## 2.1 Historical trends ## Source details **Canonical URL:** [2.1 Historical trends](https://www.imf.org/-/media/files/publications/wp/2024/english/wpiea2024213-print-pdf.pdf) ## Other formats - [Markdown version](/-/media/files/publications/wp/2024/english/wpiea2024213-print-pdf.pdf.md) - [Structured JSON version](/-/media/files/publications/wp/2024/english/wpiea2024213-print-pdf.pdf.json) --- ### Recent developments in the electricity mix - The share of solar and wind energy is growing exponentially. - The share of electricity generation from coal, nuclear energy and oil is on a downward trend. - In 2023, global annual renewable capacity additions increased by almost 50% (IEA 2024). - In 2022, 86% of electricity capacity additions have been renewable (Mitri et al. 2023, p. 14). - Through a high share of hydropower, Ethiopia, Iceland, Nepal, and Paraguay already achieved a 100% renewable energy mix. - Country examples with high shares of solar and wind in 2023: - Germany, Greece, Ireland, the Netherlands, Spain, and Uruguay: more than 37% of their electricity mix from solar and wind power in 2023. - Denmark: 67% of electricity from solar and wind power in 2023. - Lithuania: 57% of electricity from solar and wind power in 2023. - These country examples demonstrate that high shares of solar and wind energy are feasible and are increasing steeply in the named countries. ### Quantitative trajectory of solar and wind relative to total electricity production - Yearly increases in solar and wind generation have steadily approached the trendline for total electricity generation; if the trend continues, solar and wind energy production could soon exceed the total increase in electricity production (implying net decreases in other sources). - The observation that production increases in solar and wind could outpace total generation growth underpins the rapid structural shift in the electricity mix. ### Model-related context and implications for demand - Integrated Assessment Models (IAMs) and other energy-economy models project the lowest-cost electricity mix consistent with carbon budgets and show common patterns: - Solar and wind expand strongly in all models, though to different degrees. - Hydropower and geothermal are used where available but have limited potential. - Nuclear, CCS, and biomass roles vary across models and scenarios. - When bioenergy is combined with CCS (BECCS), negative emissions can be achieved; BECCS is used mostly by GCAM and WEM in the examples discussed. - Models identify three determinants explaining differences in total electricity production: - Energy efficiency (economic value added derived from a unit of electricity). - Electrification (substituting direct fossil fuel use with electricity in transport, buildings, etc.). - Cost projections (learning rates and resulting supply prices), where continued cost declines for solar translate into lower supply cost and higher demand. ### Model-projected growth in electricity production (selected models) - MESSAGEix: electricity production increases by a factor of 2.1 between 2020 and 2050. - WEM: electricity production increases by a factor of 2.5 between 2020 and 2050. - REMIND-MAgPIE: electricity production increases by a factor of 2.5 between 2020 and 2050. - GCAM: electricity production increases by a factor of 2.7 between 2020 and 2050. ### Emerging consensus and remaining questions - Recent IAM results converge on solar and wind as the main options to expand electricity production across world regions. - Prominent research groups suggest more than 90% renewable energy by 2050 in decarbonization scenarios. - Whether a full 100% renewable electricity system is achievable has become more of an academic question; reaching very high shares will require continued dedicated effort and further successful development of solar, wind, and flexibility options. ### Regional variation (summary of Section 2.3) - Global models divide the world economy into 11 to 32 world regions to capture local conditions; despite regional differences, solar and wind energy emerge as the most important energy source in all regions. - Differences across model outputs reflect: - Local energy production conditions (e.g., solar efficiency better near the equator and with less cloud cover). - Region-specific differences in demand growth. - Changes since 2014/15 projections: - Natural gas and coal played a much bigger role previously; the “baseload” concept gave way to “flexibility options.” - Earlier results made much more use of CCS combined with coal, natural gas, and biomass; CCS retains a role but is smaller as solar and wind costs declined. - Earlier results relied more heavily on nuclear energy; nuclear has lost ground in terms of relative prices. - Empirical comparison (Figure 4 summary): - Wind production in 2023 exceeded the GCAM 2025 projection and neared other models’ 2025/2030 projections. - Solar production in 