Grid infrastructure can’t cope with RE boom – BMI research

MANILA, Philippines  —Increasing investments in renewable energy technologies will dampen grid infrastructure development in the next decade, thus straining global energy transition efforts, an international think tank said.

BMI, a unit of the Fitch Group, said in a report that current renewable energy projects would see “little relief” from congested grid conditions despite growing investments.

“The grid has emerged as a bottleneck to the global energy transition, with investments in nonhydropower renewable generation capacity outpacing grid infrastructure spending,” BMI explained.

BMI also noted that investment in renewables had been outpacing grid spending since 2018 by an average of $200 billion, citing data from the International Energy Agency.

RE, grid spending gap

Spending gap reached $328 billion in 2023.

“We expect the gap in investment to remain as strengthening global renewable deployment targets and adopted climate policies will continue to drive renewables investment,” BMI added.

In the Philippines, both the government and developers point to poor transmission grid development as among the reasons why there is a slowdown in the entry of renewables.

As a well-developed power grid is needed to ensure that the power network is stable even as new clean energy technologies emerge, the Developers of Renewable Energy for Advancement Inc. (Dream) previously stressed that this posed a challenge for developers.

“Generators want to build [power plants] in some areas, only to find out that there’s no transmission capacity,” DREAM president Jose Layug Jr. had said.

He noted that only 2,699.76 megawatts of renewable energy capacity was added from 2009 to 2019, with coal still taking over.

BMI warned that the “uneven” investment in the grid would create “considerable risks” to the growth of renewable energy, as “existing interconnection capacity will be unable to facilitate demand from new projects.”

RE sector growth slowing

According to BMI, the growth of the renewable energy sector will slow to an annual rate of 10.2 percent in the next 10 years, from 19.4 percent in 2023.

While an improvement in grid investments is seen, BMI pointed out that these would “take years to be realized” due to long permitting and construction processes.

This trend is also observed in the Philippines. Layug had stressed that more government agencies needed to utilize the Energy Virtual One-stop Shop (Evoss), a systematic, web-based filing and monitoring system for energy-related applications.

Layug, who had served as energy undersecretary from 2010 to 2012, explained that all other industries had to utilize Evoss to fast-track renewable energy development.