The energy transition: a historic opportunity

The latest data on climate change compels us to adopt a greater acceleration in the evolution of the energy paradigm towards decarbonization: a transition that brings with it a variety of social, economic and environmental benefits. Let’s see how.

The only way to change course and limit global warming is to reduce emissions of carbon dioxide and other greenhouse gases.

Climatologists have been saying it for years, but the latest report from the IPCC (the United Nations Intergovernmental Panel on Climate Change) now certifies that the warming of the planet due to human activities is the direct cause of extreme weather phenomena.

This means we must accelerate the energy transition towards a zero-emissions future: in fact, if we don’t act immediately, the Paris Agreement goal of limiting the increase of global temperatures to 1.5 degrees Celsius will no longer be within our reach.

What is the energy transition?

The energy transition is the shift from using fossil fuels to energy produced from renewable sources to create a zero-emissions future.

The energy transition is part of a scenario in which urbanization is on the rise: cities, where over half of the world population already lives, are constantly growing. The United Nations estimates that two thirds of humanity will live in urban areas by 2050. In addition, the global demand for electricity is on the rise and, according to the International Energy Agency (IEA), it will increase by 5% in 2021 and 4% in 2022.

So the world needs more energy – but above all, more clean energy.

In this scenario, the key elements of the energy transition are: renewables, electrification of consumption, and digitalization of networks.

More energy – and more of it from renewable sources

Renewable sources play the most important role in this transformation: alongside the traditional ones – hydroelectric and geothermal energy – we now have solar and wind power registering incredible growth on every continent. According to the IEA, since 1990 photovoltaic and wind generation have grown globally, on average, 36% and 22.6% respectively.

Overall, renewable energy reached a global share of 29% in 2020: in other words, almost one third of all the electricity produced on the planet today comes from renewable sources. And estimates indicate that this trend shows no signs of stopping: the International Renewable Energy Agency (IRENA) predicts that the installed generation capacity of renewable energy will quadruple by 2030, to the point that the 2020s have been dubbed “the decade of renewable energy”.

The Italian scenario is even more advanced than the international context: in 2020, according to data from the GSE (Gestore dei Servizi Energetici, or Energy Services Operator, the publicly-owned company promoting and supporting renewable energy sources in Italy), 37% of electricity consumption was met by renewable energy sources. Certain aspects of the country facilitate this, such as the contribution of geothermal energy: here, in the nation where it was born over two centuries ago, geothermal energy yielded 3,222 GWh of electricity in 1990, which jumped to 5,646 GWh in 2020 (data from Terna).

There was also a significant increase in hydroelectric power, historically the cornerstone of Italian electricity: with 35,079 GWh in 1990 and 47,990 in 2020, it still remains the leading renewable source in the country in terms of energy production.

However, just as in the rest of the world, it is the “new” renewables that are registering the most impressive increases: while in 1990 wind power and photovoltaics had a negligible presence (2 GWh and 4 GWh), in 2020 they reached 18,547 GWh and 25,549 GWh respectively – a staggering increase of more than 9,000 times as much energy for the former, and almost 6,000 times for the latter.

Innovation and technology

The successful spread of renewables is also made possible by technological innovation, which has made them financially competitive compared to traditional sources, and has also made storage systems available to energy producers. These systems store electricity and make it available when it is needed the most, balancing supply and demand and contributing to the network’s stability.

This evolution also has another important consequence, which is profoundly altering the face of the energy system: the shift from a centralized model, in which one large plant supplies energy to users, to distributed generation, in which many small plants powered by renewable sources bring to life a dense multi-directional network in which users themselves are simultaneously producers and consumers of energy.

Just as we’d expect from the principle of communicating vessels, the result is a decrease in generation from more polluting sources. Our Group, at the forefront of this process, has set ambitious goals for itself, committing to complete the closure of all coal plants in Italy by 2025.

The electrification of consumption and smart cities

So electricity must be cleaner and also more widespread: if upstream the energy transition is based on decarbonization and a shift towards renewable sources, downstream the scenario includes a progressive electrification of final consumption.

Change will affect the way urban areas are designed and built, as well as consumption habits. Cities and smart grids will become synonymous.

The electrification of demand – from cooking, to heating, to mobility – is a crucial challenge for energy networks, which are becoming increasingly digitalized.

The smart city model, the platform-city, will bring together moment by moment all the information coming from meters, vehicles, connected objects and devices, in order to streamline and distribute energy in a way that is efficient, sustainable, affordable and reliable.

In terms of mobility, as we get closer to our goal of parity between the costs of electric and internal combustion engine cars, charging infrastructures are also making progress. Our Group is doing its part, with an increasingly extensive network of public charging stations in Europe and in Italy.

A growing number of local administrations, from China to South America, are also deciding to shift to fleets of electric public transportation vehicles.

Thanks to the smart, real-time management of energy flows, prosumers – i.e., anyone who has a system to generate energy from renewable sources – will be able not only to meet their own needs, but also to give back any excess energy to the grid for more effective distribution. Drivers of electric cars will have the same opportunity thanks to two-way Vehicle-to-Grid technology that allows them to use their vehicles to store and feed energy back into the network, making it more stable.

The benefits of the energy transition

The energy transition is inextricably linked to international efforts to combat the climate crisis. The crucial step to achieve this outcome is to drastically cut greenhouse gas emissions, mainly carbon dioxide.

In anticipation of the new global commitments that will be defined at COP26 in Glasgow (the 2021 United Nations conference on climate change), the European Union has officially set a goal to reduce emissions by 55% compared to 1990 levels by 2030 as a stepping-stone towards a net-zero emissions system for electrical generation by 2050.

Increasing electrification, especially in urban areas, leads to other benefits as well, such as environmental sustainability – starting with less air and noise pollution caused by internal combustion engine cars and heating systems that use fossil fuels.

In addition to the advantages for people’s health and the environment, it will also be beneficial for society and the economy. According to the Just E-volution study by Enel Foundation and The European House Ambrosetti (TEHA), a just transition will create up to 1.4 million new jobs in Europe by 2030, including up to 173,000 in Italy.

The energy transition, therefore, helps create shared value for society as a whole, contributing to the social and economic development of local communities and improving quality of life for the population, in terms of better services offered, more energy efficiency, and therefore less waste and fewer resources used.

Find out more about our commitment towards energy transition