Power Supply and Use: A global and regional forecast to 2050
The world has changed dramatically in 2020 as a result of the coronavirus pandemic.
There is enormous human suffering, while the economic damage is deep, wide and long-lasting – reducing global GDP in 2050 by 9% relative to pre-pandemic forecasts.
COVID-19 has impacted hugely on energy supply and demand in the short term and will have lasting behavioural impacts when the pandemic ends. Renewables has so far been the most resilient energy source during coronavirus lockdown measures. Solar and wind power generation have demonstrated that they can reliably supply a larger proportion of energy demand. For example, no coal-powered ENERGYelectricity was generated in the UK for 67 days, 22 hours, and 55 minutes – the longest ‘coal-free’ period since electricity was first produced in the UK in the 1880s.
We have also seen that renewables are less volatile than fossil fuels, and know that new renewable energy capacity can be installed more quickly, making it more attractive to investors. Uncertainty remains over the revenue stream of variable renewables, and is compounded by the impact of ‘price cannibalization’. However, we are seeing increasing interest in corporate power purchase agreements (PPAs) as a mitigating measure that can provide greater certainty to all parties.
We predict another significant rise in renewables deployment this decade thanks to continuing reduction in the cost of energy from variable renewables; increased efficiency from technology improvements, digitalization and data analytics; compatibility to combine with advanced energy-storage solutions; and zero emissions once operational. We forecast that solar and wind will meet 62% of the world’s electricity needs by 2050.
With the earlier than anticipated peaking of oil, and continued rapid decline of coal, our forecast shows that CO2 emissions have most likely already peaked (in 2019). Nonetheless, the longer-term decline in emissions is not significantly accelerated by the pandemic, and the energy transition is nowhere close to being fast enough to deliver on the climate goals of the Paris Agreement. Even though wind and solar will dominate electrical generation by mid-century, it will not be enough.
COVID-19 impacts may have granted us an extra year for ‘allowable’ emissions before the carbon budget for the 1.5°C target is exhausted, according to this year’s findings of our Energy Transition Outlook Model; but we can do more to transition faster.
We have the technology, but if we are going to speed up the transition, we desperately need governments around the world to dare to commit to post-pandemic economic stimulus packages and new focused policies and regulation that drive the uptake of low or zero-carbon sustainable solutions, everywhere. We also need higher carbon pricing; renewable technology rapidly deployed at scale; expanded, reinforced and upgraded grid infrastructure; and greater energy-efficiency measures.
The many companies that will survive the coronavirus crisis want to continue with their 2050 net-zero plans. We sense an appetite for this from our customers. In some cases, the crisis has meant a stronger spotlight on emissions reduction targets and the impetus to make the transition happen faster. As countries and markets continue to reopen for business, companies will renew their business structures to first stabilize and then position themselves for future growth in this new paradigm. But the cost of not taking action now could be severe. It will vary by company and sector, with some delaying decarbonization while others attack this with renewed intensity.
The next phase of the energy transition demands committed implementation of new technologies and digital grid operations. We must develop and deploy these technologies including floating offshore wind, hydrogen, high-voltage direct current (HVDC) + hybrid grids, and electric vehicles. Efficiently integrating vast volumes of variable generation adds complexity to power systems and will require significant investment in grid infrastructure, more intelligent grid operation, energy markets closer to being real-time, and extensive utilization of flexibility options. Grid flexibility will be provided by battery storage, greater grid interconnection, demand side response and flexible generation. We will also see the rise of the supergrid in Greater China, the Indian Subcontinent and Europe as grids expand to cover larger market areas.
“We desperately need governments around the world to dare to commit to post-pandemic economic stimulus packages and new focused policies and regulation that drive the uptake of low or zero-carbon sustainable solutions, everywhere."
We have the technology and we have the means, but we all need to promote new ideas, and to share innovation and proven solutions. And crucially, we need policies and regulation to support this. We need to find ways to transition faster together towards a clean energy future for the benefit of all of us. And we need to do it now – the clock is ticking really fast. At DNV GL, we are 12,000 colleagues ready to do our part, as nothing is more important to us than safeguarding life, property and the environment.
- Ditlev Engel
CEO, DNV GL - Energy