PointsofProgressAnIntroductiontoRMI’sGlobalEnergyTransformationGuide:ElectricityNovember2022GLOBALGUIDErmi.org/2PointsofProgressAboutRMIRMIisanindependentnonprofitfoundedin1982thattransformsglobalenergysystemsthroughmarket-drivensolutionstoalignwitha1.5°Cfutureandsecureaclean,prosperous,zero-carbonfutureforall.Weworkintheworld’smostcriticalgeographiesandengagebusinesses,policymakers,communities,andNGOstoidentifyandscaleenergysysteminterventionsthatwillcutgreenhousegasemissionsatleast50percentby2030.RMIhasofficesinBasaltandBoulder,Colorado;NewYorkCity;Oakland,California;Washington,D.C.;andBeijing.GLOBALGUIDErmi.org/3PointsofProgressCaraGoldenbergLeiaGuccioneGenevieveLillisCarinaRosenbachAuthorslistedalphabetically.ContactsCaraGoldenberg,cgoldenberg@rmi.orgGenevieveLillis,genlillis@rmi.orgCopyrightsandCitationCaraGoldenberg,GenevieveLillis,LeiaGuccione,andCarinaRosenbach,PointsofProgress—AnIntroductiontoRMI’sGlobalEnergyTransformationGuide:Electricity,RMI,2022,https://rmi.org/insight/points-of-progress.RMIvaluescollaborationandaimstoacceleratetheenergytransitionthroughsharingknowledgeandinsights.Wethereforeallowinterestedpartiestoreference,share,andciteourworkthroughtheCreativeCommonsCCBY-SA4.0license.https://creativecommons.org/licenses/by-sa/4.0/.AllimagesusedarefromiStock.comunlessotherwisenoted.AuthorsGLOBALGUIDErmi.org/4PointsofProgressTheauthorsthankthefollowingindividualsfromRMIfortheirhelpfulinsightsand/orfeedbackonthisreport.Allerrorsremainourown.KaitlynBunkerMarkDysonRachelGoldJagabantaNingthouhamVikramSinghMattSugiharaQinZhouAcknowledgmentsGLOBALGUIDErmi.org/5PointsofProgressAboutThisReport................6TransformingtheGlobalPowerSector...8SevenPriorityOutcomes...........25EnsureaFairandInclusiveEnergyTransition.....26ExpandAccessandEnableEconomicDevelopment..26PromoteAffordabilityandEquity.............29CreateaSystemPoisedforSustainableGrowth...36EnsureEnergyReliabilityandResilience........36SecureUtilityFinancialStability.............42IncreaseEfficientUtilizationofCleanAssets.....45ImproveEnergyIntensity..................45AccelerateCleanEnergyAdoption............48ReduceDependenceonCoal................51CatalystsforChange..............55Conclusion....................61Endnotes.....................62TableofContentsGLOBALGUIDErmi.org/6PointsofProgressAboutThisReportThisisthefirstreportinRMI’sGlobalEnergyTransformationGuide:Electricity(“GlobalGuide”)series,whichisaresearchendeavoraimedatunderstandingtheleadingedgeofinnovationforforward-thinkingelectricitysystemtransitionsaroundtheworld.TheprimaryobjectiveoftheGlobalGuideistoassessnewdevelopmentstosecureuniversalaccesstoreliable,affordable,andcleanelectricitybyidentifyingkeytrends,exploringemergingchallengesandopportunities,andsharingsuccessstoriesfromelectricitysystemleaders.TheseincludeeffortsspanningfromanewregionalelectricitymarketintheSaheltoaninnovativestrategytotransitionawayfromacoalpowerpurchaseagreementinChile.Bydocumentingthesepointsofprogress,theGlobalGuideintendstosupportleaderswhoareseekingguidanceonhowtosimultaneouslyexpandenergyaccessandpromotesustainabledevelopmentwhiledecarbonizingtheirpowersectortoavoidtheworstimpactsofclimatechange.Thisreportdescribesthechallengeaheadandintroduceskeyelementsoftheframeworkusedtoguideourresearch,includingsevenkeyoutcomesandeightcatalystsforchange,whicharehigh-impactleversavailabletoelectricitysectorleadersacrosscountriestotransformthepowersector.TheaccompanyingreportsGLOBALGUIDErmi.org/7PointsofProgressinthisseriesprovidemoredetaileddiscussiononspecificcatalysts,includingtheinnovationedgeforeachandwhereleadershipisneededmost.Theeightcatalystsourresearchhasshowntohavethegreatestpotentialtosupportelectricitysystemtransformationinclude:1.MarketStructures2.FossilFuelTransitionStrategies3.SystemPlanningandProcurement4.PublicPolicies5.CustomerSolutions6.AccessibleFinance7.UtilityIncentiveStructures8.Carbon-FreeTechnologyOurresearchincludedinterviewswithover85expertsfromaroundtheglobe,includingutilities,regulators,businesses,systemoperators,customers,andacademics,tounderstandthedriversofinnovationindifferentgeographies.Wefocusedthescopeoninnovationsinthepowersectorgiventheessentialroleelectricityplaysinmodernlifeandcountries’economies,aswellasitsimportancetomeetingeconomy-widedecarbonizationgoals.GLOBALGUIDErmi.org/8PointsofProgressTransformingtheGlobalPowerSectorElectricityisthecornerstoneofeconomicdevelopmentandhumanprosperity.Reliableaccesstoaffordableandcleanelectricityunlocksthepotentialtomeetfoundationalsocioeconomicneeds,advancinggoalsforindustrialization,publichealth,education,waterandsanitation,comfort,andequity.Historically,economicgrowthandhigherlivingstandardshavebeencoupledwithanincreaseinelectricitydemand,andthusanincreaseingreenhousegas(GHG)emissions.Asaresult,theelectricitysectoristhelargestsourceofGHGemissionstoday,responsiblefor42%ofemissionsglobally.1Thistrendalsoexplainswhycumulativepowersectoremissionsarelargelyconcentratedinthemostaffluenteconomies.In2020,theUnitedStates,theEuropeanUnion(EU),andothercountriesinEuropemadeup57%ofglobalcumulativeelectricitysectoremissionsalone.2,iExhibit1(nextpage)showspercapitaelectricityuse,grossdomesticproduct(GDP),andcumulativeemissionsin2019forasubsetofcountries.Asshown,higherGDPisdirectlycorrelatedwithhigherelectricityconsumptionandemissions(representedbythesizeofthecircle).GLOBALGUIDEiCumulativeemissionsrepresentthesumofacountry’shistoricalemissionsandeachcountry’stotalcontributiontoclimatechangeovertime.Thismetricisimportantbecausecarbonemissionsremainintheatmosphereforhundredsofyears.Severalofthelargestemittingcountriestoday(e.g.,IndiaandBrazil)arenotmajorcontributorstothehistoricalaccumulationofcarbonintheatmosphere.rmi.org/9PointsofProgressGUIDEExhibit1CorrelationbetweenElectricityUse,GDP,andEmissions5002,00010,00050,000200,0001,0003,00010,00030,000100,000300,000BubblesizeindicatesemissionsTurkeySaudiArabiaRussiaUnitedKingdomGermanyAustraliaUnitedStatesSingaporeCanadaQatarLuxembourgTrinidadandTobagoEstoniaChinaPolandBrazilPeruSouthAfricaIranJordanIndonesiaUzbekistanTajikistanTajikistanTajikistanCambodiaIndiaMyanmarNepalKenyaSudanMaliRwandaRwandaRwandaRwandaNigerGuineaUgandaGDPPerCapita(2019,US$)ElectricityUsePerCapita(2019,Kilowatt-Hours[kWh])Source:EIA,InternationalEnergyData;BP,StatisticalReviewofWorldEnergy;UniversityofGroningen,MaddisonProjectDatabase2020;WorldBank,CO2emissionspercapita;WorldBank,GDPpercapita;WorldBank,DatabankWorldDevelopmentIndicatorsGLOBALGUIDErmi.org/10PointsofProgressToday,politicalleadersandotherdecisionmakersacrossalleconomiesarebeingchallengedtoimmediatelyreduceorlimitemissionstopreventthemostharmfulimpactsofclimatechange.ThelatestInternationalPanelonClimateChange(IPCC)reportmakesclearthattostaywithin1.5°Cofwarming,globalemissionsmustpeakby2025anddecrease43%from2019levelsby2030.However,despiteexistingcommitmentstoreduceGHGemissions,theworldisnotontracktomeetthistarget.Currentemissionstrendsarepointingtowarda2.7°Caveragetemperatureincreasethiscentury.3Simultaneously,thereisstillaneedtoexpandenergyaccesstoalargeportionoftheworld.Althoughtheabsolutenumberofpeoplewithoutaccesstoelectricityhasdeclinedfrom1.2billionin2010to733millionin2020,9%oftheglobalpopulationstilllacksaccess.Toputthisinperspective,toachieveuniversalelectricityaccessby2030,100millionpeopleneedtogainaccesseveryyear.4Exhibit2(nextpage)showstheshareofpopulationwithelectricityaccessacrossregionsoverthepast25years.Amuchlargernumber,anestimated3.5billionpeople,lackaccesstoreliableelectricityservice(themajorityresidinginsub-SaharanAfrica),significantlylimitingthebenefitselectricitycanoffer.5Evenincountriesthathaverelativelyreliableaccesstoelectricity,escalatingweather-drivenevents,disruptionsinglobalenergymarketsduetoRussia’swaronUkraineandongoingissueswithenergytechnologysupplychainsduetoCOVID-19haverecentlyexposedsignificantvulnerabilitiesoftheelectricitysector,especiallytheinabilityoffossilfuelstodeliverreliablepowerundertimesofgridormarketdistress.Thesechallengeshaveresurfacedconcernsaroundenergyindependenceandtheopportunitytodeploydomesticresourcestoensuresecurityandaffordabilityofelectricity.Deliveringaffordable,reliable,andsecureaccesstoelectricitywhilealsomeetingtheworld’sclimatetargetsrequiresatransformationinthewayselectricityissupplied,delivered,andusedacrossGLOBALGUIDErmi.org/11PointsofProgress%ofPopulation199520002005201020152020020406080100LatinAmericaandCaribbeanEastAsiaandPacificMiddleEastandNorthAfricaSub-SaharanAfricaSouthAsiaEurope,CentralAsia,andNorthAmericaExhibit2ShareofPopulationwithElectricityAccessbyRegionSource:WorldBank,AccesstoElectricity(%ofPopulation)GLOBALGUIDEThereisstillaneedtoexpandenergyaccesstoalargeportionoftheworld.Toachieveuniversalelectricityaccessby2030,100millionpeopleneedtogainaccesseveryyear.rmi.org/12PointsofProgresstheglobe.Theactionsthatmanyadvancedeconomiesneedtotaketodayarelikelygoingtolookdifferentfromthoseinemergingmarketsanddevelopingeconomies,whicharefacingimmediatehumandevelopment(e.g.,foodsecurity,education,medicalcare,income)andlocaleconomicneedswhileconcurrentlymanagingclimateimpactsandrisks.Actionsalsowillneedtoreachbeyondborders,withhigher-incomecountriesusingtheirresourcestonotonlydramaticallyreducedomesticemissions,butalsotomobilizewide-scalefinanceforcleantechnologydeploymentaroundtheworld.Andalthoughthereisnotyetagloballyunifiedfrontonelectricitydecarbonizationpathwaysandtimelines,thereisagrowingnumberofnational,subnational,andcorporatecommitmentstoreducingemissionsandemergingopportunitiesforeconomiestoworktogetherinpursuitofanequitabletransformationoftheglobalpowersector.GLOBALGUIDErmi.org/13PointsofProgressExhibit3DecliningRenewableEnergyCostsandNewCoalCapacitySource:BloombergNEF,2H2021LevelizedCostofElectricity(LCOE);GlobalEnergyMonitor,GlobalCoalPlantTrackerFixed-AxisPhotovoltaic(PV)LCOE($/Megawatt-Hours[MWh])TrackingPVOnshoreWindOshoreWind(Megawatts[MW])20102012201420162018202020210100200300400050,000100,000150,000NewCoalCapacityGLOBALGUIDEFortunately,increasesinenergyefficiency,theaccelerationofelectrification,andthegrowinguseofcost-effectiverenewableenergyarecreatingnewpathwaysforcountriestosustainablygrowatthesametimetheyadvancecriticalenvironmentalandsocietalobjectives.Thesepotentialobjectivesincludeexpandingdomesticworkforces,supportinglocalprocurementandsupplychains,andimprovingcommunities’livelihoods.Exhibit3showsthedeclineinglobalrenewableenergycostsfrom2010to2021andthecorrespondinggeneraldeclineinnewcoalcapacityoverthesameperiod.rmi.org/14PointsofProgressExhibit4RenewableEnergyGrowthinAdvancedEconomiesCumulativeCapacity(MW)Renewables%ofOverallMix2010201220142016201820200100K200K150K50K50%40%30%20%10%0AustraliaGermanyJapanUnitedKingdomUnitedStatesSource:BloombergNEF,2H2021LevelizedCostofElectricity(LCOE)GLOBALGUIDEThistrendismostpronouncedinadvancedeconomiesoverthepastdecade.Renewablecostdeclines,ambitiousclimatetargets,andexpandedelectricitymarketshaveacceleratedthedeploymentofwindandsolartechnologiesincountrieslikeAustralia,Germany,Japan,theUnitedKingdom,andtheUnitedStates(seeExhibit4).rmi.org/15PointsofProgressEnergyintensityinthesecountriesalsohasbeendecliningoverthepast20years,playingacentralroleinmaximizingthelevelofservicesprovidedforeveryunitofenergyproduced.iiAlthoughreductionsinenergyintensityinmanyadvancedeconomieshavebeenatleastinpartenabledbyatransitionfrommanufacturingtoserviceindustries,therealsohasbeenincreasedfocusonenergyefficiency.iiiForexample,GermanyandJapanhavesustaineddecadesoffocusedattentiononenergyefficiencyimprovements.Singaporealsohasreducedenergyandcarbonintensitythroughstrategicimprovementsinenergyefficiencyandinvestmentsinlesscarbon-intensivefuels(seeExhibit5).6iiEnergyintensityistheamountofenergyusedtoproduceagivenlevelofoutputoractivity.Usinglessenergytoproduceaproductorprovideaserviceresultsinreducedenergyintensity.iiiIntheUnitedStates,theserviceindustryaccountsforapproximately80%ofGDP(McKinsey&Company,https://www.mckinsey.com/industries/electric-power-and-natural-gas/our-insights/the-decoupling-of-gdp-and-energy-growth-a-ceo-guide).GLOBALGUIDEExhibit5EnergyIntensityImprovementsinAdvancedEconomiesNote:Purchasingpowerparity(PPP)isaGDPpricerelativemetricthataccountsforvariationinpurchasingpowerofdifferentcurrenciesbyconvertingintoacommoncurrency.Source:InternationalEnergyAgency(IEA),SDG7Database.AllRightsReserved.TotalEnergySupplyperUnitofGDP(Megajoules[MJ]/2017US$PPP)0246820192015201020052000SingaporeAustraliaGermanyJapanUnitedKingdomUnitedStatesAveragermi.org/16PointsofProgressAftertheFukushimanucleardisasterin2011,Japanreplacedhalfofitsnuclearcapacitywithenergyefficiencyandconservationmeasuresthataimedtoreducepeakdemandby15%.7ThesemeasuresallowedJapantoimmediatelypreventrollingblackoutsandtheunnecessaryreplacementoffossilfuelassets,andtheyhavebeensustainedinthelongterm.Similarenergy-savingmeasureshavebeenrecentlycalledupongivensummerheatwavesandshortagesinenergysupply.8LessonsfromJapan’ssuccesswithenergyefficiencyareparticularlyvaluablerightnowgivenmountingglobalpressuretoreducerelianceonRussiaforoilandnaturalgasandtomanageuncertaintiesinfossilfuelsupply.Forexample,priortothepastfewmonths,Russiasupplied45%ofgasimportedintotheEU.9Tostrengthenenergysecurity,EUmembersrecentlyauthorizedamandatory5%reductioninelectricityconsumptionduringpeakhoursandavoluntary10%reductioninoveralldemand.10Earlierthisyear,theEUalsoreleaseda€300billionplantophaseoutRussiangasimportsby2027.Long-termgoalsforachievingthistargetrelyonrapiddeploymentofdomesticrenewableenergysources;however,intheshortterm,muchofthefocusisonenergy-savingmeasuresandtheelectrificationofenduses(suchasreplacinggas-poweredheatingsystems).11LessonsfromJapan’sSuccesswithEnergyEfficiencyGLOBALGUIDErmi.org/17PointsofProgressInmanyadvancedeconomies,reductionsinenergyconsumption,increasesinrenewableenergyuse,andshiftstomoreservice-basedindustrieshavealsofacilitatedthedecouplingofemissionsfromGDPgrowth.Exhibit6(nextpage)showstheGDPandemissionstrendsforfourlargeeconomiesoverthepast30years.Allfourcountrieshaveexperiencedabsolutedecoupling,whichoccurswhenGDPcontinuestogrowasemissionsdecreaseorremainstable.GLOBALGUIDErmi.org/18PointsofProgressExhibit6DecouplingofGDP,Emissions,andElectricityConsumptioninAdvancedEconomiesSource:EIA,InternationalEnergyData;BP,StatisticalReviewofWorldEnergy;UniversityofGroningen,MaddisonProjectDatabase2020;WorldBank,CO2emissionspercapita;WorldBank,GDPpercapita;WorldBank,DatabankWorldDevelopmentIndicatorsUnitedStatesUnitedKingdom(%ChangeSince1990)1990200020102019−100%0%100%200%300%400%500%1990200020102019−100%0%100%200%300%400%500%GDPConsumptionEmissionsTheUnitedStatesbeganabsolutedecouplingin2001.Since1990,GDPhasincreasedonaverage3.5%peryearwhileemissionshavedeclinedonaverage1%peryearandelectricityconsumptionhasincreasedonaverage0.6%peryear.TheUnitedKingdombeganabsolutedecouplingin1992.Since1990,GDPhasincreasedonaverage2.9%peryearwhileemissionshavedeclinedonaverage2.2%peryearandelectricityconsumptionhasdeclinedonaverage0.5%peryear.SingaporeGermany1990200020102019−100%0%100%200%300%400%500%1990200020102019−100%0%100%200%300%400%500%Singaporebeganabsolutedecouplingin2000.Since1990,GDPhasincreasedonaverage6.1%peryear,whileemissionshavedeclinedonaverage0.5%peryearandelectricityconsumptionhasincreasedonaverage4.5%peryear.Germanybeganabsolutedecouplingin1997.Since1990,GDPhasincreasedonaverage2.6%peryearwhileemissionshavedeclinedonaverage1.4%peryearandelectricityconsumptionhasdeclinedonaverage0.5%peryear.GLOBALGUIDErmi.org/19PointsofProgressCumulativeCapacity(MW)Renewables%ofOverallMix2010201220142016201820200500K1M750K250K50%40%30%20%10%0ChinaIndiaSouthAfricaThailandExhibit7RenewableEnergyGrowthinEmergingMarketsSource:BloombergNEF,2H2021LevelizedCostofElectricity(LCOE)GLOBALGUIDEThelargestemergingmarketsarealsoseeingadramaticaccelerationinrenewabledeploymentoverthepastdecadeandsteadyreductionsinenergyintensityoverthepast20years.Forexample,Chinahasboththelargestglobaldeploymentoftotalrenewableenergy,exceeding1,000gigawatts(GW),andthefastestimprovementrateinenergyintensity,averaging2.8%from2000to2019.12Similarly,Indianowhasthefastestgrowingrenewablessectorofanycountryintheworldandenergyintensitybelowtheglobalaverageof4.75totalenergysupplyperunitofGDPasof2019(seeExhibit7,below,andExhibit8onpage20).rmi.org/20PointsofProgressExhibit8EnergyIntensityImprovementsinEmergingMarketsSource:IEA,SDG7Database.AllRightsReserved.TotalEnergySupplyperUnitofGDP(MJ/2017US$PPP)20192015201020052000IndiaThailandChinaSouthAfricaAverage024681012AndalthoughIndiaandChinahaveexperiencedphasesofeconomicgrowththathaveresultedinanuptickinemissions,theyarebeginningtoleveragelesscarbon-intensivetechnologiestodrivedevelopment.BeyondIndiaandChina,othercountriesacrossAsiaandsub-SaharanAfrica,suchasSouthAfricaandThailand,havealsoexperiencedincreasesinGDPpairedwithimprovementsinrenewabledeploymentandenergyefficiencyoverthepastdecade.Lookingforward,rapidlyimprovingadvancesinelectrificationandgreenhydrogentechnologywillofferemergingmarketsanddevelopingeconomiesadditionalopportunitiestosustaintheireconomicgrowthwithoutfollowingthesameemissionstrajectoryasmostadvancedeconomies.Withabsolutedecouplinglikelytooccurinthecomingdecades,ChinaandIndiahavealreadyundergonerelativedecoupling,whichoccurswhenemissionsincreaseatalowerratethanGDPgrowth.SouthAfricaandThailand,meanwhile,haveadvancedbeyondrelativetoabsolutedecouplinginthepasttwodecades(seeExhibit9,nextpage).GLOBALGUIDErmi.org/21PointsofProgressExhibit9DecouplingofGDP,Emissions,andElectricityConsumptioninEmergingMarketsSource:EIA,InternationalEnergyData;BP,StatisticalReviewofWorldEnergy;UniversityofGroningen,MaddisonProjectDatabase2020;WorldBank,CO2emissionspercapita;WorldBank,GDPpercapita;WorldBank,DatabankWorldDevelopmentIndicatorsChinaIndia(%ChangeSince1990)Dottedlinerepresentstheverticalaxisrangeofallotherdecouplingchartspresentedinthissection19902000201020191990200020102019−100%0%100%200%300%400%500%GDPConsumptionEmissionsChinabeganrelativedecouplingin1994.Since1990,GDPhasincreasedonaverage12.7%peryearwhileemissionshaveincreasedonaverage4.9%peryearandelectricityconsumptionhasincreasedonaverage5.7%peryear.Indiabeganrelativedecouplingin2003.Since1990,GDPhasincreasedonaverage6.2%peryearwhileemissionshaveincreasedonaverage3.6%peryearandelectricityconsumptionhasincreasedonaverage5%peryear.ThailandSouthAfrica1990200020102019−100%0%100%200%300%400%500%1990200020102019−100%0%100%200%300%400%500%Thailandbeganrelativedecouplingin2006andabsolutedecouplingin2013.Since1990,GDPhasincreasedonaverage5.8%peryearwhileemissionshaveincreasedonaverage3.1%peryearandelectricityconsumptionhasincreasedonaverage5.1%peryear.SouthAfricabeganrelativedecouplingin2003andabsolutedecouplingin2008.Since1990,GDPhasincreasedonaverage2.3%peryearwhileemissionshaveincreasedonaverage0.4%peryearandelectricityconsumptionhasincreasedonaverage1.2%peryear.