2023 exceeded both 2025 projections and one 2030 projection, and was close to the other 2030 projection. - Model projections by 2050 (reported renewable shares): - GCAM: 94.6% renewable share in electricity generation. - MESSAGE: 69.0% renewable share. - REMIND: 95.8% renewable share. - WEM: 90.0% renewable share. - LUT-ESTM (Bogdanov et al. 2021) results: - Projects a share of 99.9% renewable energy in the electricity mix by 2050. - By 2050, only marginal amounts of nuclear energy and natural gas remain. - Projects electricity production grows by a factor of 5.1 between 2020 and 2050. - Key debates and sensitivities: - “Firm” low-carbon resources (nuclear, reservoir hydro, geothermal, bioenergy, fossil with CCS) can reduce system cost by as much as 62% by supplying electricity when solar and wind are low (Sepulveda et al. 2018). - Later work suggests Long-Duration Energy Storage (LDES) could entirely replace the need for firm low-carbon resources if LDES capacity costs fall sufficiently (Sepulveda et al. 2021). - LDES technologies include electrochemical, chemical, thermal, and mechanical options. - Conclusion: Renewable energy can supply almost the entire electricity requirement; the economic viability of near-100% renewable systems hinges crucially on technological progress in flexibility and long-duration storage. ### Nuclear fusion outlook (summary of Section 3.6) - Nuclear fusion is considered an attractive option for future electricity generation, but is not expected to be available in time for net zero emission targets at mid-century (Nicholas et al. 2021). - Nuclear fusion is expected to enter the picture, but not before 2050. ### Cost concepts and trends (LCOE and storage costs) - LCOE definition: “the price at which the generated electricity should be sold for the system to break even at the end of its lifetime” and is equivalent to the net present value lifetime cost divided by discounted total electricity produced. - LCOE does not capture complementary investments (electricity grid, energy storage, demand flexibility) required by variable sources. - Way et al. (2022) analysis (years 2010 to 2020) findings for 2020: - Lowest-cost technology for generating electricity in 2020: wind energy, followed by solar energy. - Next: natural gas and coal (costs fluctuated without a clear long-term trend). - Most expensive of the major technologies in 2020: nuclear energy (upward cost trend since first reactors were constructed). - IRENA (2023) confirms solar and wind have lower LCOE than all types of fossil fuels. - Selected numerical LCOE values for solar PV (2020$/MWh): - 2010: 422.8 $/MWh - 2011: 321.4 $/MWh - 2012: 241.6 $/MWh - Energy storage cost trends: - Battery cost declined by 68% between 2010 and 2020 (Way et al. 2022). - Power-to-X cost declined by 71% between 2010 and 2020 (Way et al. 2022). - In 2023, battery cost has hit another all-time low and is now 82% less expensive than in 2013. ### Local determinants of effective cost and financing - Share of capital in total cost: 15% for fossil fuels and 91% for onshore wind (Beiter et al. 2024). - In EMDEs, borrowing cost can “more than double the cost of renewable electricity production” (IMF 2023). - Countries with very high financing cost may have effective renewable costs higher than global averages. - Options exist for developing countries to seek support from multilateral banks or international support (IRENA and CPI 2023). - Political economy factors (local jobs, vested interests, corruption) can lead to investments that are not least-cost. ### Flexibility options and system integration - Four main types of flexibility options (Pietzcker et al. 2017): supply elasticity, grid extension, demand flexibility, energy storage. - Cost minimization requires an optimal combination of these four. - Trends and deployment: - Supply elasticity is the most widely used. - Grid investments increasing in the United States, Europe and “OECD Pacific” (IEA 2023a); grids becoming increasingly digital. - IEA projects grid battery storage to increase by more than a factor six between 2020 and 2026; pumped hydro storage also increases substantially, mostly in China (IEA 2021b). - Demand flexibility is the least advanced but legal frameworks and pilots exist (IEA 2023b). ### Findings on specific flexibility components - Supply flexibility: - Non-intermittent power plants (natural gas, hydropower) offset variability when intermittent sources underproduce. - Natural gas is expected to remain part of the energy mix for many years; coal is phased out much faster. - Adding natural gas capacity risks oversupply and potential stranded assets if deep decarbonization is required. - Hydropower (e.g., in Latin America where all countries have at least 10% hydropower share) can step up production when intermittent sources are low. - Grid extension: - Pooling intermittent supply across large geographic areas requires well-connected