Energy Transition: Shift to Low-Carbon Energy Systems

The Role of Policy in Energy Transition 

As gatekeepers of compliance and funding, governments worldwide will play a key part in the energy transition as they decide what initiatives to focus on. We give an overview of the government regulations, policies and international agreements driving decarbonisation: 

The EU's Corporate Sustainability Reporting Directive 

As part of the EU's Corporate Sustainability Reporting Directive, businesses and organisations will need to report information about their business's environmental risk, with a new to give stakeholders, investors and consumers complete transparency around their green credentials, potentially influencing future business collaborations.  

The directive was introduced this year, with companies required to report from 2025. The type of information businesses are expected to provide includes the use of renewable and non-renewable energy sources, water use, greenhouse gas emissions and pollution. The directive is hoped to incentivise business' switch from fossil fuels to renewable energy, alongside other green transitions.  

Security compliance policy  

Networks as large and connected as smart grids are vulnerable to cyber hacking, so it's important they adhere to strict compliance guidelines to keep the businesses and homes that they are connected to, as well as the plants at the other end. However, strict compliance requires resource, time and expertise to implement, so the policy and regulations introduced to manage these networks mustn't be too complex that they hinder innovation and networks are unable to keep compliant. Renewable energy by nature is volatile because the majority of the industry relies on uncontrollable weather to produce energy; for example, if water shortages occur, renewable plants could find themselves non-compliant with little control over the situation. Compliance also introduces a financial hurdle, as keeping ahead of regulations requires specialist employees and technology to keep businesses compliant.  

Investment Trends in Renewable Energy 

While multiple initiatives can be put in place to help set up and generate energy, other industries need to be on board to help the renewable market flourish. But how are private and public sectors are fuelling the clean energy market? 

Consumer purchase power trend 

As the general public becomes more savvy about where the products they buy come from and how they are produced, their attention has been turned to their energy consumption. While some are monitoring and adjusting their spending based on smart meters, others are going one step further by investing in green energy tariffs comprising only renewable energy or a fossil fuel and renewable energy mix. These tariffs tend to be set at a higher rate, but their adoption of them proves that people are willing to spend more to facilitate the green energy transition. 

Guarantees of Origin trend 

Guarantees of Origin (GOs) are also trending in regards to energy transition, purchased by businesses to promote the fact that they are investing in renewable energy. They provide a trusted method to verify that an energy source is green, as GOs can track the green energy source. Some companies have developed software programs that allow GO purchasers to locate the specific plant in which their energy was generated, including case studies and updates on that specific producer. GOs also cut out the middle man, which means more money goes directly to the renewable energy producer.  

Financial lending trend 

Financial lenders must follow regulations that are closely tied to risk. Since renewable energy is considered a risky investment, businesses in this field often face financial challenges. Reducing or accepting some of these financial obstacles could make it easier for renewable energy companies to innovate and expand, supporting the shift to greener energy. Additionally, the technology needed to ensure compliance with these regulations adds extra costs, which could be lessened if financial barriers for renewable energy producers were reduced.

Technologies Leading the Energy Revolution 

For the green energy transition to take place, we need innovation to drive the renewable industry forwards. We take a look at the impact of volatile solar and wind energy on the energy transition, bolstered by battery storage. 

Solar and wind energy

The energy transition faces significant technological challenges, one being the unpredictability of renewable energy. Unlike fossil fuels, renewables can’t produce energy as reliably or on demand, so renewable plants need to be placed in areas with optimal energy generation potential. For solar energy, this often means spreading solar arrays across a large region, so if clouds cover some areas, other arrays in the network can still receive sunlight and produce power. Wind power is also affected by "wind droughts," where calm periods reduce electricity generation. During high-wind events, like storms, energy surges can be stored to cover these low-production periods.

Energy storage 

To make renewable energy a reliable source for future smart grids, energy storage is essential. In renewable energy systems, batteries store excess energy produced during high-generation periods and release it when consumer demand exceeds renewable supply. This is particularly helpful during times like wind droughts, extreme weather, or overheating that affects solar output. Various energy storage methods exist, including thermochemical, thermal, pumped hydro, compressed air, hydrogen, chemical, and magnetic storage. The primary types used today are lithium batteries, supercapacitors, and other methods like hydropower storage.

Government policies and private sector investment are pivotal in advancing the energy transition. With supportive regulations, secure funding, and innovative technology, renewable energy can overcome its challenges. Together, these efforts are making sustainable energy more accessible, secure, and integrated into the modern power grid.