−100%1,000%2,000%3,000%GLOBALGUIDErmi.org/22PointsofProgressFinally,agrowingnumberofdevelopingeconomiesareinvestingindomesticrenewableresourcesandenergyefficiencytoexpandaccesstoreliableelectricityserviceandcatalyzeeconomicgrowth.Althoughtheseachievementsreflectpointsofprogress,advancingenergyefficiencyandrenewabledeploymentinsupportofsustainableeconomicdevelopmenthasbeenlimitedandunevenintheleastdevelopedeconomies.Manyofthesecountrieslackthefinancialresourcesandgridinfrastructuretosupportsignificantrenewableadoption,resultingintheneedtorelyonfossilfuelstomeetrisingdemand.Fortheseregions,business-as-usualinvestmentsruntheriskoflockinginexpensiveandcarbon-heavypowersystemswhilealsopotentiallyincreasingdependenceonforeignfossilfuelsthatwouldunderminetheabilitytoprovideuniversalaccesstoaffordable,reliable,andcleanelectricity.However,thereispromise.Strongmarketandpolicysignalsinfavorofcleanenergyareincreasinglypushingpoliticalleadersindevelopingeconomiestoevaluatealternative,low-carbonapproachestopromoteaffordableandefficientelectrificationandutilizemoredomesticresources.Byleveragingcleanenergy’sdecliningcostsandstrategicallyoptimizingsystemexpansionanddeploymentofoff-gridsolutionstomeetgrowingdemand,industryleadershaveanopportunitytoexploreamutuallyreinforcingpathwaythatachieveslocaldevelopmentandglobalclimatealignmentobjectives.Additionally,manycountrieswiththelowestlevelsofelectricityaccessandthemosturgentneedtoincreaseelectricityconsumptiontosupportsustainablegrowthhavesignificantlyhighlevelsofrenewableenergypotential.In2021,CarbonTrackeranalyzedthetechnicalpotentialforwindandsolartomeetcurrentenergydemandacrosstheglobe.Theanalysisfoundthatbasedonexistingdemand,alargemajorityofcountriesinsub-SaharanAfricahadmorethan1,000timesasmuchtechnicalpotentialasexistingenergydemand(seeExhibit10,nextpage).13GLOBALGUIDErmi.org/23PointsofProgressExhibit10WindandSolarEnergyPotentialasaMultipleofEnergyDemand(2021)Source:CarbonTracker,“TheSky’stheLimit”Superabundant:>1,000×(2021)Abundant:>100×Adequate:>10×Stretched:<10×RMIanalysisestimatesthatcountrieswiththelowestlevelofenergyconsumptioninsub-SaharanAfrica(DemocraticRepublicofCongo,Ethiopia,Kenya,Nigeria,andZambia)wouldneedtoincreasepercapitaelectricityconsumption50–100timestoday’slevelstoachievemodernlivingstandardscomparabletothoseoftheUnitedStatesandEuropeusingconservativeassumptionsaboutenergyefficiency.Consideringthetechnicalpotentialforthesecountries,RMI’sanalysisshowsthatdomesticrenewableresourcesshouldbemorethanabletosupportdemandgrowthtomeettheseneeds.ivBeyonddomesticconsumption,thesignificantsolarandwindpotentialintheseivManyofthecountrieswithsuperabundantsolarandwindpotential(greaterthan1,000timesenergydemandtoday)alsohavesomeoftheworld’slowestlevelsofpercapitaenergyconsumption.However,overthecomingyears,advancementsinelectricityaccess,reliability,andindustrializationareexpectedtodramaticallyincreaseconsumptioninthesecountries.Toaccountforthisgrowth,RMIcomparedpercapitaelectricityconsumptionforasubsetofcountrieswiththelowestlevelsofconsumptionandhighestrenewablepotentialtothatofOrganisationforEconomicCo-operationandDevelopment(OECD)Europe,OECDAsiaOceania,andNorthAmerica.RMI’sfindingssuggestthatthesecountrieswouldexperiencea50-to100-foldincreaseinconsumptiontoreachmodernlivingstandards.Thispotentialdemandgrowth,usingconservativeassumptionsforenergyefficiency,isstillsignificantlybelowthesecountries’solarandwindpotential.GLOBALGUIDErmi.org/24PointsofProgresscountriesalsocouldallowthemtobenefitfromexportingrenewableenergytoneighboringcountries.Lookingforward,notwocountries’energytransitionswillbethesame.Countries’diverseneeds,priorities,andresourceswillrequiredifferenttrajectoriesandtailoredsolutions.However,noonecountryshouldhavetochartitsownpathinasilo.Agrowingnumberofpointsofprogressacrossallsixcontinentscanhelpguideandinspiretheworkahead.Therapidwarmingoftheplanetdoesnotaffordthetimetoreinventthewheel,butrequiresindustryleaderstobuildonsuccesses,learnfrommistakes,andscaleinnovationsthroughouttheglobalpowersector.GLOBALGUIDETherapidwarmingoftheplanetdoesnotaffordthetimetoreinventthewheel,butrequiresindustryleaderstobuildonsuccesses,learnfrommistakes,andscaleinnovationsthroughouttheglobalpowersector.rmi.org/25PointsofProgressGUIDEGiventheimportanceofelectricityinhumandevelopmentandeconomy-widedecarbonization,powersectorleadershavetheresponsibilitytochartthepathforthetransitiontoamodernandcleanelectricitysystem.Toguideregional,national,andlocaldecisionmakersastheyleveragedifferentcatalyststoachieveclimatealignmentandotherpowersectorpriorities,sevenuniversaloutcomescanbeusedasindicatorsofprogresstowardasuccessfultransitionoftheelectricitysystem.Thesesevenoutcomesrepresentcriticalobjectivesthatindustryleaderswillberequiredtoconsiderandplanforinpolicy,regulations,andinvestments.Theyareanchoredtothreeprimarygoals:(1)ensuringafairandinclusiveenergytransition,(2)creatingasystempoisedforsustainablegrowth,and(3)increasingtheefficientutilizationofcleanenergyassets.GUIDESevenPriorityOutcomesGLOBALGUIDESevenPriorityOutcomesandThreeOverarchingGoalsEnsureafairandinclusiveenergytransitionCreateasystempoisedforsustainablegrowthIncreaseeicientutilizationofcleanassetsImproveenergyintensityAcceleratecleanenergyadoptionReducedependenceoncoalGlobalEnergyTransformationExpandaccessandenableeconomicdevelopmentPromoteaordabilityandequityEnsureenergyreliabilityandresilienceSecureutilityfinancialstabilityrmi.org/26PointsofProgressEnsureaFairandInclusiveEnergyTransitionExpandAccessandEnableEconomicDevelopmentEnergyaccessisfundamentaltosocialandeconomicdevelopment,includingensuringaccesstocriticalpublicservices(e.g.,health,education)andimprovingcommunityandindividuallivelihoods(e.g.,foodsecurityandpovertyreduction).14Globally,thenumberofpeoplewhohaveaccesstoelectricityhasbeensteadilyincreasingoverthepasttwodecades.However,in2020,733millionpeople(9%oftheworld)stilldidnothaveaccesstoelectricity—themajorityresidinginsub-SaharanAfricaandSouthAsia.Progresshasslowedinrecentyearsbecausethosewhocurrentlyhavelimitedornoaccesstoreliableelectricitytendtoresideinthehardest-to-reachlocations.InAsia,morethan1.2billionpeoplehavegainedenergyaccesssince2000.Indiainparticularhasmadenotableprogress—today,morethan99%ofitspopulationhasaccesstoelectricity.Gridextensions,distributedenergyresources(DERs)deployment,andtargetedgovernmentfundinghavecontributedtosubstantialimprovementsinenergyaccessacrossAsia.Agreaterfocusonreliabilitytoensure24/7accesstoelectricitywillbenecessarytounlockthefullrangeofelectricity’ssocioeconomicbenefits,includingdependablehealthservices,educationopportunities,andfoodsecurity.GLOBALGUIDEGlobally,thenumberofpeoplewhohaveaccesstoelectricityhasbeensteadilyincreasingoverthepasttwodecades.However,in2020,733millionpeople(9%oftheworld)stilldidnothaveaccesstoelectricity.rmi.org/27PointsofProgressEnsureaFairandInclusiveEnergyTransitionInAfrica,however,progresshasbeenslower(seeExhibit11).SincetheCOVID-19pandemic,thenumberofpeoplewithoutelectricityaccesshasincreasedaspopulationgrowthhasoutpacedprogressinhouseholdelectrification.Toachieveuniversalaccessby2030,akeyUnitedNationsSustainableDevelopmentGoal,thenumberofcustomersgainingaccesstoelectricityneedstoreach100millionperyearglobally,and80millionperyearinAfricaalone—triplethecurrentgrowthrate.15Tocontinuetoexpandaccesstoreliableandcleanelectricity,utilitiesandsystemplannersareleveragingdecentralizedoff-gridcleanresources,wheretheyaretheleastexpensiveandmostreliableoption,aswellascost-effectiveinvestmentsinlast-mileconnectivitytounelectrifiedhouseholds.Exhibit11AnnualChangeinElectricityAccessRateSource:WorldBank,TrackingSDG7—TheEnergyProgressReport2022AnnualAccessGrowthRateFallingAnnualAccessGrowthRatebetween0and2percentagepointsAnnualAccessGrowthRateabove2percentagepointsUniversalAccessAchievedbetween2010and2020NotApplicableGLOBALGUIDErmi.org/28PointsofProgressBeyondsecuringreliableaccess,anincreasingnumberofcountriesareturningtodomesticrenewablestocatalyzeeconomicdevelopmentgivencostdeclinesandincreasingconcernsoverenergysecurity.Forexample,thereareeffortsunderwayacrossEthiopia,Nigeria,andotherneighboringcountriestoenergizetheiragriculturesectorsbycreatingsustainablemicrogridsandscalingdistributedenergysolutionstoboostproductivityandeconomicreturnstofarmers.InNamibia,politicalleadershavedevelopedaneconomicrecoveryplanthatexploitsitssolarresourcepotentialtodiversifyitseconomy,generatewell-payingjobssuchasintransmissioninfrastructureconstructionandportoperations,andaddressenergyaccessshortfalls.Basedonthenumberofrenewableprojectproposalsinthequeue,Namibiacouldproduce10timesitscurrentpeakgenerationcapacityfromrenewableresourcesinthenext10years.Giventhisforecast,NamibiaisinnegotiationswithEuropeandSouthAfricatoexportexcesselectricitysupplyasgreenhydrogen.16Kenya’sexperiencealsoillustratestheopportunitytosupporteconomicdevelopmentwithrenewables.KenyaisoneofthefastestgrowingeconomiesinAfricaandhasrecentlyreachedlower-middle-incomestatuswithagrossnationalincomeof$2,010percapita.17Inparallel,Kenyaalsoincreasedenergyaccessfrom15%in2000tomorethan70%in2020.Tosupportthesedevelopments,Kenyahasacceleratedcleanenergydeploymentthroughinvestmentindomesticwindandgeothermalresources.Today,90%ofKenya’selectricityisfromgeothermal,wind,solar,andhydro,positioningthenewlyindustrializingcountrytoachieve100%cleanenergyby2030.18Thisprojectedcapacityexpansionhasthepotentialtoroughlyquadruplethenumberofjobsinthecountryoverthenext20years.Forexample,jobssupportingoperationswillexpandbyanorderofmagnitude—10,000to100,000by2040—primarilyintheextractionsectorbecauseofprojectedgeothermalexpansion.19EnsureaFairandInclusiveEnergyTransitionGLOBALGUIDErmi.org/29PointsofProgressPromoteAffordabilityandEquityEnsuringthatelectricityisaffordableforhouseholds,businesses,andindustryispivotaltosupportingsustainableeconomicdevelopmentandasuccessfulcleanandequitableenergytransition.Thisobjectiveisespeciallyimportantgivenrecentfuelpricevolatilityandthelevelofelectricitysysteminvestmentexpectedinthenextdecadetoaccommodategrowingdemand,expandthegridtounderservedregions,replaceandmodernizeaginginfrastructure,andimprovesystemresilience.Globally,Russia’swarinUkraineanddisruptiontosupplychainscausedbytheongoingpandemichascausedoil,coal,andnaturalgaspricestospike.Thegeopoliticalandeconomicrisksassociatedwithimportedfossilfuelscanbedetrimentaltothosecountriesthatsignificantlydependonforeignresources.Exhibits12and13(nextpage)showthewidevariationinnaturalgasandcoalpricesoverthepasttwodecades.EnsureaFairandInclusiveEnergyTransitionGLOBALGUIDErmi.org/30PointsofProgressExhibit12HistoricalGasPrices—AsianMarketIndexExhibit13HistoricalCoalPrices—AustralianMarketIndex1992199720022007201220172022010203040LiquefiedNaturalGasPrice(US$/millionBritishthermalunits[MMBtu])Source:InternationalMonetaryFund,GlobalpriceofLNG,AsiaSource:InternationalMonetaryFund,Globalpriceofcoal,Australia19921997200220072012201720220100200300CoalPrice(US$/ton)Note:Chartsinbothexhibitsreflectnominal,non-inflation-adjustedpricing.EnsureaFairandInclusiveEnergyTransitionGLOBALGUIDErmi.org/31PointsofProgressTounderstandwhatthesepricesmeanforcustomerrates,Exhibit14showselectricitypricesaroundtheglobe.Evenbeforetherecentspikeinfuelcosts,morethan16%oftheworld’spopulationfacedresidentialretailratesover15UScents/kWh.vWithelectricitypricescontinuingtoclimbinanumberoflargeeconomies,suchastheUnitedStates,thispercentageislikelytoincreasetomorethan20%in2023.20vAnalysisincludesresidentialretailratedataon135countries,makingup96%oftheworld’spopulation.Exhibit14RetailElectricityPricesNote:Australia,China,andtheUnitedStatesrepresentanaverageofstate-specificelectricityprices.Allsourcesare2020,exceptfortheUnitedStates,whichis2019,andChina,whichis2018.Source:BloombergNEF,GlobalPowerandFuelPrices,PowerPrices3691215182124273033(USCents/kWh)EnsureaFairandInclusiveEnergyTransitionGLOBALGUIDErmi.org/32PointsofProgressTohelpsupportaffordabilityduringthisvolatiletime,governmentshaveintroducedreliefmeasuresandpackagessuchaspricecontrols,taxrelief,anddirectbillsupporttoshieldhouseholdsandbusinessesfromunexpectedlyhighenergybills.21Governmentsinadvancedeconomieshavealsocontinuedtoprioritizeeffortstocontrolutilitycostsandmaintainstabilityincustomerratesandbillsalongsidedecarbonizationpolicies,suchasthroughperformance-basedregulation,fairratedesign,virtualpowerplants,andfinancialmechanismstomitigatetheimpactsofthefossilfueltransitiononratepayers.Inmanyemergingmarketsanddevelopingeconomies,ensuringaffordabilitythrougheconomicdevelopmentandthecleanenergytransitioncanbecomeparticularlychallenginggiventhehighlevelsoffossilfuelconsumptionsubsidiesthatallowforsubstantiallylower-pricedelectricity.Inanefforttoreducethebarrierstocleanenergyinvestmentandencouragetheefficientuseofelectricitywhilesupportingthelong-termsustainabilityofpublicutilitiesandmanagingfederaldebt,manygovernments,suchasinEgypt,Tunisia,andUkraine,havebeenexploringandimplementingcomprehensivesubsidyreformmeasuresthatsupportpublicpolicyobjectivesandprotectvulnerablehouseholdsaselectricitypriceschange.22Beyondsubsidyreform,effortstodecarbonizethegridshouldhelprelievecustomers’energyburden,notexacerbateit.Althoughanincreasingamountofinvestmentingenerationandinfrastructureistobeexpectedaseconomiesgrowandinvestinmorerenewables,solutionssuchasdemand-sidemanagement,minigrids,andimprovementstosystemefficiencycanhelpalleviateupwardpressureonrates.viAlternativepaymentprograms,suchasprepaidmetersandpay-as-you-gomodels,alsocanmakeincrementalelectricityconsumptionmoreaffordableforawiderrangeofcustomers.viAminigridisaself-containedelectricitygenerationanddistributionsystemthatprovidespoweratthecommunitylevel.Minigridsaretypicallyusedinruralareaswheregridextensionisnotviable,andusuallyconsistofacombinationofsolarPV,batterystorage,andabackupdieselgenerator.EnsureaFairandInclusiveEnergyTransitionGLOBALGUIDErmi.org/33PointsofProgressAdditionally,thereisasignificantopportunitytoleveragehundredsofbillionsofdollarsofavailableclimatefinancetosupportrenewableprojectsandrelatedinvestments.Unlockingthispotentialwillrequirespurringdemandbymakingfinancingaccessibleandpredictableanddelegatingdecision-makingtonationalandregionalstakeholders.23Inadditiontoaffordability,industryleadersanddecisionmakerswillneedtoprioritizetheintegrationofmarginalizedandvulnerablevoicesintoplanningfortheenergytransition.Althoughsystemicsocial,economic,andenvironmentalinequitieshavepreventedhouseholdsandcommunitiesfromvoicingelectricityneedsandparticipatinginsolutiondevelopmentinthepast,thereareemergingopportunitiestochangecourse.Creatinginclusiveandtransparentprocessesandestablishingtoolstoholdutilities,regulators,andpolicymakersaccountabletocommitmentswillbecomeevenmorecriticalgiventhedisparatesocial,economic,andhealthimpactsofclimatechangeoncommunitiesandindividuals.Tosupportfairandinclusivedecision-makingandresourceallocation,local,country,regional,andglobalinitiativesandinvestmentsmustbeevaluatedacrossdifferentequitylenses.Exhibit15(nextpage)providesanoverviewofdifferentequitylenses,includingwheretheseareshowingupasakeypriorityandemergingapproachestosupportprogress.EnsureaFairandInclusiveEnergyTransitionGLOBALGUIDErmi.org/34PointsofProgressExhibit15EquityLensesCriticaltoGlobalPowerSectorTransformationSource:RMIINTERNATIONALCLIMATEJUSTICEANDSTRUCTURALEQUITYDescriptionCountriesWhereThisIsaKeyPriorityEmergingSolutionsRecognizestheunequaldistributionofadverseimpactsofclimatechange,emissionsreductionresponsibilities,andresourcecapabilitiesbyrebalancingaccesstoresources,correctingpastharms,andprotectingvulnerablecommunitiesfromclimateandenvironmentalhazards24Low-incomecountriesandcommunitiesandthosemostvulnerabletotheimpactsofclimatechangeCountry-specificassessmentsthatquantifytimelinesforassetdeploymentandretirementthataccountforeconomicdevelopment,prosperity,resilience,andotherimmediatecountrypriorities(suchasairpollutionandhealth)Integrationofequityindicatorsintopolicy,planning,andprogramorprojectimplementationtoprovidetransparencyandcreateaccountability25Increasedglobalinvestmentinmitigation,adaptation,andresiliencethatreducesrisksforpopulationcentersandcriticalinfrastructurethroughfinancialinstruments,suchasinsurancepremiumsforthoseactivelyreducingclimaterisks,orinfrastructuregreenbondsandgrantsgearedtowardresilientgridinfrastructure26Improvedaccesstoclimatefinancethroughbuildinglocaltechnicalandinstitutionalcapacity27DISTRIBUTIONALEQUITYDescriptionCountriesWhereThisIsaKeyPriorityEmergingSolutionsSocioeconomicbenefitsofthecleanenergytransitionareequitablydistributedacrossandwithinnationsAlleconomiesTargetedutilityorgovernmentincentives,programdesign,andfinancingtoensurethatthecustomerswhocanbenefitmostfromreducedenergycostsorcleanenergyhaveequalaccesstoopportunitiesandnoonegroupisdisproportionatelyburdenedbyrisingcostsornegativeexternalitiesEnsurethatpoliciesandincentivesforgreeninfrastructuretargetlocaljobcreation,includingtailoredsolutionsthatconsiderconstraintsandneedsofdisadvantagedpopulationsConductequityimpactassessmentsthatidentifykeybarrierspreventingdisadvantagedgroupsfromcapitalizingonbenefitsandopportunities.Indevelopingimpactassessments,disaggregatedatabydemographicvariablessuchasincome,gender,age,andethnicity28EnsureaFairandInclusiveEnergyTransitionGLOBALGUIDErmi.org/35PointsofProgressExhibit15EquityLensesCriticaltoGlobalPowerSectorTransformation(continued)Source:RMIPROCEDURALEQUITYDescriptionCountriesWhereThisIsaKeyPriorityEmergingSolutionsEnsuresthatprocessesarefairandinclusiveofallinterestedorimpactedstakeholdersbyaddressingengagementinequitieswithinapopulationbasedonrace,gender,ethnicity,andage.29Theseinequitiesresultindisenfranchisementofminoritygroupsinelectricityplanning,investmentopportunities,andtechnologyadoptionduetolowersocietalstatus,alackofdecision-makingpowerandagency,andreducedaccesstofinanceAlleconomiesEngagementofdiverseandrepresentativevoicesinshapingpolicies,regulations,andinvestmentsEnsureongoingcollaborationwithmarginalizedlocalcommunities(youth,women,minorities,andvulnerableandunderservedindividuals)bydevelopinginclusive,transparent,andsubstantiveopportunitiesforinputatallstagesofpolicyandprogramdevelopment.CreateexplicitsocialequitygoalsandparticipationthresholdsfortheseprocessesAdvisorygroupsthatrepresentdiversestakeholdersthathaveinfluenceoverinvestmentplansanddecisionsEnsureaFairandInclusiveEnergyTransitionGLOBALGUIDErmi.org/36PointsofProgressEnsureEnergyReliabilityandResilienceIntandemwithexpandingelectricityaccess,theavailabilityofreliableelectricityisalsoakeypriorityforallcountriesgiventheimportanceofelectricityinsupportingcriticalinfrastructureandawell-functioningeconomy.Therearedifferentcomponentstoensuringareliableelectricitysystem:•Adequacy:Theabilityofthesystemtosupplyaggregateelectricpowerandenergyrequirementstoconsumersatalltimes•Operatingreliability:Theabilityofthesystemtowithstandsuddendisturbancesandprovidecontinuouspowersupply•Resilience:Theabilityofthesystemtoabsorb,accommodate,andrecoverfrombothshort-termshocksandlong-termchangesthatgobeyondconditionscoveredinstandardadequacyandoperatingreliabilityassessments•Quality:TheabilityofthesystemtoavoidvoltagefluctuationsandmaintainconsistencyinfrequencyGLOBALGUIDECreateaSystemPoisedforSustainableGrowthrmi.org/37PointsofProgressCreateaSystemPoisedforSustainableGrowthGlobalprogresstowardachievinguniversalaccesstoadequate,reliable,andresilientelectricityisseverelyunderreportedbecauseofalackofstandardmetricsandgovernmenttracking.Currently,assessmentsofprogressfocusheavilyonaccessibilityanddonotadequatelyreportonthefrequencyormagnitudeofelectricitydisruptions.ThebestestimatefromEnergyforGrowthsuggeststhat45%oftheglobalpopulationdoesnothavereliableaccesstoelectricitysupply(seeExhibit16).30Forexample,althoughcountriessuchasBangladesh,Ghana,India,andKenyahavemadesignificantimprovementstoexpandenergyaccess,persistentlyunpredictablepowerhashinderedtheireconomicgrowth.Exhibit16CountrieswithReliableandUnreliableElectricityServicesNote:Thisresourcedefinesreasonablyreliableelectricityserviceashavinganannualnationalaverageofnomorethanoneoutageoronehourofoutagepermonth.Source:EnergyforGrowth,“3.5BillionPeopleLackReliablePower”ReliableUnreliableMeasuressuchaspowerplantcapacityratings,periodsofelectricityavailability,andqualitycanprovidehelpfulindicatorsofreliableelectricityservice.31MeasurementsofgridresilienceshouldfocusoncustomerimpactsandshouldtrackthenumberofoutagesthatoccurGLOBALGUIDErmi.org/38PointsofProgress(frequency),thenumberofcustomersaffectedbyanoutage(scale),andthelengthoftimebeforeinterruptedservicecanberestored(duration).32Thereliabilityofacountry’selectricitysystemisstronglycorrelatedwithitspercapitaGDPgiventheinvestmentrequiredinmaintainingsupplylevelstomeetpeakdemandandensuringdurableandefficientdistributionsystems.However,eventhosecountriesthathaveexperiencedhighlevelsofreliabilityinthepastnowfaceincreasingexposuretoeventsthatcandisruptpowersupplyanddelivery.Acrosseconomies,ensuringreliabilityandresilienceisbecomingincreasinglycomplexbecauseof:•Increasingsharesofvariablerenewableenergythatrequirechangestoantiquatedreliabilitymetricsandprocessesdesignedfora20th-centurygrid•Extremeandsustainedweatherevents,whichcandirectlycauseequipmentfailuresandfuelsupplyshortages,leadingtounplannedoutagesandlongdisruptionstosupply•Globalunrestandmarketdisruptions,suchasRussia’swarinUkraine,whichcancompromiseenergysecurity,particularlywherethereisastrongrelianceonfossilfuelimportsforenergysupplies33•Increasingcybersecuritythreatstothepowersectorthatcanbreachnationaleconomicsecurityandaffectpublichealthandsafety•AginggridinfrastructurethatisexpensivetoreplaceGiventhevaryingwaysreliabilityismeasuredandtrackedacrosscountries,itisdifficulttocapturethefullextentofthischallengeorcomparecountries.Internationalindicatorsforreliableandresilientelectricityandagreed-uponprocessestotrackprogresscouldbehelpfultobetterunderstandreliabilityandresiliencefromaworldview.TheWorldBank’sMulti-TierFramework(MTF)providesonewaytoadequatelymeasureaccessandaspectrumofservicelevelsexperiencedbyhouseholds,aswellasaffordability,healthandsafety,andformalityofservice(i.e.,whethercustomersarepayingforelectricity)acrosscountries(seeExhibit17,nextpage).CreateaSystemPoisedforSustainableGrowthGLOBALGUIDErmi.org/39PointsofProgressExhibit17WorldBank’sMulti-TierFrameworkforEnergyAccessSource:WorldBank,EnergySectorManagementAssistanceProgramMulti-TierFrameworkPowerCapacityRatings(watts[W]ordailywatt-hours[Wh]orkWh)PowerCapacityServicesDailyAvailabilityEveningAvailabilityReliabilityQualityAordabilityFormalityHealthandSafetyTier0Tier1Tier2Tier3Tier4Tier5Lessthan3WAtleast3WAtleast50WAtleast200WAtleast800WAtleast2kWLightingof1,000lumen-hoursperdayElectricallighting,aircirculation,television,andphonechargingarepossibleLessthan12WhAtleast12WhAtleast200WhAtleast1kWhAtleast3.4kWhAtleast8.2kWhMorethan14disruptionsperweekAtmost14disruptionsperweekoratmost3disruptionsperweekwithtotaldurationofmorethan2hours(>3to14disruptionsperweek)or≤3disruptionsperweekwith>2hoursofoutageAtmost3disruptionsperweekwithtotaldurationoflessthan2hoursCostofstandardconsumptionpackageof365kWhperyearismorethan5%ofhouseholdincomeCostofastandardconsumptionpackageof365kWhperyearislessthan5%ofhouseholdincomeLessthan1hourAtleast1hourAtleast2hoursAtleast3hoursAtleast4hoursLessthan4hoursAtleast4hoursAtleast8hoursAtleast16hoursAtleast23hoursHouseholdexperiencesvoltageproblemsthatdamageappliancesVoltageproblemsdonotaecttheuseofdesiredappliancesNobillpaymentsmadefortheuseofelectricityBillispaidtotheutility,prepaidcardseller,orauthorizedrepresentativeSeriousorfatalaccidentsduetoelectricityconnectionAbsenceofpastaccidentsCreateaSystemPoisedforSustainableGrowthGLOBALGUIDErmi.org/40PointsofProgressThelowesttierofaccessintheMTFframeworkisTier1,whichreferstolimitedaccesstosmallquantitiesofelectricityforafewhoursperday,suchasforelectriclightingorphonecharging.34,viiThislevelofaccesscanbeprovidedbyanytechnology,suchasasmallsolarsystem.Higherlevelsofaccessreflecthighercapacityandlongerdurationofsupply,enablingtheuseofmedium-andhigh-loadappliances(suchasarefrigerator,washingmachine,orairconditioning).Agridisthemostlikelysourcefordeliveringhigh-accesstiers,althoughalargeminigridmaydosoaswell.Exhibit18showsthebreakdownoftiersforasubsetofcountries.Exhibit18Multi-TierFrameworkDistributionacrossCountriesSource:WorldBank,EnergySectorManagementAssistanceProgramandClimateInvestmentFundsMulti-TierFramework;WorldBank,Multi-TierEnergyAccessTrackingFrameworkGlobalSurveysviiHouseholdsinTier0arenotconsideredtohaveaccessunderthisframework.Tier0Tier1Tier2Tier3Tier4Tier5Cambodia12%18%46%6%13%Myanmar30%19%12%9%17%13%Nepal6%15%12%32%18%17%Ethiopia56%12%17%7%SãoToméandPríncipe30%23%21%19%Zambia60%8%7%21%Nigeria61%14%18%Rwanda73%10%8%Kenya47%11%12%12%14%Niger83%Honduras13%29%10%42%CreateaSystemPoisedforSustainableGrowthGLOBALGUIDErmi.org/41PointsofProgressForcountriesthatareattemptingtoexpandaccessandimprovereliabilityandresilienceatthesametime,governmentsandregulatorsshouldensurethatutilitieshavesufficientrevenuestomakethesysteminvestmentsrequiredtomaintainadequateavailabilityofelectricity,whichisdiscussedfurtherinthenextoutcome.Therealsoisanopportunityforgovernmentsanddeveloperstoleveragedifferentfinancingoptions,suchasconcessionaldebt,grants,andbalancesheetfinancing,tomakeneededinvestmentsinbothinfrastructureandgenerationcapacity.Inadvancedeconomies,gridplannershaveanopportunitytomodernizetheirresourceadequacyassessmentsandsystemplanningapproachestoensurethatreliabilitycriteriareflectscale,frequency,duration,andtimingofemergingclimateevents.Theyalsocanupdatetheirmodelingapproachessothatrenewableanddemand-sideresourcesarefairlycreditedfortheirabilitytodeliverenergyservicesandresourceadequacy.35Marketmechanismscanfurthersupportevolvingreliabilityrequirementsandcanprovidenewvaluestreamsforreliabilityservicesfromrenewableresources,storage,andaggregatedDERs.CreateaSystemPoisedforSustainableGrowthGLOBALGUIDErmi.org/42PointsofProgressSecureUtilityFinancialStabilityUtilities(ordistributioncompanies),bothverticallyintegratedandunbundled,arecriticaltodeliveringsafeandreliableelectricitytohomesandbusinesses.viiiTomeettheirservicerequirements,utilitiesmusthaveaccesstosufficientcapitaltomakenecessaryinvestmentsinresourcesandinfrastructureandhaveadependablerevenuestreamtorecovertheircosts.Utilitiescanbeprivateorpublic,whichhasimplicationsforhowtheyraisecapitalandspendmoney,whatservicestheyprovide,andhowtheystructurerates.Private,orshareholder-owned,utilitiesneednotonlytocollectenoughrevenuestocovercosts,butalsotopayareturntotheirinvestors.Inadvancedeconomieswhereefficientcapitalmarketsenablefirmstoissuepublicdebt,thereisahigherprevalenceofprivatelyownedutilities,whereastheyarerareinsub-SaharanAfrica,EastAsia,theMiddleEast,andNorthAfrica.36Althoughpublicutilitiesdonotneedtogenerateaprofitforinvestors,theirobligationtoprovideapublicgoodregardlessofcostrecovery,politicalties,andlinkagetogovernmentfinancialhealthinfluencesinvestmentandrecoverydecisions.Inrecentdecades,bothprivateandpublicutilitieshavehadchallengesmaintainingtheirtraditionalbusinessmodel.Inadvancedeconomies,theexpansionofbehind-the-meterresources,increasedcustomerchoiceoversupplyofenergy,anaginggrid,andincreasingincomeinequalityhaveallchallengedutilities’cost-of-servicebusinessmodel,whichlargelyreliesonsalesandcapitalinvestments.Nonetheless,electrification,decliningcostsofcleanresources,emergingfinancialtoolsforfossilfuelretirement,andpersistentlyviiiVerticallyintegratedutilitiesownalllevelsofthesupplychain:generation,transmission,anddistribution.Unbundlingreferstothefunctional,structural,and/orlegalseparationofdifferentcomponentsofelectricityproductionandsupply,includinggeneration,transmission,distribution,andretailsupplyorsaleofelectricity.CreateaSystemPoisedforSustainableGrowthGLOBALGUIDErmi.org/43PointsofProgresshighapprovedreturnsonequitysuggestlimitedshort-termriskfortheseutilities.Indevelopingeconomies,customers’failuretopayenergybills,politicalpushbacktoraisingratestobettercovercosts,lackofaccesstocapital,volatilefuelcosts,andlong-standingcrosssubsidieshavedamagedpublicutilities’financialstanding,andinmanyplaceshavemadeutilitiesdependentongovernmentloans,subsidies,andbailouts.Thisdependencehascontributedtocountries’alreadygrowingdebtburden,whichinhibitsthemfromtakingmeasurestoreduceemissionsandmakinginvestmentsthatwouldhelpthemcopewiththeeffectsoftheclimatecrisis.Supportfrommultilateraldevelopmentbankscanhelpalleviatethispressurebutwillrequireasignificantdeparturefromcurrentinvestmentmodelstoonethataddressestheentiretyofcapitalrequirementsneededtogetprojectsunderwayandaunifiedmodelforconsideringfirstlossreserves.Inadditiontotheselong-standingbusinesspressures,COVID-19hashadasignificantimpactonutilitiesacrosstheglobebecauseofdemandshocks,take-or-paycontractsforfuel,increasesinCreateaSystemPoisedforSustainableGrowthGLOBALGUIDErmi.org/44PointsofProgresscustomers’inabilitytopayenergybills,supplychainchallenges,andglobalmarketvolatility.Toaddresssomeofthesechallenges,governments,regulators,andutilitiesareexploringdifferentbusinessmodels,suchasalternativeorperformance-basedratemaking,theprovisionofnewservicesandproductsthatextendbeyondelectricityforsubsetsofcustomers,andincreasedcompetitionandprivatizationtoenableothercapitalizedentitiestotakeoverfunctionsthatutilitiesareunableorarenotrequiredtomaintain,orwheretheeconomicsofaparticularservicehaveshifted.Alternatively,orinparallel,therearemoreincrementalactionsthatcanhelpimproveutilities’businessmodels,suchas:•Establishingprogramstogrowtheircustomerbasethroughagriculture,healthcare,ortelecommunicationservices•Supportingtheefficientelectrificationoftransportation,buildings,andindustrytogrowthedemandbase•Investingingridmodernizationtounderstandandmanageloadbetterandreducemeteringandbillinglossesandtheft•Reducingcrosssubsidies,suchastherelianceonrecoveringdisproportionaterevenuefromcommercialandindustrialconsumers•Revisingtariffstokeepupwithinflationandotherexternalpricepressures,aswellastosendmoreaccuratepricesignalstocustomersthatarebetteralignedwithgridneeds•Transitioninginefficientend-of-lifecoalplantsorusinganalternativemeanstoremovestrandedcoalassetsfromautility’sbalancesheetCreateaSystemPoisedforSustainableGrowthGLOBALGUIDErmi.org/45PointsofProgressImproveEnergyIntensityImprovingenergyintensityiscriticaltomaintainingaffordabilityascountriesdevelopandseekwaystoreduceemissions.ixEnergyintensityisgenerallyconsideredaproxyforenergyefficiency,butitalsoreflectsenergyuseshiftsdrivenbyotherfactors,suchassocialandeconomicdevelopmentandweather.37From2010to2019,globalenergyintensitydecreasedbyalmost2%peryear.38Althoughimpressive,theUnitedNationshasdeterminedthatglobalenergyintensitymustimproveatanannualrateof3.2%toensureuniversalaccesstocleanandefficientenergyby2030.Investinginenergyefficiencyanddemandflexibilitycanunlocksignificantbenefitsforhouseholds,industry,andthegrid.xEnergyefficiencyanddemandflexibilityarethemostcost-effectivemeanstoreduceemissionsgiventheynotonlycansaveconsumersandbusinessesmoneybyreducingorshiftingtheirenergyconsumption,butalsocanreducepeakdemand,obviatingtheneedforcapitalinvestmentsingenerationassetsandgridinfrastructure.39Utilizingdemand-sideresourcesalsocanfreeupgovernmentandutilityfundingtoinvestinothercriticaleffortsinensuringasuccessfulenergytransition,suchasworkforcedevelopmentandcapacitybuilding.ixEnergyintensitymeasuresthetotalenergyrequiredtoproduceagivenlevelofoutputoractivity.Whenreferringtoenergyintensityofaspecificeconomy,outputisusuallymeasuredbyGDP.xDemandflexibilityusescommunicationsandcontroltechnologytoshiftelectricityuseacrosshoursofthedaywhiledeliveringend-useservices(e.g.,airconditioning,domestichotwater,electricvehiclecharging)atthesameorbetterqualitybutlowercost.Itdoesthisbyapplyingautomaticcontroltoreshapeacustomer’sdemandprofilecontinuouslyinwaysthateitherareinvisibletoorminimallyaffectthecustomer,andbyleveragingmoregranularratestructuresthatmonetizedemandflexibility’scapabilitytoreducecostsforbothcustomersandthegrid(RMI,TheEconomicsofDemandFlexibility,2015,https://rmi.org/insight/the-economics-of-demand-flexibility/).GLOBALGUIDEIncreaseEfficientUtilizationofCleanAssetsrmi.org/46PointsofProgressIncreaseEfficientUtilizationofCleanAssetsGUIDEForexample,between2015and2019,energyefficiencyhelpedtoavoidalmosttwo-thirdsofadditionalenergydemanddrivenbyeconomicgrowth.40Lookingforward,theInternationalEnergyAgency(IEA)estimatesthatefficiencyimprovementsneedtoincreaseanaverageof4%peryearthrough2030toachievenetzeroby2050—aboutthreetimestheaverageoverthepasttwodecades.41Governmentandprivateenergyefficiencyanddemandflexibilityinvestmentsinbuildingsandindustrysectorswillbecriticaltoimprovingpowersectorenergyintensity.Inparallel,investmentsintheelectrificationoftransportationandbuildingswillalsohelpimproveenergyintensitygiventhatelectricvehiclesandappliancesaremuchmoreefficientthanfossilfuel–basedalternatives.Electrificationwillalsoprovidenewsourcesofdemandflexibilitythatcansupporttheintegrationofrenewablesandmitigatecostlygridupgradestoaccommodatenewload.Anumberofsolutionsareavailabletogovernments,utilities,andprivateactorstoleveragethebenefitsofenergyefficiencyanddemandflexibility.Forexample,buildingcodes,appliancestandards,energyefficiencyorpeakdemandreductiontargets,andcustomerprogramscandirectlysupportefficiencygainsandcanbeusedasindicatorstomonitorandevaluateprogress.42Additionally,taxincentives,rebates,andfinancingmechanismscanunlocknewopportunitiesforcustomerstoinvestinmoreenergy-efficientandflexibleappliancesandvehicles.Tosupportthesesolutions,itiscriticalthatutilitieshavethefinancialincentivesrequiredtodriveefficiencyanddemandsavingsandadequatelyintegrateenergyefficiency,demandflexibility,andbeneficialelectrificationintosystemplanningandprocurement.SincetheCOVID-19pandemic,somecountrieshaveincreasedenergyefficiencyinvestmentsthroughrecoveryspendingprograms.Forexample,GermanyhasincreasedloanrepaymentgrantsandGLOBALGUIDErmi.org/47PointsofProgressprovideddirectfinancialsupportforenergyefficiencyinvestments.InIndia,theintroductionofagovernment-ownedenergyservicecompany(EnergyEfficiencyServicesLimited)hasenabledrapidimprovementsinenergyefficiencythroughbulkwholesaleprocurementofbuildingappliancesandlighting,smartmetering,andnewbusinessmodelsforefficientairconditioning.TheneweffortssaveIndiamorethan47billionkWhofenergyeveryyear.43Mostrecently,theInflationReductionAct(IRA)intheUnitedStatesintroducedbillionsofdollarsinrebatestohomeownersforwhole-homeretrofitsandforefficientheatpumps,heatpumpwaterheaters,andotherelectricalequipment.TheIRAalsoincreasedtaxcreditsforheatpumpsandhomeandcommercialbuildingimprovements,amongapackageofotherincentivesaimedatimprovingenergyefficiencyandsupportingbeneficialelectrification.44IncreaseEfficientUtilizationofCleanAssetsGUIDEGLOBALGUIDErmi.org/48PointsofProgressAccelerateCleanEnergyAdoptionThedeploymentofcleanenergyresourceswillbenecessarytosupportthetransitionawayfromfossilfuels,supportsustainabledevelopment,andelectrifytransportation,buildings,andindustrytomeeteconomy-widedecarbonizationgoals.Fortunately,renewablesarenowthelowest-costformofelectricitygenerationinalmostallmajoreconomiestoday(seeExhibit19).45IncreaseEfficientUtilizationofCleanAssetsGUIDEGLOBALGUIDEExhibit19CheapestSourceofNewBulkElectricity,byCountry(US$/MWh,2020)Note:Levelizedcostofenergycalculationsexcludesubsidiesandtaxcredits.Source:BloombergNEF,CheapestSourceofNewBulkElectricityGenerationbyCountryCoalNaturalGasOnshoreWindOshoreWindUtilityPV(tracking)UtilityPV(fixedaxis)NotCoveredGermany$50US$37China$38Brazil$30SouthAfrica$50Australia$39India$33UK$45rmi.org/49PointsofProgressWindandsolarpowerresourcesmadeupmorethan10%ofglobalelectricitysupplyin2021;46however,IEA’sNetZeroby2050studyfindsthatrenewablegenerationmusttripleby2030andincreasemorethaneightfoldby2050.47Thismeanstheannualcapacitydeploymentofwindandsolarmustgrowatfivetimestheaveragegrowthrateseenoverthepastthreeyears.48Beyondwindandsolar,countriesaregeneratingelectricityfromotherrenewableresourceslikehydrogen,geothermal,andtidal.Exhibit20showstheshareofelectricityfromavarietyofrenewableresourcesin2020.IncreaseEfficientUtilizationofCleanAssetsGUIDEGLOBALGUIDEExhibit20ShareofElectricityfromRenewables(2020)Note:Renewablesincludeelectricityproductionfromhydrogen,solar,wind,biomassandwaste,geothermal,wave,andtidalsources.Source:BP,StatisticalReviewofWorldEnergy(2022);Ember,GlobalElectricityReview(2022);Ember,EuropeanElectricityReview(2022)2020050%100%rmi.org/50PointsofProgressSeveraltargetedinterventionswillberequiredtounlockthepotentialforcost-effectivecleanresourcestomeethigherpercentagesofload.Countrieswithrapidlygrowingrenewablepipelinesareexploringthefollowingsolutionstosupporttimelydeploymentofcleanresources:•Buildtransmissiontobetterconnectrenewablestodemandcenters•Streamlineinterconnectionandpermittingprocessestoreducecostsandtimeofscalingrenewables•Leveragegrid-enhancingtechnologies,demandflexibility,andstoragetobettermatchdemandandsupply•Updateutilityplanningprocessesandincentivestodriverenewablesinvestment•Modernizereliabilitystandardsandrequirementstobetteralignwiththeuniquecharacteristicsofcleanenergytechnologies•Reformmarketmechanismstobetterreflectthevalueofrenewablesandcoordinateresourcedispatchscheduling•Investinglobalsupplychainstoacceleraterenewabletechnologydevelopment•IncreaselocalmanufacturingcapacityandworkforcedevelopmentprogramsGlobally,renewabletargets,feed-intariffs,competitiveprocurement,andauctionscanincentivizeprivate-sectorinvestmentinrenewableenergyanddrivedowncosts.Inparallel,gridinvestmentsthatexpandinterconnectionopportunities,supportlast-mileconnectivitytounderservedareas,andimproveuseofrenewablesalsowillacceleratetheirdeployment.Inemergingmarketsanddevelopingeconomies,newpublic–privatefinancingmechanismsandpartnershipsthatreduceprojectrisksfurtherexpandopportunitiesfordeveloperstoinvestinrenewableresources.Onthecustomerside,innovativemodelstoimprovethevaluepropositionofDERsarereachinghouseholdsandbusinessesinawiderangeofgeographiesandincomelevels,leadingtoanewwaveofadoptionwhileempoweringcustomerstomanagetheirelectricityuseandbolsteringtheirresilience.IncreaseEfficientUtilizationofCleanAssetsGUIDEGLOBALGUIDErmi.org/51PointsofProgressReduceDependenceonCoalGlobally,coal-firedpowerplantsarethelargestsourceofelectricitygeneration,makingupmorethanone-third(36.5%)oftheworld’selectricity.49Coalisalsothemostcarbon-intensivefossilfuelandthelargestsourceofpollutioncontributingtoglobaltemperaturerise(seeExhibit21,nextpage).AccordingtotheIEA,coalisresponsibleformorethan0.3°Cofthe1°Cincreaseinglobalaveragesurfacetemperaturethathasbeenrecordedabovepreindustriallevels.50Beyondcoal’soutsizedinfluenceontheclimate,itsusealsohassignificantimpactsonhealthandcommunities.Burningcoalreleasespollutants,suchasmercury,lead,sulfurdioxide,nitrogenoxides,particulates,andotherheavymetals.Thesepollutantsareknowntocontributetoadversehealthoutcomesfromasthma,bronchitis,andrespiratorysymptomstoheartdisease,lungdisease,andprematuredeath.51Itisestimatedthatcoalisresponsiblefor800,000prematuredeathsperyear.52Thisraisesparticularconcernfordisadvantaged,marginalized,andvulnerablecommunities,whodisproportionatelyliveinareasclosetocoalplantsandmaylackaccesstoaffordableorreliablehealthservices.Healthimpactsalsocanlimitcommunitymembers’abilitytowork,furthercontributingtofoodandhousinginsecurity.IncreaseEfficientUtilizationofCleanAssetsGUIDEGLOBALGUIDErmi.org/52PointsofProgressIn2021,agreementscomingoutoftheUnitedNationsClimateChangeConference(COP26)representedabreakthroughintheglobalefforttophaseoutcoal.Countriesannouncedanunprecedentednumberofcommitmentsaroundcoalphaseout,“nonewcoal,”“nonewcoal/fossilfinancingoverseas,”and“net-zero”emissions.Inaggregate,thesecommitmentsnearlydoubledthenumberofcoalplantseffectivelygivenaclose-bydateto750(550GW).53Despitethisprogress,overallpowersectoremissionsfromcoalhavebeenincreasingandthereiscurrently280GWofplannedcapacityand176GWofcapacityunderconstruction.54TobealignedwithIPCC’s1.5°Cpathway,theworldwouldneedtoexecuteallcoalphaseoutpledgesagreedtoatCOP26andretireanadditional1,100GWofcapacity.55Exhibit21GlobalCO2EmissionsfromCoal,Gas,andOilElectricityandHeatGeneration0246810Gigatons(Gt)CO2CoalGasOil20002005201020152021Source:BasedonIEAdatafromIEA2021,CO2EmissionsfromElectricityandHeatProductionbyFuel.Allrightsreserved.IncreaseEfficientUtilizationofCleanAssetsGUIDEGLOBALGUIDErmi.org/53PointsofProgressDespitetheenvironmentalandhealthimplicationsofburningcoal,manyoftheworld’slargesteconomiesstilluseitasalargesourceofelectricity(seeExhibit22).Forexample,morethanhalfofnewcoalcapacityin2021wasinChina.Morerecently,severalEuropeancountries,includingAustria,France,Germany,andtheNetherlands,haveannouncedplanstorestartcoal-firedgenerationinthewakeofRussiangascutoffs,althoughtheemissionsimpactsfromtheserefiredplantsareunclear.56Exhibit22PercentageofCoalGenerationinDifferentCountries’ResourcePortfolios(2020)Note:Sumsmaynottotal100duetorounding.Source:BasedonIEAdatafromIEA2022,ElectricityGenerationbySource.Allrightsreserved.UnitedStatesChinaIndiaJapanGermany2071710943919863333238481144423517112391164723025CoalNaturalGasNuclearHydroWindSolarPVOtherIncreaseEfficientUtilizationofCleanAssetsGUIDEGLOBALGUIDErmi.org/54PointsofProgressInsomecountries,though,aconfluenceoffactorsiscontributingtoamaterialshiftawayfromcoal(e.g.,Canada,Poland,Ukraine,theUnitedKingdom,andtheUnitedStates),includingtheincreasingcostcompetitivenessofrenewablesandstorageandcommitmentstophaseoutcoalnotonlybygovernments,butbyutilities,businesses,andfinancialinstitutionsaswell.Policiesthatinternalizethecostofcarbonemissionsthroughpricingandtaxmechanismstocorrectcriticalmarketfailuresandeconomicbarriershavefurtherreducedcoaluse.Tostrategicallyplanthetransitionawayfromcoal,anincreasingnumberofadvancedeconomiesarebeginningtoexploretheuseofnovelfinancingmechanismstosupporttheearlyretirementofplants(e.g.,securitization)whilealsomitigatingfinancialimpactsonratepayersandutilitiesandsupportingworkforceandcommunitytransitions.Additionally,insomeemergingmarketsanddevelopingeconomies,fossilfuelsubsidyreformaswellasmorecost-effectivegasandrenewablealternativeshavelimitednewcoalbuild-outtosupportgrowingdemand.Together,thesesevenoutcomescanhelppowersectorleadersformavisionforwhatitmeanstosuccessfullytransformtheglobalelectricitysectorinserviceofsustainabledevelopment.Andalthoughnotwovisionswillbethesamebecauseprioritiesarelikelytovaryacrossgeographiesandshiftovertime,theseoutcomescanbeusedtohelpchartthepathtoamodernandcleanelectricitysystemthatadvanceseconomicgrowthalongsidedecarbonizationandothercriticalpowersectorpriorities.IncreaseEfficientUtilizationofCleanAssetsGUIDEGLOBALGUIDErmi.org/55PointsofProgressCatalystsforChangeTosupportindustryleadersinpursuitofthesesevenoutcomes,RMIhasidentifiedeightcatalystsforchangethatcandeliverprogressacrossgeographies.Thesecatalystsrepresentawiderangeofsolutionsandreflectareasoftheelectricityecosystemwhereinnovationisnecessarytobreakthroughpolitical,technical,andeconomicconstraints.Giventhatthepathwaystotransformtheenergysystemlookdifferentforcountriesacrosstheglobe,certaincatalystsmaybemoreinfluentialdependingonacountry’scontextandneeds.Successinadvancingpriorityoutcomeswillalsodependonseveralenablingfactors,includingtheabilityofutilitiesandpowerproducerstoinvestinassetsandimproveoperations,theexistenceofwholesaleandretailmarkets,resourceavailability,existinginfrastructure,andthepolicyandregulatoryauthoritiesofnationalandsubnationalgovernments.GUIDEGLOBALGUIDErmi.org/56PointsofProgressEnsureafairandinclusiveenergytransitionCreateasystempoisedforsustainablegrowthIncreaseeicientutilizationofcleanassetsImproveenergyintensitySystemplanningandprocure-mentAccessiblefinanceCustomersolutionsCarbon-freetechnologyUtilityincentivestructuresFossilfueltransitionstrategiesPublicpoliciesMarketstructuresAcceleratecleanenergyadoptionReducedependenceoncoalGlobalEnergyTransformationExpandaccessandenableeconomicdevelopmentPromoteaordabilityandequityEnsureenergyreliabilityandresilienceSecureutilityfinancialstabilitySystemPlanningandProcurementResource,transmission,anddistributionplanningestablishestheblueprintforutilities’long-termgenerationmixandnecessarygridinvestmentstoexpandaccessanddeliverelectricityreliablyandcost-effectivelytocustomers.Afterneedsareidentified,fairandtransparentprocurementprocessescanbeusedfornewresourcestoensurethatsysteminvestmentsareinthebestinterestofcustomers.Innovationsinplanningandprocurementpracticesofferanopportunitytooptimizegridinfrastructuredesignandinvestmentsforthecleanenergyfuturefromtheverystart.GLOBALGUIDErmi.org/57PointsofProgressAccessibleFinanceSupportingthepaceofcleaninvestmentneededforsustainabledevelopmentandclimatealignmentwillrequiremobilizingcapitalfrompublicandprivateinstitutionswithinnovativefinancingstructuresandensuringitsequitabledistributionandaccessacrosseconomiesandcommunities.Expandingopportunitiestoleverageinternationalanddomesticlow-costcapital,applyingnewandexistingriskmitigationfinancialinstruments(e.g.,greenbanks,hedginginstruments,balancesheetfinancing),engagingwithbanksandotherfinancialentitiestopursuenewpartnerships,aswellasestablishingrobustandtransparentregulatoryenvironmentscanhelpexpandandspeedthedeploymentofcapitalforthecleanenergytransition.CustomerSolutionsEnergycustomerswillhaveakeyroleinthepowersectortransformationastheyshiftfrompassiveconsumerstogridassets,engagingwiththeirenergyuseinunprecedentedwaysandgeneratingvalueforsystemoperationsandforthemselves.Electricitysuppliers,distributioncompanies,andthird-partyentitieswillneedtodevelopnewtechnologies,tariffs,andprogramstocreateanddeliverthesesolutionsandmaximizebenefitstocustomersandthegrid.Carbon-FreeTechnologySuccessfulpowersectortransformationwillrelyonunprecedenteddeploymentofrenewableresources,inadditiontodiscoveringnewwaystogenerate,deliver,andefficientlyuseelectricity.Thiswillrequireoptimizingforawiderangeoffactors,includingcost,landandresourceuse,reliability,andconsumerbehavior.Continuedprogresswillnecessitateongoingexperimentationtodevelopnewtechnologies,improveexistingones,andconsidernovelapplicationsthatmeetcountries’diverseneeds.GLOBALGUIDErmi.org/58PointsofProgressUtilityIncentiveStructuresThefinancialincentivesinherentinutilitybusinessmodels,includingtheirownershipstructures,availablesubsidies,allowableassets,andrevenuesources,driveelectricityinvestmentsandoperationaldecisions.Countriescanexploreinnovativemodelstobetteralignutilities’financialinterestswithdecarbonizationandotherlocalprioritiesforthepowersector.FossilFuelTransitionStrategiesDecliningcosts,technologicaladvances,andrisingenergysecurityconcernshaveresultedinrenewableenergyrecentlyusurpingcoalandgasasthelowest-costwaytoreliablypowermostcountries’economies.ThiscostadvantagehasbeenevenmorepronouncedinthepastyeargiventhesignificantvolatilityinfossilfuelpricesduetoRussia’swarinUkraine.Toreliablytransitionthecoalfleet,minimizethebuild-outofnewgas,andmitigateratepayerandcommunityimpacts,utilitiesandgovernmentscantakeadvantageofnewfinancingandreinvestmentopportunitiesthatcanhelpeaseandde-riskthetransitiontocleanenergy.PublicPoliciesInternational,national,andsubnationalpoliciescanhaveasignificantimpactonelectricitymarketsandutilityplanning,operations,andbusinessmodels.PoliciescansettargetsforGHGemissions,renewableenergy,andenergyefficiency;spurinvestmentinrenewablesandtechnologiesneededtomodernizethegrid;pricecarbonandotherexternalities;andestablishdirectivesforutilitiesandtheirregulators.MarketStructuresThedesignandrulesofwholesale,retail,andlocalelectricitymarketsimpactwhich,when,andhowresourcesarepurchased,sold,andutilizedbysystemoperators.MarketscangenerateGLOBALGUIDErmi.org/59PointsofProgressefficientpricingforenergy,capacity,andotherancillarygridservices.Today,expandingandmaturingmarketsaresupportinginvestmentingenerationandgridinfrastructure,puttingnewstressontheeconomicsofcoal,andimprovingtheeconomicsofrenewables.Inresponse,marketparameterscanevolvetosupportelectricityreliabilityandaffordabilityassystemsaccommodatehigherlevelsofvariableanddistributedenergyresources.Noneofthesecatalystsalonewillbesufficienttosupportdecarbonizationandsustainabledevelopment,nordotheyoperateinsilos.Alleightcatalystsareinterconnectedandcaninfluenceoneanotherindifferentways.Forexample,apolicythatestablishesacarbonpricecanhavecascadingeffectsontheeconomicsofexistingcoalassets,resourcepricesinmarkets,andutilityplanningassumptions.Alternatively,achangeinmarketdesign,suchasintroducingacapacitymarket,canaffectthevaluepropositionofrenewables,procurementapproaches,andutilityincentives.Additionally,interventionsunderonecatalystmightbenecessaryifanotherisnotworkingasintendedorifthereareextremeorunforeseencircumstances.Forexample,renewableportfoliostandards,whichareconsideredunderthePublicPoliciescatalyst,havebeeneffectivetoolsinincreasingrenewabledeploymentwhenmarketforceshavenotprovidedthenecessaryincentivestoincreaseadoption.AnotherparticularlytimelyexampleisthedifferentpolicyinterventionsbeingexploredtomitigateimpactsfromsoaringelectricitypricesinEuropeduetoreducedgassuppliesfromRussia.TheEUCommissionhasauthorizedseveralmeasures,includingamandated5%reductioninelectricityconsumptionduringpeakhoursanda10%reductioninoveralldemand,atemporaryrevenuecapon“inframarginal”producersthathavebeenmakingexceptionalrevenues,andacontributiononexcessprofitsfromoil,gas,coal,andrefinerysectorsnotcoveredGLOBALGUIDENoneofthesecatalystsalonewillbesufficienttosupportdecarbonizationandsustainabledevelopment,nordotheyoperateinsilos.rmi.org/60PointsofProgressbytherevenuecap.xiThisportionofexcessprofits,alongwithanyrevenuesabovetherevenuecap,willberedistributedtovulnerablehouseholdsandbusinesses.57Throughresearchandinterviewswithexpertsaroundtheglobe,RMIhascompiledexamplesanddatatodescribehowpowersectorleadersareleveragingtheseeightcatalysts.Tosharewhatwehavelearned,RMIispublishingeightreports,oneforeachcatalyst,overthenextseveralmonthsthatwill:•Highlightwhyinnovationiscriticaltomakingprogressintheenergytransition•Explainemergingglobaltrendsandassociatedchallengesandopportunities•Describehoweachcatalystcanadvancethesevenkeyoutcomesforsuccessfulglobalenergytransformation•Articulatetheedgeofinnovationfordifferentcountriesandwhereattentionisneededmost•SpotlightcasestudiestobetterillustratewhatisbeingattemptedacrosstheindustryandtosharetheexperiencesofpractitionersThefirsttwocatalystreportspublishedalongsidethisreportfocusontwoparticularlytimelycatalysts:FossilFuelTransitionStrategiesandMarketStructures.Givenrapidlyclimbingelectricitypricesinmanycountries,reliabilityandresiliencechallengesduetomoresevereweatherevents,andthepotentialforintegratinghigherlevelsofrenewablesacrossregions,theseleverswillbecomeincreasinglyinfluentialaselectricitysectorleadersnavigatethesepressingchallengesanddevelopsolutions.xiTheEUCommissiondefines“inframarginaltechnologies”astechnologiesthatprovideelectricitytothegridatcostsbelowthepriceofthemarginalgenerator.Thistypicallyreferstowind,solar,nuclear,andlignite.GLOBALGUIDErmi.org/61PointsofProgressConclusionCountries’pathwaystoarapidandequitableelectricitysystemtransformationwillrequireadiversesetofinterventionstoadvancethesevenoutcomesintroducedinthisreport.Thechallengeaheadwillrequirecreativityandcollaborationtoreimaginehowelectricityisgenerated,delivered,andmanagedtomeettheneedsofagrowingandevolvingpopulation.Itwillrequireeconomiestocometogethertoleverageoneanother’scomparativeadvantagesandtocontinuouslyexpandthesolutionspace.Therapidwarmingoftheplanetdoesnotaffordthetimetoreinventthewheel,butrequiresindustryleaderstobuildonsuccesses,learnfrommistakes,andscaleinnovationsthroughouttheglobalpowersector.ThepointsofprogressandstoriesofsuccessfeaturedacrosstheGlobalEnergyTransformationGuide:Electricityhighlightimportantopportunitiestospurchangeacrossdifferentleversoftheelectricitysystemthatcanhelpguideandinspirethetransformationthatliesahead.GLOBALGUIDErmi.org/62PointsofProgressEndnotes1IEA,EnergyStatisticsDataBrowser,2022,https://www.iea.org/data-and-statistics/data-tools/energy-statistics-data-browser.2GlobalCarbonProject,DataSupplementtotheGlobalCarbonBudget