In 2023, the global climate crisis reached unprecedented levels, marking one of the hottest years on record. These events compounded the impact of ongoing geopolitical conflicts and other external pressures, further intensifying the volatility in the global energy market. However, amid these challenges, the transition to clean energy gained momentum, with significant investments in clean technologies. Wind and solar energy continued to lead in growth, complemented by increasing interest in hydrogen, nuclear power, and geothermal energy. Schneider Electric’s 2024 Global Energy Outlook highlights five key trends shaping the future of the global energy market.
Energy resilience is a catalyst for change in the global energy market
Global energy systems have faced immense strain due to climate change, geopolitical events, and supply chain disruptions exacerbated by the pandemic. These challenges have prompted companies and governments to accelerate investments in energy resilience, focusing on robust infrastructure, real-time monitoring, demand flexibility, diversified energy supplies, and dynamic grid interconnectivity. For example, in the USA, Jersey City partnered with Schneider Electric to enhance its energy resilience by transitioning its sanitation truck fleet to electric vehicles, modernising city facilities, and creating a microgrid capable of sustaining operations for up to 14 days following a power grid failure.
The acceleration of next-gen clean energy will open new pathways to a greener future
At the 2023 United Nations Climate Change Conference (COP28), representatives from nearly 200 countries committed to transitioning away from fossil fuels and tripling renewable energy production. The International Renewable Energy Agency (IRENA) found that two-thirds of carbon dioxide emission reductions could be achieved through increased renewable energy supply, electrification of energy services and improved energy efficiency.
Public and private investments in clean energy are crucial for achieving decarbonisation goals, with renewables expected to comprise over one third of the global generation mix by 2025. However, to reach net-zero emissions, substantial investments in next-generation clean energy sources such as green hydrogen, nuclear power, and geothermal energy are necessary. Policies must address regulatory barriers to scale up clean energy technologies, particularly in enhancing grid capacity.
Global competitiveness is expected to shape new economic development policies and decarbonisation mandates
The US Inflation Reduction Act (IRA) has intensified expectations for domestic clean energy manufacturing, prompting the EU to implement comparable measures to maintain its market share and attract new investments. The European Commission’s Green Deal Industrial Plan aims to expand the EU’s manufacturing capacity for net-zero technologies. Emerging markets are also introducing innovative approaches to renewable energy adoption, spurring economic development and decarbonisation mandates. However, market disruptions from unstable energy systems, geopolitics, and changes in governments could impact capital flow and investor behaviour, creating a patchwork of policies.
AI is set to take energy management to the next frontier
In 2023, AI tools addressed various business challenges, and in energy management, AI uses algorithms, machine learning and data from smart meters and IoT devices to analyse and optimise energy use. AI also optimises energy infrastructure, such as microgrids, that contribute to local energy resiliency. AI helps businesses create decarbonisation strategies, identify renewable opportunities, and improve supply chain efficiency. Schneider Electric uses AI in its EcoStruxure Resource Advisor software, enhancing data analysis, visualisation, decision support, and performance optimisation for energy management and decarbonisation efforts. However, the growth of AI applications increases power requirements, necessitating efforts to develop more energy-efficient algorithms and optimise hardware for AI workloads.
A Just Transition is essential to managing how energy will be generated and consumed
A Just Transition refers to the social implications of the energy and digital transitions, and calls for an equitable shift towards a low-carbon future that benefits everyone.
The first high-level ministerial roundtable on the Just Transition, at COP28, highlighted the need for sustainable and just solutions to the climate crisis, founded on meaningful social dialogue and participation of all stakeholders. Accessibility and resilience are central to the Just Transition. Ensuring equitable access to clean and affordable energy, regardless of socioeconomic status or geography, is crucial. This includes developing microgrids in rural areas, inclusive policy frameworks for underserved areas, and energy subsidies for low-income families. Increasing the use of clean energy is essential for resilience, but efforts must also protect scarce resources, promote conservation, and safeguard human rights through labour and environmental protection.
In conclusion, Schneider Electric’s 2024 Global Energy Outlook identifies five trends expected to steer the global energy market. These trends collectively signal a new era of global growth, technological innovation and climate action, paving the way for a cleaner, more resilient and equitable energy landscape.
To view the full summary visit www.instrumentation.co.za/ex/schneider.pdf
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