Global Energy Transformation Guide: Electricity

Electricity is the cornerstone of economic development and human prosperity. Reliable access to affordable and clean electricity unlocks the potential to meet foundational socioeconomic needs, including goals for industrialization, education, and public health.

The electricity sector is also the largest source of greenhouse gas emissions today, responsible for 42 percent of emissions globally. To simultaneously expand energy access and promote sustainable development while decarbonizing the power sector, we must rapidly transform our electricity systems.

The Global Energy Transformation Guide: Electricity shows how we can achieve this goal by elevating innovations from the energy transition. The reports and spotlights identify key trends, explore emerging challenges and opportunities, and share success stories from electricity system leaders across the globe.

Spotlights Map

Elements of the Transition

A framework for thinking about the energy transition

Seven universal outcomes can be used as indicators of progress toward a successful transition of the electricity system, and these outcomes can be advanced by certain catalysts. Each outcome is anchored to three primary goals: (1) ensuring a fair and inclusive energy transition, (2) creating a system poised for sustainable growth, and (3) increasing the efficient utilization of clean energy assets.

As you click on each of the seven outcomes that are depicted along the outer ring of the concentric circle in the graphic below, this text box will change to describe key challenges and emerging solutions associated with each outcome.

To learn more about the catalysts that can be leveraged to advance these outcomes, follow the links below to our thematic reports as they are released throughout the year.

Expand access and enable economic development

Reliable access to energy is fundamental to social and economic development, including ensuring access to critical public services (e.g., health, education) and improving community and individual livelihoods (e.g., food security and poverty reduction).

Globally, the number of people who have access to electricity has been steadily increasing over the past two decades. However, in 2020, 733 million people (9 percent of the world) still did not have access to electricity — the majority residing in sub-Saharan Africa and South Asia.

To expand access to reliable and clean electricity and catalyze economic development, utilities and system planners are leveraging cost-effective local renewable resources, strategically deployed grid extensions, and decentralized off-grid clean solutions when they are the least cost and most reliable option.

Promote affordability and equity

Ensuring that electricity is affordable for households, businesses, and industry is pivotal to supporting sustainable economic development and a successful clean and equitable energy transition. Although an increasing amount of investment in generation and infrastructure is to be expected as economies grow and invest in more renewables, solutions such as demand-side management, minigrids, and improvements to system efficiency can help alleviate upward pressure on rates.

Beyond affordability, industry leaders and decision makers will need to prioritize the integration of marginalized and vulnerable voices into planning for the energy transition. Creating inclusive and transparent processes and establishing tools to hold utilities, regulators, and policymakers accountable to commitments will become even more critical given the disparate social, economic, and health impacts of climate change on communities and individuals.

Ensure energy reliability and resilience

The availability of reliable electricity is a key priority for all countries given the importance of electricity in supporting critical infrastructure and a well-functioning economy. However, estimates suggest that 45 percent of the global population does not have reliable access to electricity.

For countries that are attempting to expand access and improve reliability and resilience at the same time, there is a growing number of opportunities for governments and developers to leverage different financing options, such as concessional debt, grants, and balance sheet financing, to make needed investments both in infrastructure and generation capacity.

In more advanced economies, grid planners have an opportunity to modernize their resource adequacy assessments and system planning approaches to ensure that reliability criteria reflect scale, frequency, duration, and timing of emerging weather events, as well as to update their modeling approaches so that renewable and demand-side resources are fairly credited for their ability to deliver energy services and resource adequacy.

Secure utility financial stability

Utilities, both vertically integrated and unbundled, are critical to delivering safe and reliable electricity to homes and businesses. To meet their service requirements, utilities must have access to sufficient capital to make necessary investments in resources and infrastructure and have a dependable revenue stream to recover their costs.

To respond to long-standing business pressures, as well as more recent challenges introduced by the COVID-19 pandemic and Russia’s war in Ukraine, governments, regulators, and utilities are exploring different business models, such as alternative or performance-based ratemaking, the provision of new services and products that extend beyond electricity for subsets of customers, and increased competition and privatization.

Improve energy intensity

Improving energy intensity is integral to maintaining affordability as countries develop and seek ways to reduce emissions. Energy intensity is generally considered a proxy for energy efficiency, but it also reflects energy use shifts driven by other factors, such as social and economic development and weather.

Energy efficiency and demand flexibility are the most cost-effective means to reduce emissions given they not only can save consumers and businesses money by reducing or shifting their energy consumption, but also can reduce peak demand, obviating the need for capital investments in generation assets and grid infrastructure. Utilizing demand-side resources also can free up government and utility funding to invest in other critical efforts in ensuring a successful energy transition, such as workforce development and capacity building.

Accelerate clean energy adoption

The deployment of clean energy resources will be necessary to help transition away from fossil fuels, support sustainable development, and electrify transportation, buildings, and industry to meet economy-wide decarbonization goals. Fortunately, renewables are now the lowest-cost form of electricity generation in almost all major economies today.

Globally, renewable targets, feed-in tariffs, competitive procurement, technology-neutral auctions, and public–private financing mechanisms can incentivize investment in renewable energy and drive down costs. In parallel, grid investments that expand interconnection opportunities, support last-mile connectivity to underserved areas, and improve system flexibility to increase utilization of renewables also will accelerate their deployment.

Reduce dependence on coal

Globally, coal-fired power plants are the largest source of electricity generation, making up more than one-third of the world’s electricity. Coal is also the most carbon-intensive fossil fuel and the largest source of pollution contributing to global temperature rise.

To strategically plan the transition away from coal, a number of economies are beginning to explore the use of novel financing mechanisms to support the early retirement of plants while also mitigating financial impacts on ratepayers and utilities and supporting workforce and community transitions. In parallel, fossil fuel subsidy reform and more cost-effective gas and renewable alternatives have limited new coal build-out to support growing demand in an increasing number of emerging markets and developing economies.


Spotlighting Examples of the Transition