2021(Version1.0),2021,https://doi.org/10.18160/gcp-2021.3UnitedNationsClimateChange,“UpdatedNDCSynthesisReport:WorryingTrendsConfirmed,”October25,2021,https://unfccc.int/news/updated-ndc-synthesis-report-worrying-trends-confirmed;andIPCC,ClimateChange2022:MitigationofClimateChange.ContributionofWorkingGroupIIItotheSixthAssessmentReportoftheIntergovernmentalPanelonClimateChange(Cambridge:CambridgeUniversityPress,2022),https://www.ipcc.ch/report/sixth-assessment-report-working-group-3/.4WorldBank,“Report:UniversalAccesstoSustainableEnergyWillRemainElusiveWithoutAddressingInequalities,”June7,2021,https://www.worldbank.org/en/news/press-release/2021/06/07/report-universal-access-to-sustainable-energy-will-remain-elusive-without-addressing-inequalities;andIEA,SDG7:DataandProjections,2022,https://www.iea.org/reports/sdg7-data-and-projections.5JohnAyaburietal.,“Measuring‘ReasonablyReliable’AccesstoElectricityServices,”TheElectricityJournal33,no.7(August1,2020):106828,https://doi.org/10.1016/j.tej.2020.106828.GLOBALGUIDErmi.org/63PointsofProgress6SingaporeNationalEnvironmentAgency,“EnergyEfficientSingapore,”accessedOctober4,2022,https://www.nea.gov.sg/our-services/climate-change-energy-efficiency/energy-efficiency/energy-efficient-singapore.7LauriMyllyvirtaandJustinGuay,“HowJapanReplacedHalfItsNuclearCapacitywithEfficiency,”GreentechMedia,April10,2014,https://www.greentechmedia.com/articles/read/how-japan-replaced-half-its-nuclear-capacity-with-efficiency.8RockySwiftandYukaObayashi,“KeepCalmandCuttheAirCon—Japan’sEnergySavingIsModelforEurope,”WorldEconomicForum,August3,2022,https://www.weforum.org/agenda/2022/08/japan-energy-saving-model-europe/.9NilsRokke,“HowUkraineInvasionIsChangingEurope’sEnergyPlans,”Forbes,May30,2022,https://www.forbes.com/sites/nilsrokke/2022/05/30/how-ukraine-invasion-is-changing-europes-energy-plans/.10JorgeLiboreiro,“EUApprovesMandatoryEnergySavingsandCaponCompanyRevenues,”EuroNews,September30,2022,https://www.euronews.com/my-europe/2022/09/30/eu-energy-ministers-meet-to-approve-power-savings-and-revenue-caps-to-curb-soaring-prices.11KingsmillBondetal.,“FromDeepCrisis,ProfoundChange,”RMI,2022,https://rmi.org/insight/from-deep-crisis-profound-change/.12IEAetal.,TrackingSDG7:TheEnergyProgressReport,2022,https://trackingsdg7.esmap.org/data/files/download-documents/sdg7-report2022-full_report.pdf.13CarbonTrackerInitiative,“TheSky’stheLimit:SolarandWindEnergyPotential,”April23,2021,https://carbontracker.org/reports/the-skys-the-limit-solar-wind/.14WorldBank,“AccesstoEnergyIsattheHeartofDevelopment,”April18,2018,https://www.worldbank.org/en/news/feature/2018/04/18/access-energy-sustainable-development-goal-7.15IEAetal.,TrackingSDG7,2022.GLOBALGUIDErmi.org/64PointsofProgress16HageG.Geingob,“HowNamibiaisPoisedtoBecometheRenewableEnergyHubofAfrica,”WorldEconomicForum,October3,2021,https://www.weforum.org/agenda/2021/10/namibia-is-positioned-to-become-the-renewable-energy-hub-of-africa/.17WorldBank,“GNIPerCapita,AtlasMethod(CurrentUS$)—Kenya,”accessedSeptember15,2022,https://data.worldbank.org/indicator/NY.GNP.PCAP.CD?locations=KE;andUnitedStatesAgencyforInternationalDevelopment,“EconomicGrowthandTrade,”May4,2022,https://www.usaid.gov/kenya/economic-growth-and-trade.18MactildaMbenywe,“KenyaWillFullyTransitiontoCleanEnergyby2030—UhuruKenyatta,”TheSundayStandard,November2021,https://www.standardmedia.co.ke/national/article/2001428373/kenya-will-fully-transition-to-clean-energy-by-2030-uhuru-kenyatta.19RTI,“ExploringHowExpandingElectricityAccessinKenyaImpactsJobsandIncomes,”June20,2022,https://www.rti.org/impact/Kenya-electricity-access-expansion-impact-on-jobs-and-incomes.20RobertWalton,“RetailElectricityPricesContinueRapidRise;USHomesCouldPayMorethan15Cents/kWhNextYear:EIA,”UtilityDive,September9,2022,https://www.utilitydive.com/news/retail-electricity-prices-continue-rapid-rise-utility-debt-growing/631496/.21DefneGencerandElcinAkcura,“AmidEnergyPriceShocks,FiveLessonstoRememberonEnergySubsidies,”WorldBankBlogs,May13,2022,https://blogs.worldbank.org/energy/amid-energy-price-shocks-five-lessons-remember-energy-subsidies.GLOBALGUIDErmi.org/65PointsofProgress22WorldBank,“EnergySubsidyReformFacility:GeneratesKnowledgetoSupportGovernmentstoDesignandImplementSustainableEnergySubsidyReformswhileSafeguardingtheWelfareofthePoor,”November12,2020,https://www.worldbank.org/en/results/2020/11/12/energy-subsidy-reform-facility-generates-knowledge-to-support-governments-to-design-and-implement-sustainable-energy-subsidy-reforms-while-safeguarding-the-welfare-of-the-poor;andIEA,“Fossil-FuelConsumptionSubsidiesAreDown,ButNotOut,”2017,https://www.iea.org/commentaries/fossil-fuel-consumption-subsidies-are-down-but-not-out.23JustinLockeetal.,“TheTimeforRadicalImplementationIsNow,”RMI,August4,2022,https://rmi.org/the-time-for-radical-implementation-is-now/.24RTI,“ClimateJusticeandEquity,”April13,2021,https://www.rti.org/focus-area/climate-justice-equity.25TedWongetal.,“3HurdlestoRacialJusticeinCleanEnergy—and3WaysU.S.CitiesCanOvercomeThem,”WorldResourcesInstitute,September2,2020,https://www.wri.org/insights/3-hurdles-racial-justice-clean-energy-and-3-ways-us-cities-can-overcome-them.26CenterforClimateandEnergySolutions,“FinancingResilience,”accessedSeptember15,2022,https://www.c2es.org/content/financing-resilience/.27RMI,“ClimateFinanceAccessNetwork,”accessedSeptember15,2022,https://rmi.org/our-work/climate-finance/.28MathildeBouyéandDavidWaskow,“ClimateActionIsn’tReachingtheMostVulnerable—ButItCould,”WorldResourcesInstitute,November11,2021,https://www.wri.org/insights/how-climate-action-can-help-vulnerable-populations.29OliviaGiovetti,“ClimateJustice,Explained,”ConcernWorldwideUS,April20,2022,https://www.concernusa.org/story/climate-justice-explained/.GLOBALGUIDErmi.org/66PointsofProgress30JohnAyaburietal.,“3.5BillionPeopleLackReliablePower,”EnergyForGrowthHub(blog),September8,2020,https://www.energyforgrowth.org/memo/3-5-billion-people-lack-reliable-power/.31WorldBanketal.,“Electricity,”accessedSeptember15,2022,https://mtfenergyaccess.esmap.org/methodology/electricity.32AlisonSilverstein,RobGramlich,andMichaelGoggin,ACustomer-FocusedFrameworkforElectricSystemResilience,GridStrategiesLLC,May2018,https://gridprogress.files.wordpress.com/2018/05/customer-focused-resilience-final-050118.pdf.33Bondetal.,“FromDeepCrisis,ProfoundChange,”2022.34WorldBanketal.,“Electricity,”accessedSeptember15,2022.35RedefiningResourceAdequacyTaskForce,EnergySystemsIntegrationGroup,RedefiningResourceAdequacyforModernPowerSystems,2021,https://www.esig.energy/wp-content/uploads/2021/08/ESIG-Redefining-Resource-Adequacy-2021.pdf.36AhmadF.Alkhuzam,JeanArlet,andSilviaLopezRocha,“PrivateversusPublicElectricityDistributionUtilities:AreOutcomesDifferentforEnd-Users?”WorldBankBlogs,May3,2018,https://blogs.worldbank.org/developmenttalk/private-versus-public-electricity-distribution-utilities-are-outcomes-different-end-users.37IEAetal.,TrackingSDG7,2022.38IEA,GlobalEnergyReview2019,2020,https://www.iea.org/reports/global-energy-review-2019.39IEA,“MinistersFromAroundtheWorldAgreetoSpeedUpEnergyEfficiencyProgresstoHelpTackleGlobalEnergyCrisis,”June10,2022,https://www.iea.org/news/ministers-from-around-the-world-agree-to-speed-up-energy-efficiency-progress-to-help-tackle-global-energy-crisis.40IEAetal.,TrackingSDG7,2022.41StevenNadel,“IEA:TriplingSpeedofEfficiencyProgressaMustforNet-Zero,”AmericanCouncilforanEnergy-EfficientEconomy(blog),May18,2021,https://www.aceee.org/blog-post/2021/05/iea-tripling-speed-efficiency-progress-must-net-zero-carbon-world.GLOBALGUIDErmi.org/67PointsofProgress42IEA,EnergyEfficiency2021,2021,https://www.iea.org/reports/energy-efficiency-2021.43EnergyEfficiencyServicesLimited,“AboutUs,”accessedSeptember15,2022,https://eeslindia.org/en/about-us/.44LowellUngar,“CongressIsSettoVoteonLargestEfficiencyInvestmentsinHistory,”AmericanCouncilforanEnergy-EfficientEconomy(blog),August2,2022,https://www.aceee.org/blog-post/2022/08/congress-set-vote-largest-efficiency-investments-history.45BloombergNEF,“Scale-UpofSolarandWindPutsExistingCoal,GasatRisk,”April28,2020,https://about.bnef.com/blog/scale-up-of-solar-and-wind-puts-existing-coal-gas-at-risk/.46DaveJones,“GlobalElectricityReview2022,”Ember,March29,2022,https://ember-climate.org/insights/research/global-electricity-review-2022/.47IEA,NetZeroby2050,2021,https://www.iea.org/reports/net-zero-by-2050.48IEA,NetZeroby2050,2021.49Ibid.50IEA,GlobalEnergy&CO2StatusReport2019,2019,https://www.iea.org/reports/global-energy-co2-status-report-2019.51UnitedStatesEnvironmentalProtectionAgency,“PowerPlantsandNeighboringCommunities,”January24,2021,https://www.epa.gov/airmarkets/power-plants-and-neighboring-communities.52D.Tongetal.,“HealthCo-BenefitsofClimateChangeMitigationDependonStrategicPowerPlantRetirementsandPollutionControls,”NatureClimateChange11(2021):1077–83,https://doi.org/10.1038/s41558-021-01216-1.53GlobalEnergyMonitoretal.,BoomandBustCoal2022,April2022,https://globalenergymonitor.org/wp-content/uploads/2022/04/BoomAndBustCoalPlants_2022_English.pdf.54Ibid.55Ibid.GLOBALGUIDErmi.org/68PointsofProgress56SarahBrown,“CoalIsNotMakingaComeback:EuropePlansLimitedIncrease,”Ember,July13,2022,https://ember-climate.org/insights/research/coal-is-not-making-a-comeback/.57Liboreiro,“EUApprovesMandatoryEnergySavingsandCaponCompanyRevenues,”2022,https://www.euronews.com/my-europe/2022/09/30/eu-energy-ministers-meet-to-approve-power-savings-and-revenue-caps-to-curb-soaring-prices.GLOBALGUIDECaraGoldenberg,GenevieveLillis,LeiaGuccione,andCarinaRosenbach,PointsofProgress—AnIntroductiontoRMI’sGlobalEnergyTransformationGuide:Electricity,RMI,2022,https://rmi.org/insight/points-of-progress.RMIvaluescollaborationandaimstoacceleratetheenergytransitionthroughsharingknowledgeandinsights.Wethereforeallowinterestedpartiestoreference,share,andciteourworkthroughtheCreativeCommonsCCBY-SA4.0license.https://creativecommons.org/licenses/by-sa/4.0/.AllimagesusedarefromiStock.comunlessotherwisenoted.RMIInnovationCenter22830TwoRiversRoadBasalt,CO81621www.rmi.org©November2022RMI.Allrightsreserved.RockyMountainInstitute®andRMI®areregisteredtrademarks.GLOBALGUIDE