Electricity increasingly pivotal in the global energy system

Global geopolitical tensions have exposed the fragility of the global energy system, creating a pressing need to accelerate the energy transition away from fossil fuels and towards secure, sustainable sources. This is the core message of the World Energy Outlook 2024, published by the International Energy Agency (IEA), a body that analyses global market trends and the impact of geopolitical developments and climate change on the energy sector.

The report predicts that the energy market in the coming years will see an increase in the supply of oil and natural gas, which could lead to lower prices and an easing of pressure on consumers. However, the increased availability of fossil fuels ought to be seen as an opportunity to drive the energy transition forward, with downgraded subsidies for the most polluting sources and higher investment in green technologies. Furthermore, fossil fuels have associated costs and risks that make them increasingly unattractive as energy sources, as they have been used for geopolitical leverage in recent years, with direct consequences on prices.

The Economist magazine believes that the energy crisis triggered by the war in Ukraine may have accelerated the transition to more sustainable sources, earning Western and other countries a window of five to ten years. Examining a number of factors (including fossil fuel consumption, energy efficiency and the growth of renewables), the British weekly in effect argues that the war in Ukraine has set off a series of virtuous behaviours that would otherwise have taken years to gain traction.

In this landscape, electricity is becoming increasingly pivotal in the global energy system. Over the past ten years, the percentage increase in electricity demand has been double that of the entire world's energy consumption, with two-thirds of demand coming from China alone. This trend not only highlights the growing importance of electricity, but also underlines the growing need to produce it from renewable sources. For example, today’s Italian electricity grid is based on energy production that still very much depends on natural gas, which accounts for 43% of the energy produced. A 2023 simulation by Italian climate change think tank ECCO concluded that in 2035 Italian electricity demand (excluding industrial and especially energy-intensive uses) could be completely met by renewable energy sources if the necessary energy production and storage facilities existed.

But despite recent progress, the transition to sustainable sources needs greater investment in grid infrastructure and storage systems. Currently, only 60 cents out of every dollar invested in renewables goes to storage systems. This imbalance makes grids more vulnerable and less secure, especially in the face of increasingly frequent extreme weather events.

In many countries worldwide, high financing costs and project risks hinder the deployment of green energy technologies. This is especially evident in developing economies, where such solutions could significantly impact sustainability and emissions reduction. Energy access inequality remains the most pressing challenge in today’s energy system—a gap that must be bridged as we transition to a secure, resilient, and flexible global energy future.