. As partners in the energy transition, these organizations should align with policy targets and serve as an effective public tool to develop and achieve these goals.
7. Resilient infrastructure and supply chains
Infrastructure should be designed with long-term sustainability and resilience in mind, ensuring high-quality service and reduced costs throughout an asset’s lifecycle. Future projects should factor in extreme weather events and existing infrastructure may need upgrades for the same reason. These principles should apply to the final assets and the supply chain, from raw materials to workforce development. Additional measures, including mandatory risk assessments, should be integrated into national adaptation plans to ensure infrastructure resilience against climate impacts.
8. Public and stakeholder engagement
Engaging all relevant stakeholders early on is required to optimize infrastructure development and performance. Public participation and scrutiny mechanisms ensure transparency and social acceptance of projects.
9. Economic and social benefits
Infrastructure development should maximize long-term benefits for society, including economic growth, job creation and social equity, particularly in local communities.
10. Regular monitoring and data sharing
All targets and contributions of infrastructure development should be closely monitored, including their performance and impacts. The involvement of impartial entities plays a significant role in this context. Sufficient data should be made publicly available to maintain accountability and improve future projects.
Ultimately, a key question remains: how should we share the risks of investing in infrastructure ahead of demand arising between public and private sectors? Achieving the right balance is important for fostering resilient, forward-thinking energy systems, yet this challenge remains open for debate — underscoring the need for continued collaboration and innovation.
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Maxim Timchenko
December 9, 2024