What is Power System Transformation?

The generation, transmission, and distribution of electric power is fundamental to modern civilization, economic activity, and sustainable development. Today, countries around the world are in various stages of reforming and restructuring their power systems to better meet development needs and decarbonization commitments. Changes in technology, business models, societal needs, and environmental goals are increasing pressure on countries to consider improvements to their electricity systems.

Within this context, “power system transformation” is an active process of creating the policy environments, and the planning and operating practices, which accelerate investment and innovation in power systems that maximize the use of sustainable energy and maximize delivered energy productivity, while also fostering the integration of power systems with transportation, heating and cooling, and broader resource management.

The Challenge

The Power System Challenge was established in 2015 through the Clean Energy Ministerial to provide a consistent vision among major economies regarding the pathway to providing clean, reliable, resilient, and affordable power. To read the original joint statement of endorsing governments, click here.

Core Principles

Endorsing governments have created the following set of core principles as a framework for collective action to support and guide power system transformation.

Power system transformation is a strategic imperative

Power systems should provide clean, reliable, resilient, and affordable power to everyone, and power system transformation is a strategic imperative to achieve these goals. Different pathways will emerge in our different contexts, but all transformations will require innovations to increase energy efficiency and to reorient system planning and operation to take advantage of smart grid technologies and renewable resources such as wind and solar power.

The Challenge:

To show leadership by establishing national roadmaps or strategies for achieving power system transformation.

To deploy best practice planning and operational methods, and to share knowledge about effective strategies.

To identify approaches to support and measure effective power system transformation, and to work with international partners and local communities to advance diffusion of effective transformation strategies.

Cleaner power systems will improve public health and combat climate change

Globally, power systems are one of the largest sources of emissions that significantly degrade public health and accelerate global climate change. Working together to innovate and implement clean energy solutions across the spectrum of energy supply, delivery, and demand will yield benefits locally and globally.

The Challenge:

To work together to innovate and implement solutions that support high-quality, low emissions power systems, consistent with our national strategies.

To identify cost-effective pathways toward cleaner power systems, and to support implementation of our national strategies.

Markets, prices, and tariffs should be aligned to support power system transformation

Transforming power systems will require innovation in the design of energy markets, in pricing mechanisms that better represent energy costs, and in tariffs that incentivize investment in critical system assets. Alignment of these design elements will increase efficiency, flexibility and other desired system characteristics, facilitate regional market integration, encourage system-friendly deployment of renewable and other clean energy resources, and unlock new business models.

The Challenge:

To show leadership in the design of markets, prices, and tariffs, and to share best practices through CEM initiatives.

To identify design strategies that support alignment across these elements.

Smart grids are a key enabler for power system transformation

Smarter power grids, enhanced with information and communication technologies, provide strategic value by increasing consumer engagement, efficiency, resilience and reliability, and by facilitating the integration of clean energy resources. They also provide opportunities for business model and technology innovation, and they support regional electricity market integration.

The Challenge:

To promote significant investment in modernized grid infrastructure as a pathway toward cleaner, more reliable, and more resilient power systems.

To support our national smart grid priorities and work with our national smart grid leadership to develop shared visions for scaling up smart grid deployment.

Renewable energy is a strategic power system resource

As a sustainable, domestic, and cost-effective source of supply, renewable energy will constitute an important asset in transformed power systems. Policy and regulation should promote sustained, cost-efficient investment, and system-friendly deployment to maximize the benefits of renewable energy for the power system and society at large.

The Challenge:

To promote accelerated growth of renewable energy, consistent with our national strategies and domestic contexts.

To conduct analysis and make recommendations on best practices to achieve cost-efficient and system-friendly renewable energy deployment.

Innovation in finance and procurement is essential to accelerating transformation

Prices of clean energy supply and smart grid technologies are likely to continue to decline, yielding opportunities for accelerated investment with less reliance on subsidies. Innovation in financing and procurement will be critical in this objective. Effective policy and regulatory frameworks encourage this innovation by ensuring efficient procurement mechanisms, providing market-based price signals, and unlocking new financing business models.

The Challenge:

To develop and implement strategies to accelerate innovative financing mechanisms, and to encourage transparent, cost-effective, and market-based procurement.

To identify key principles for finance and procurement, and to facilitate greater peer learning and knowledge exchange between CEM countries.

Power systems should be optimized to interface with other energy systems

Power systems are part of a larger energy system. Integrating electricity and thermal systems leads to improved efficiency, reduced emissions, and improved energy security. Integrating electricity and transport systems through vehicle electrification can result in significant improvements in air quality and system flexibility. Intelligent industrial and building energy management increases efficiency and supports advanced power system operation.

The Challenge

To advance research and policies that promote innovation at the interface of electricity, thermal, transport, industrial and building energy systems.

To support the diffusion and adoption of best practice approaches to energy system integration.

Skill and capacity development is critical to 21st century power systems

Planning and operating transformed power systems will require highly skilled workers in various fields. Proactive skill development in the areas outlined by these Principles will be crucial for realizing power system transformation.

The Challenge

To cooperate internationally to increase the skills and capacity of power system experts, especially in emerging sectors such as smart grids, advanced power system planning and advanced power system operation.

To facilitate staff exchanges and peer learning opportunities between regulators, system operators, policy makers, and utility staffs that promote skills and knowledge transfer.

To learn about what each participant is doing to meet this challenge, visit the participants and initiatives pages.