grids. - Interconnected regions achieve steadier supply and lower costs; disconnected regions face higher costs and lower efficiency. - Transcontinental power pools can enable renewable energy to meet 100% of electricity demand (H. Yang, Deshmukh, and Suh 2023). - Practical limitations: island economies (Australia, Japan) have constraints on electricity trade; very large countries (US, China) can extend domestic grids for flexibility. - Demand flexibility: - IEA definition: demand response balances grid demand by encouraging customers to shift electricity demand to times when electricity is more plentiful or other demand is lower. - Jurisdictions with legislation on demand response include Australia, Brazil, the European Union and Korea (IEA 2023b). - Residential demand response uptake depends on financial benefits, cost, effort, perceived risk; households with higher income, younger members, and suitable devices are more likely to participate. - If consumer prices reflected market prices at high frequency, cost savings would exceed smart meter installation cost, without loss for non-responding households (Blaschke 2022). - Industrial demand response useful for short-term fluctuation balancing but cannot fully compensate renewable variability (Müller and Möst 2018). - Energy storage: - Batteries are profitable for short-term storage and reduce cost of generating electricity. - 2023: battery cost is 82% less than in 2013. - Long-term storage: pumped hydro and compressed air energy storage can balance seasonal demand and supply. - Power-to-gas / Power-to-X converts excess electricity from solar/wind to fuels (green hydrogen, ammonia) and is economical when moderate carbon price and support for power-to-gas exist. ### Policy-relevant takeaways and implementation priorities - State-of-the-art energy-economy models identify solar and wind as the most important sources for decarbonizing electricity production globally; CCS, nuclear energy, biomass and other renewables play supporting roles. - Global perspective matters to keep total emissions within the global emission budget and to align energy trade across regions. - Local planning must translate global insights into country-level studies compatible with the global view; electricity mixes vary by region but all regions can rely on solar and wind. - Implementation requires balanced and locally customized deployment of: - Rapid expansion of solar and wind capacity, - Investments in electricity grid extension and energy storage, - Maintenance of complementary nuclear capacity and development of limited biomass and CCS capacity. - Rapid change over the last 10 years: transition from reliance on CCS, nuclear, and biomass to solar and wind as first choice driven by technological developments in flexibility options replacing the need for “baseload.” - Key uncertainties and future developments to monitor: - Which flexibility options (new storage technologies, compressed air, new battery chemistries) prove most effective. - Sector coupling potential where sustainable fuels produced from renewables are used outside electricity sector; not expected at scale yet but with large potential. *Source: Excerpt from IMF Working Paper chapter/section "2.1 Historical trends" and adjacent sections provided in the source content.* ### 2.1 Historical trends .................................................................................................. ### 2.1 Historical trends ### Recent developments in the electricity mix - The share of solar and wind energy is growing exponentially (see Figure 1 in source). - The share of electricity generation from coal, nuclear energy and oil is on a downward trend. - In 2023, global annual renewable capacity additions increased by almost 50% (IEA 2024). - In 2022, 86% of electricity capacity additions have been renewable (Mitri et al. 2023, p. 14). - Through a high share of hydropower, Ethiopia, Iceland, Nepal, and Paraguay already achieved a 100% renewable energy mix. - Several countries achieved high shares of solar and wind in 2023: - Germany, Greece, Ireland, the Netherlands, Spain, and Uruguay: more than 37% of their electricity mix from solar and wind power in 2023. - Denmark: 67% of electricity from solar and wind power in 2023. - Lithuania: 57% of electricity from solar and wind power in 2023. - These country examples demonstrate that high shares of solar and wind energy are feasible and are increasing steeply in the named countries. ### Quantitative trajectory of solar and wind relative to total electricity production - Yearly increases in solar and wind generation have steadily approached the trendline for total electricity generation; if the trend continues, solar and wind energy production could soon exceed the total increase in electricity production (implying net decreases in other sources). - The observation that production increases in solar and wind could outpace total