By sion932 
- Regions such as China, Norway, and Texas in the United States are leading the global development of electrification, with electricity’s share in final energy consumption increasing significantly.
- Policy frameworks, economic incentives, and technological advancements are the three core elements driving the energy transition.
- Grid readiness is a crucial factor in accelerating the global transition to clean energy, and its key lies in improving grid capacity, reliability, and flexibility.
In leading economies undergoing the clean energy transition, the share of electricity in final energy consumption is showing a significant upward trend, a trend crucial for the global clean energy transition. What lessons can we learn from this?
Electricity technology is generally more efficient than fossil fuel technology, and one of its main advantages is its ability to facilitate the effective integration of renewable energy through the coupling of different energy sectors, making electrification a key lever for driving the global energy transition.
To advance the net-zero transition, the share of electricity in final energy consumption is expected to rise from 21% in 2024 to around 30% by 2030, and electricity is quietly becoming a new benchmark for measuring a country or region’s industrial strength.
Although replacing fossil fuels such as oil and natural gas with electricity has become a major trend, progress varies across different regions globally. Regions such as China, Norway, Indonesia, and Texas in the United States are far ahead of other regions in the electrification process.
This article will use data to deeply analyze: What is driving the electrification process of these pioneers? What challenges will they face in the future? How can other regions capitalize on this trend?
Global Electrification Pioneers
Due to industrial electrification, the popularization of electric vehicles, the development of artificial intelligence (AI), and cooling demands, electricity demand is constantly growing across various sectors. Therefore, the electrification rate is not the only indicator of electrification.
However, changes in the electrification rate do help reveal the specific factors driving the energy transition. Based on multi-year statistical data shared by the International Energy Agency (IEA) and the U.S. Energy Information Administration (EIA), we have found the following prominent characteristics:
China has increased the share of electricity in its total final energy consumption by more than 10 percentage points in a decade, and has enormous production capacity.
Indonesia has the highest growth rate in the share of electricity in industrial final energy consumption.
South Korea has performed exceptionally well in industrial electrification, with electricity accounting for over 50% of total final industrial energy consumption and continuing to grow.
Norway has consistently maintained a leading position in electrification, with more than half of its energy use now coming from electricity.
Texas, once a symbol of oil and natural gas, is now one of the fastest-growing states in the United States in terms of electricity use, with the share of electricity in total final energy consumption far exceeding the U.S. average over the past 10 years.
What are the main factors driving the energy transition? For pioneers in electrification, the core drivers of the transition are largely consistent: achieving decarbonization goals, ensuring energy security, and achieving economic growth. For example, China is committed to achieving its “dual carbon” goals through renewable energy generation, aiming to reach peak carbon emissions before 2030 and achieve carbon neutrality before 2060.
Even resource-rich countries like Norway have historically adopted electrification strategically, using it to replace domestic oil and gas consumption.
The electrification process varies significantly across different economies due to local conditions such as geography, energy structure, and market dynamics. However, according to our analysis, three factors are common key drivers:
Policy frameworks play a fundamental role in all pioneering efforts, although the specific implementation methods differ. China’s government-led electrification process demonstrates that national-level policies and regulations can systematically promote electrification across various industries, such as the credit policies promoting energy conservation and emission reduction in the automotive industry and the “Industrial Energy Efficiency Improvement Action Plan,” both of which have accelerated the electrification of industrial end-use energy. Indonesia also validates the driving role of policy frameworks. Its “hilirisasi policy,” aimed at promoting downstream mineral processing industries, while controversial, undeniably significantly increased the share of electricity in the energy structure of the mineral refining industry.
Economic benefits directly stimulate energy consumption and drive the transition of the energy structure from fossil fuels to electricity. In Norway and Texas, the low electricity prices, thanks to abundant renewable energy or competitive electricity markets, effectively encouraged the traditional oil and gas industry to embrace electrification. Meanwhile, direct subsidies have also promoted the widespread adoption of electricity, such as China’s subsidies for replacing old cars with new energy vehicles and Norway’s subsidies for household heat pumps.
Technological advancements have opened up new avenues for electricity-intensive applications. In recent years, the rapid maturation of AI technology and the booming development of related applications have increasingly integrated into daily life; the maturity of electric vehicle technology has driven transportation electrification; and breakthroughs in heat pump technology have paved the way for broader applications in industrial and other sectors.
How to overcome the inevitable obstacles in the electrification process?
Driven by the continuous progress of electrification, electricity demand is expected to continue to grow, potentially reaching the capacity limits of existing power grids. Without sufficient transmission channels to deliver electricity from source to end-users, electrification efforts on the demand side will largely be in vain.
Grid readiness, a comprehensive indicator of the grid’s capacity, reliability, and flexibility, is the ultimate foundation for electrification. However, our analysis shows that this requires efforts in the following three areas:
Capacity needs to be increased to accommodate renewable energy generation and load without congestion. Grid infrastructure development must precede demand growth. The International Energy Agency points out that by 2040, 80 million kilometers of power grids must be newly built or replaced globally, equivalent to the total length of the world’s current power grids. State-led investment has made China a leader in grid upgrades, with China Southern Power Grid leading the world in high-voltage direct current (HVDC) transmission networks, enabling the long-distance transmission of renewable energy generated in remote areas to central cities with high electricity demand. Furthermore, the experience in Texas, USA, has also demonstrated that commercial transmission models are an effective way to promote grid investment.
Reliability is becoming increasingly important to meet the demands of emerging loads with extremely high power quality requirements, such as advanced manufacturing and data centers. South Korea boasts one of the world’s most reliable power grids, thanks to its smart grid technology. Since 2011, South Korea has been planning, introducing, and developing smart grid technologies under the guidance of national promotion laws. The Texas power grid in the United States has also been evaluating broader interconnection schemes to improve its reliability and mitigate the impact of extreme weather events. The experience of the 2021 winter storm that hit Texas, bringing historically low temperatures and snowfall, forcing the state to implement rolling blackouts to manage energy, is still fresh in people’s minds. In addition, Indonesia has also proposed regional interconnection schemes as part of the ASEAN Power Grid initiative.
The potential for flexibility brought about by electrification remains to be explored. While electrification puts pressure on grid infrastructure, on the other hand, electrification technologies such as smart appliances and electric vehicles, acting as flexible users or “prosumers,” provide opportunities to utilize the flexibility of existing infrastructure. The “Digital Grid” project initiated by China Southern Power Grid integrates data assets, 5G, AI, and the Internet of Things to provide a comprehensive digital transformation strategy aimed at enhancing the flexibility of power utilization.
The experience of global electrification pioneers shows that the electrification process is not a sprint, but a marathon, requiring continuous policy framework guidance, economic benefit creation, and technological innovation support. Building a power grid with sufficient capacity, reliability, and flexibility is a crucial pillar for advancing electrification.
For other regions, the urgent task is to learn from and adapt these blueprints to local conditions, utilizing proven strategies to accelerate their own energy transition. The era of electricity has arrived, and now is a critical moment to firmly advance this transformation.
Authors:
Zheng Waisheng, Chairman of China Southern Power Grid Research Institute Co., Ltd.
Kristen Panerali, Head of Clean Power, Grids and Electrification, World Economic Forum
This article was originally published on the World Economic Forum Agenda blog.