Publication - Scaling Renewables in the AI Era: How Emerging Economies Can Accelerate the Energy Transition
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In recent years, renewable energy has gone from being the expensive and less attractive option for powering economies to being cheaper and more viable than fossil fuels in many countries around the world.
This is transforming the global energy landscape.
Renewables are now the largest source of electricity generation in 57 countries.
Investment in clean-energy sources has risen by 60 per cent since 2015, with more than $1 billion per day spent on deploying solar power alone. Where spending on fossil fuels and renewables was roughly equal in 2018, five years later $2 was being spent on clean energy for every $1 invested in fossil fuels.
The positive impacts of this change are significant. The global power sector saved an estimated 465 megatonnes of carbon-dioxide emissions (MtCO2e) and $520 billion in fuel costs in 2022 alone by using renewables instead of fossil fuels.
At the same time, countries are decoupling from volatile fossil-fuel markets and developing modern grids and decentralised energy sources to power economic growth and development. Their rewards for this move are energy independence, economic stability and more.
Despite the opportunities renewables present for every country around the world, the pace of their uptake is not equal. Recent increases in clean energy spending come mostly from advanced economies and China, together accounting for some 85 per cent of global clean-energy spending between 2019 and 2024.
Other emerging markets and developing countries (EMDCs), home to two-thirds of the global population, account for just 15 per cent.
The world’s ability to tackle climate change and enable sustainable global growth will rest on its ability to change this dynamic. At the moment, additional electricity demand continues to outstrip additional renewable capacity, a trend driven largely by EMDCs.
Unless there is a significant change, this trend will intensify as development accelerates, hurting global climate ambitions and preventing many EMDCs from benefitting from the opportunities of renewables-led development.
Accelerating the deployment of renewables in EMDCs is a clear priority for governments. The technology is mature, affordable and ready to be deployed. The private and public capital to fund these opportunities can be found. The end consumers, who will enjoy more affordable and cleaner energy, already exist. Missing is the political and regulatory environment to bring these factors together. What is needed, therefore, is the political courage to use reform and the smart application of new technologies to drive through the challenges that stand in the way of scaling renewables in these economies.
While these barriers cannot be resolved by EMDC governments alone, there are several steps that must be taken by in-country political leaders to help accelerate change. These include driving a transformation in how the energy system is managed – transitioning from a short-term, transactional approach to a long-term, strategic one, and from opaque, one-off projects to transparent markets into which private capital can flow. Any transition on this scale will upset vested interests, and therefore will require smart policy and the targeted use of political capital to implement reform in a way that balances the politically viable with the technically and economically optimal.
Artificial intelligence and other digital technologies present an unparalleled opportunity to enable these energy-system changes. By harnessing the potential of technology, political leaders in EMDCs can ease or eliminate barriers along the value chain, aiding everything from strategy and planning to market creation and project pipelines that unlock investment.
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