generation growth underpins the rapid structural shift in the electricity mix. ### Model-related context and implications for demand - Integrated Assessment Models (IAMs) and other energy-economy models project the lowest-cost electricity mix consistent with carbon budgets and show common patterns: - Solar and wind expand strongly in all models, though to different degrees. - Hydropower and geothermal are used where available but have limited potential. - Nuclear, CCS, and biomass roles vary across models and scenarios. - When bioenergy is combined with CCS (BECCS), negative emissions can be achieved; BECCS is used mostly by GCAM and WEM in the examples discussed. - Models identify three determinants explaining differences in total electricity production: - Energy efficiency (economic value added derived from a unit of electricity). - Electrification (substituting direct fossil fuel use with electricity in transport, buildings, etc.). - Cost projections (learning rates and resulting supply prices), where continued cost declines for solar translate into lower supply cost and higher demand. ### Model-projected growth in electricity production (selected models) - MESSAGEix: electricity production increases by a factor of 2.1 between 2020 and 2050. - WEM: electricity production increases by a factor of 2.5 between 2020 and 2050. - REMIND-MAgPIE: electricity production increases by a factor of 2.5 between 2020 and 2050. - GCAM: electricity production increases by a factor of 2.7 between 2020 and 2050. ### Emerging consensus and remaining questions - Recent IAM results converge on solar and wind as the main options to expand electricity production across world regions. - Prominent research groups suggest more than 90% renewable energy by 2050 in decarbonization scenarios. - Whether a full 100% renewable electricity system is achievable has become more of an academic question; reaching very high shares will require continued dedicated effort and further successful development of solar, wind, and flexibility options. *Source: Excerpt from IMF Working Paper chapter/section "2.1 Historical trends."* ### 2.3 Regional variation ### 2.3 Regional variation ### Regional variation in model results - Global models identify solar and wind energy as the optimal energy source for most of the electricity supply, but they divide the world economy into 11 to 32 world regions to capture local conditions. - Models (example: REMIND regional outputs shown in appendix Figure A1) display variation in regional energy mixes, reflecting: - Local energy production conditions (e.g., solar efficiency better near the equator and with less cloud cover). - Region-specific differences in demand growth. - Despite regional differences, solar and wind energy emerge as the most important energy source in all regions. ### Development over time (changes between 2014/15 projections and recent realities) - Earlier projections (2014/15 IPCC/AMPERE and IEA “450 ppm CO2e” scenarios) differ from newer model results in three main ways: - Natural gas and coal played a much bigger role previously, reflecting a then-prevalent “baseload” concept now replaced by “flexibility options” (see Section 5). - Earlier results made much more use of CCS combined with coal, natural gas, and biomass; CCS retains a role but is smaller as solar and wind costs declined (see Section 3.3). - Earlier results relied more heavily on nuclear energy; nuclear has lost ground in terms of relative prices (see Section 3.5 and Figure 7). - Empirical comparison (Figure 4): actual energy production in 2023 exceeded or closely matched 2015 model projections: - Wind production in 2023 exceeded the GCAM 2025 projection and neared other models’ 2025/2030 projections. - Solar production in 2023 exceeded both 2025 projections and one 2030 projection, and was close to the other 2030 projection. - Interpretation: modelers in 2014/15 underestimated the potential for solar and wind energy. ### 100% renewable electricity? - Model projections by 2050 (Figure 2 models): - GCAM: 94.6% renewable share in electricity generation. - MESSAGE: 69.0% renewable share. - REMIND: 95.8% renewable share. - WEM: 90.0% renewable share. - Implications: - Models show high confidence in flexibility options to compensate solar/wind variability. - Ambitious climate targets can be reached without 100% renewables by 2050 through the use of CCS and nuclear. - Some countries with favorable hydropower conditions already have 100% renewable electricity mixes. - LUT-ESTM (Bogdanov et al. 2021) results: - Projects a share of 99.9% renewable energy in the electricity mix by 2050. - By 2050, only marginal amounts of nuclear energy and natural gas remain. - Projects electricity production grows by a factor of 5.1 between 2020 and 2050. - Debates and sensitivities: - Numerous peer-reviewed studies support 100% renewable pathways, but such studies are criticized for potentially optimistic