Supporting the renewable electricity transition through trade

Natural energy sources, such as solar, wind and water, are abundant, but they are not evenly distributed worldwide. The transmission of power across borders can help address imbalances between electricity supply and demand from renewable sources, contributing to security of supply. Security of energy supply is a core concern for countries around the world, especially in the context of the transition to renewable energy, which lies at the heart of efforts to mitigate the effects of climate change. However, only 2.8% of electricity generated is traded across borders. As the share of weather-dependent renewable power generation increases in the global energy mix, the World Meteorological Organization has a critical role to play in upgrading climate services to support decision-making in the energy sector. Trade also has a role to play to help balance power grids through interconnection with overland and undersea electricity cables. Such cables open up the possibility of bringing new suppliers with significant natural solar, wind and water endowments into energy trade. However, interconnection cables are complex and costly infrastructure, with projects taking 10-15 years to complete. This report discusses how to speed up interconnection projects. Actions identified include ensuring better access to sustainable trade finance and climate finance. Also important is improving the predictability and transparency of regulatory approval processes for these projects. WTO rules may also help to address bottlenecks in the supply chains of goods and services needed for grid and interconnection expansion. Trading renewable energy across borders could help economies meet their decarbonization commitments and reduce the overall cost of the global transition to low-carbon energy.