Electrifying Everything- Policy Brief

ELECTRIFYING EVERTHING | La Jolla Conference 30 th Anniversary Policy Brief

but at the same time it should never be free to avoid falling into a tragedy of the commons situation (examples with water provides lessons learned and what to avoid given the inherent inefficiencies that are created).

In order to pursue energy transition, countries should follow a path in which the access to this new electrified world should be more readily available. This also argues for the need to make the energy transition a collective effort, with the upside that it will also most likely help tackle civil unrest in some countries. The question around access and providing equitable solutions has a clear financial element. Indeed, as so often is the case, finance and investment are crucial and not easy to secure, particularly in low-income communities. It is then essential to ensure that electrification and corresponding technologies reach everyone—not just the wealthy populations able to afford them. In that sense, universal access to electricity should be part of any government’s mandate, which begs the case for the promotion of energy decentralization and distributed energy solutions. There are clear indicators that market mechanisms and a move away from centralized generation will help. That is to say that making small-sized generation units available for communities can help to ensure access and moreover, can be tailored to specific needs with far less investment and finance requirements compared with the traditional power system. Distributed generation can then become a real, inexpensive solution for remote, low-income communities.

There are also financial services and technologies (FinTech) that must be a part of the electrification and inclusion path forward. FinTech firms in conjunction with multilateral financing institutions, will have a major and critical role to play in solving the access challenge.

Additionally, Small Modular Reactors, or SMR, already exist and could become a key technology aimed at scaling up and allowing distributed generation to be part of base load in a clean and efficient way.

Managing challenges of electrification

To meet increasing energy demand set forth by the concept of electrification, there must be substantial investments in solar and wind technologies, albeit these are intermittent sources. Thus, managing the heated question of back-up generation must be considered. There are existing solutions, such as boosting hydro and thermal, possibly including geothermal sources to support increased deployment of intermittent renewable generation. However, there is also the clear need to further develop and lower costs of large-scale storage (such as battery and fuel cells) that can be coupled with renewable sources. Today, only one percent of electricity in the U.S. is generated through storage. To overcome this challenge, renewable and storage levelized cost of energy needs to decrease even further as to compete with thermal sources of generation, particularly in terms of baseload power demands.

A further element to properly support the growing level of clean energy in the electricity mix is transmission infrastructure. A large portion of the growth in renewables comes from wind and solar projects that are located in more remote and oftentimes far-flung locales, far from urban and

ELECTRYFING EVERYTHING | INSTITUTE OF THE AMERICAS