assumptions on costs and flexibility. - Research indicates that “firm” low-carbon resources (nuclear, reservoir hydro, geothermal, bioenergy, fossil with CCS) can reduce system cost by as much as 62% by supplying electricity when solar and wind are low (Sepulveda et al. 2018). - Later work suggests Long-Duration Energy Storage (LDES) could entirely replace the need for firm low-carbon resources if LDES capacity costs fall sufficiently (Sepulveda et al. 2021). - LDES technologies include electrochemical, chemical, thermal, and mechanical options. - Conclusion: Renewable energy can supply almost the entire electricity requirement; the economic viability of near-100% renewable systems hinges crucially on technological progress in flexibility and long-duration storage. ### Transition from regional variation to broader energy-system implications - Models incorporate probability distributions of wind and solar availability and design systems to maintain supply during “dark doldrums” (periods with low wind and solar generation). - Flexibility options (Section 5) — energy storage, demand flexibility, and grid extensions — act as additional portfolio options for grid operators to manage variability and geographic diversity. *Italic: Source content from the supplied IMF Working Paper chapter section titled "2.3 Regional variation" and adjacent subsections as provided.* ### 3.6 Nuclear fusion ### 3.6 Nuclear fusion ### Nuclear fusion outlook - Nuclear fusion is considered an attractive option for future electricity generation, but is not expected to be available in time for net zero emission targets at mid-century (Nicholas et al. 2021). - Nuclear fusion is expected to enter the picture, but not before 2050. ### The role of cost (LCOE) — key concepts - Levelized cost of electricity (LCOE) definition: “the price at which the generated electricity should be sold for the system to break even at the end of its lifetime” and is equivalent to the net present value lifetime cost divided by discounted total electricity produced. - LCOE allows direct comparison of different generation sources but does not capture complementary investments (electricity grid, energy storage, demand flexibility) required by variable sources. - Relative system value differs by technology: natural gas and hydropower (high availability) are more valuable for compensating variable sources; nuclear provides steady output but is slow to ramp; solar and wind are variable and require complementary investments. - System perspective (including complementary capacity and flexibility) must be traded off with LCOE. ### Relative cost of energy sources — findings - Way et al. (2022) analysis (years 2010 to 2020) findings for 2020: - Lowest-cost technology for generating electricity in 2020: wind energy, followed by solar energy. - Next: natural gas and coal (costs fluctuated without a clear long-term trend). - Most expensive of the major technologies in 2020: nuclear energy (upward cost trend since first reactors were constructed). - International Renewable Energy Agency (IRENA 2023) confirms solar and wind have lower LCOE than all types of fossil fuels. - Historical shift: in 2000 natural gas and coal were by far the lowest cost technologies, followed by nuclear, then solar and wind. ### Energy storage cost trends (selected figures) - Battery cost declined by 68% between 2010 and 2020 (Way et al. 2022). - Power-to-X cost declined by 71% between 2010 and 2020 (Way et al. 2022). - In 2023, battery cost has hit another all-time low and is now 82% less expensive than in 2013. ### Local determinants of effective cost - Interest rate sensitivity: - Share of capital in total cost: 15% for fossil fuels and 91% for onshore wind (Beiter et al. 2024). - In EMDEs, borrowing cost can “more than double the cost of renewable electricity production” (IMF 2023). - Countries with very high financing cost may have effective renewable costs higher than global averages. - Options exist for developing countries to seek support from multilateral banks or international support (IRENA and CPI 2023). - Political economy factors (local jobs, vested interests, corruption) can lead to investments that are not least-cost. ### The cost of energy systems — model insights - Least-cost design of entire energy systems requires models capturing: - Location-specific costs and production profiles (daily, weekly, seasonal). - Initial electricity mix (regions with lower shares of solar/wind integrate more easily). - Existing infrastructure for flexibility (strong grids or hydropower ease integration). - Models used (constraining demand satisfaction at all times and total emissions to a budget consistent with <2°C) find: - Dominant share of solar and wind energy is optimal to meet a <2°C budget. - The switch to solar and wind is even faster when the temperature target is lower (e.g., 1.5°C). - Comparative studies: - Way et al. (2022): “compared to continuing with a fossil fuel-based system, a rapid green energy transition is likely to result in trillions of net savings”. - Bogdanov et al. (2019): find “100% renewable electricity systems highly cost competitive”. - Lu et al. (2020) (India study): “renewables could provide a source of power cheaper or at least competitive with what could be supplied using fossil-based alternatives.” ### Selected numerical LCOE values for solar PV (Figure 7 excerpt) - Solar PV global LCOE values (2020$/MWh): 2010: 422.8 $/MWh, 2011: 321.4 $/MWh, 2012: 241.6 $/MWh. ### Flexibility options — overview - Four main types of flexibility options (Pietzcker et al. 2017): supply elasticity, grid extension, demand flexibility, energy storage. - Cost minimization requires an optimal combination of these four. - Trends and deployment: - Supply elasticity is the most widely used. - Grid investments increasing in the United States, Europe and “OECD Pacific” (IEA 2023a); grids becoming increasingly digital. - IEA projects grid battery storage to increase by more than a factor six between 2020 and 2026; pumped hydro storage also increases substantially, mostly in China (IEA 2021b). - Demand flexibility is the least advanced but legal frameworks and pilots exist (IEA 2023b). ### Supply flexibility (findings) - Non-intermittent power plants (natural gas, hydropower) offset variability when intermittent sources underproduce. - Natural gas is expected to remain part of the energy mix for many years; coal is phased out much faster. - Adding natural gas capacity risks oversupply and potential stranded assets if deep decarbonization is required. - Hydropower (e.g., in Latin America where all countries have at least 10% hydropower share) can step up production when intermittent sources are low and is important when high shares of solar and wind are attained and fossil use is reduced. ### Grid extension (findings) - Pooling intermittent supply across large geographic areas requires well-connected grids. - Interconnected regions achieve steadier supply and lower costs; disconnected regions face higher costs and lower efficiency. - Transcontinental power pools can enable renewable energy to meet 100% of electricity demand (H. Yang, Deshmukh, and Suh 2023). - International electricity trade enhances flexibility and acts as mutual insurance against price volatility or supply deficits; bidirectional trade creates mutual dependence that disincentivizes political abuse. - Practical limitations: island economies (Australia, Japan) have constraints on electricity trade; very large countries (US, China) can extend domestic grids for flexibility. ### Demand flexibility (findings and evidence) - IEA definition: demand response balances grid demand by encouraging customers to shift electricity demand to times when electricity is more plentiful or other demand is lower, typically through prices or monetary incentives. - Jurisdictions with legislation on demand response include Australia, Brazil, the European Union and Korea (IEA 2023b). - Residential demand response: - Based on smart devices receiving price signals and managing consumption without active user management. - Household participation depends on financial benefits, cost, effort, perceived risk; households with higher income, younger members, and suitable devices are more likely to participate. - If consumer prices reflected market prices at high frequency, cost savings would exceed smart meter installation cost, without loss for non-responding households (Blaschke 2022). - Industrial demand response: - Pioneered in the United States and Korea, and piloted in Shanghai, China. - Useful for short-term fluctuation balancing but cannot fully compensate renewable variability (Müller and Möst 2018). - Technical and economic obstacles exist (Leinauer et al. 2022), but potential grows as renewable shares and price differentials increase. ### Energy storage (findings and technologies) - Energy storage should be used when cheaper options (supply elasticity, grid extension, demand flexibility) are exhausted. - Batteries: - Profitable for short-term storage; reduce cost of generating electricity (Comello and Reichelstein 2019; Y. Yang et al. 2018). - 2023: battery cost is 82% less than in 2013. - Boom in battery investment in the US (eia 2024) expected to continue price declines. - Long-term storage: - Pumped hydro storage and compressed air energy storage can balance seasonal demand and supply (Dowling et al. 2020). - Power-to-gas / Power-to-X: - Converts excess electricity from solar/wind to fuels (green hydrogen, ammonia) for later use or use in other sectors (aviation, shipping, heating). - Economical when moderate carbon price and support for power-to-gas exist (Yilmaz et al. 2022). - Processed gas can flow through existing natural gas pipelines after methanation (Romeo et al. 2022). - Can be used for electricity production in retrofitted gas plants or directly after processing. ### Conclusion — policy-relevant takeaways - State-of-the-art energy-economy models identify solar and wind as the most important sources for decarbonizing electricity production globally; CCS, nuclear energy, biomass and other renewables play supporting roles. - Global perspective matters to keep total emissions within the global emission budget and to align energy trade across regions. - Local planning must translate global insights into country-level studies compatible with the global view; electricity mixes vary by region but all regions can rely on solar and wind. - Implementation requires balanced and locally customized deployment of: - Rapid expansion of solar and wind capacity, - Investments in electricity grid extension and energy storage, - Maintenance of complementary nuclear capacity and development of limited biomass and CCS capacity. - Rapid change over the last 10 years: transition from reliance on CCS, nuclear, and biomass to solar and wind as first choice driven by technological developments in flexibility options replacing the need for “baseload.” - Key uncertainties and future developments to monitor: - Which flexibility options (new storage technologies, compressed air, new battery chemistries) prove most effective. - Sector coupling potential where sustainable fuels produced from renewables are used outside electricity sector; not expected at scale yet but with large potential. *IMF Working Paper — section 3.6 (excerpts from the provided content).* ### References ### References ### Renewable energy potential, integration, and system transitions - Bogdanov, Dmitrii, Javier Farfan, Kristina Sadovskaia, Arman Aghahosseini, Michael Child, Ashish Gulagi, Ayobami Solomon Oyewo, Larissa de Souza Noel Simas Barbosa, and Christian Breyer. 2019. “Radical Transformation Pathway towards Sustainable Electricity via Evolutionary Steps.” Nature Communications 10 (1): 1077. https://doi.org/10.1038/s41467-019-08855-1. - Bogdanov, Dmitrii, Ashish Gulagi, Mahdi Fasihi, and Christian Breyer. 2021. “Full Energy Sector Transition towards 100% Renewable Energy Supply: Integrating Power, Heat, Transport and Industry Sectors Including Desalination.” Applied Energy 283 (February):116273. https://doi.org/10.1016/j.apenergy.2020.116273. - Creutzig, Felix, Peter Agoston, Jan Christoph Goldschmidt, Gunnar Luderer, Gregory Nemet, and Robert C. 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(2024) - MESSAGEix-GLOBIOM 1.1-M-R12 - Hosting institution: International Institute for Applied Systems Analysis (IIASA) - URL: https://docs.messageix.org/e n/latest/ - Sample publication: Nishiura et al. (2024) - REMIND-MAgPIE - Hosting institution: Potsdam Institute for Climate Impact Research - URL: https://www.pik- potsdam.de/en/institute/depar tments/transformation- pathways/models/remind - Sample publication: Humpenöder et al. (2024) - World Energy Model - Hosting institution: International Energy Agency - URL: https://www.iea.org/reports/gl obal-energy-and-climate- model - Sample publication: IEA (2021a) - Source note: Author’s summary based on sources provided in table. - Note: This table complements the model introduction in Section 2.2. ### Figure A1: Model results across world regions (REMIND-MAgPIE 3.2-4.6, scenario “below 2°C”) - Regions shown (selected from the model’s 12 regions): China, EU 28, India, Latin America and the Caribbean, Sub-Saharan Africa, United States. - Model and scenario details: - Model: REMIND-MAgPIE 3.2-4.6 - Scenario: “below 2°C” - Key observations about regional electricity mixes and drivers: - Initial composition (historical data for 2020): - China and India: coal was the dominant source of electricity. - EU and Sub-Saharan Africa: several energy sources of similar importance. - Latin America and the Caribbean: hydropower had the largest share. - United States: natural gas was a dominant source. - Renewable potential and projected specialization: - India and Sub-Saharan Africa are projected to derive more than two thirds of their electricity production from solar energy by 2050. - The EU has an exceptionally high share of wind energy, reflecting good wind potential. - Production of renewable energy technology: - China’s share in all manufacturing stages of the solar PV supply chain exceeds 80 percent. - China is also the country with the largest share in wind turbine manufacturing. - Trade and domestic production: - While solar panels and wind turbines are traded in large volumes, domestic production capacity ensures access to low-cost supply. - Source: NGFS (2023) - Note reference (footnote 11): https://about.bnef.com/blog/chinas-goldwind-retains-turbine-supplier-lead-as-global-wind-additions-hit-new-high-according-to- bloombergnef/ *Source: IMF Working Paper — Appendix: Background information for Section 2.* --- _Source: https://www.imf.org/-/media/files/publications/wp/2024/english/wpiea2024213-print-pdf.pdf_