It’s full steam ahead for renewables in the DNV-GL consultancy’s latest Energy Transitions Outlook. It looks to wind and solar power having a 29% and 40% share, respectively, of total global electricity generation by 2050, with nuclear stalled and energy demand peaking by 2035. That’s despite there being a boom in electric vehicle (EV) use – renewables can support that, with electrification carrying all before it. “Electrification and its inherent efficiency will contribute to humanity’s energy demand declining from the mid-2030s onwards,” the report says. “Global expenditure on energy, as a percentage of GDP, will fall 44% by 2050.”
However, DNV-GL says it won’t be automatic: “high fractions of solar and wind will create a need for increased use of market mechanisms and changes to the electricity market fundamentals”. So the consultancy wants policy makers to intervene and put in place “measures to incentivize a demand shift towards clean energy, to stimulate innovation in new efficient and clean technologies”. Otherwise we won’t hit the Paris climate targets.
100% renewable electricity is viable
It all sounds most exciting, but very electricity oriented. “DNV GL sees energy efficiency improvements being so strong that it from the 2030s onwards outpaces the economic growth that globally gradually will reduce towards around 2%/yr,” said Sverre Alvik, programme director of the Energy Transition Outlook. “Behind the strong efficiency improvements is a strong belief in electricity taking over as the dominant energy carrier, more than doubling its share to 45% of final energy demand in 2050.”
Alvik believes this means DNV GL has a distinctive take on what may happen. “The strong electrification of all sectors, but most of all in the transport sector, and the high renewable share, are two distinct differences from DNV GL’s forecast and many scenarios from other forecasters, and this is the main reason for DNV GL seeing world energy peak, while most other forecasters do not,” he said.
Free energy and endless growth?
Efficiency may in theory mean energy demand growth can be contained and even reduced, as DNV-GL suggests, but a boom in EV use is now widely predicted, and most see that as leading to a power demand surge, at least in the short term. DNV GL evidently thinks that the fact that green electricity use is more efficient than fossil fuel energy use will compensate — we won’t need so much primary energy. However, there are also other factors. With green power generation costs falling, it’s hard to predict what will happen. Analysts at Swiss investment bank UBS seem to believe that, by 2030, the cost of energy from renewables like PV solar will be so low they will “effectively be free”, at least for power use in the domestic sector. But won’t people use more power if it’s cheap? For driving and many other things. Or will demand stabilize? There may be natural limits. It’s certainly the case that UK electric power consumption has been falling and is now back to 1994 levels.
the future could be more nuanced than that, with electric taxis hailed electronically reducing congestion and parking
Dave Elliott
This all sounds miles away from the doom and gloom that often seems to be the norm when we talk about energy futures: a Cornucopian future of plentiful cheap clean power. Cynics will rush in to put the mockers on it – won’t we just have queues of EVs congesting the streets and more roads being built and land lost to accommodate the vehicles and their parking spaces? But the future could be more nuanced than that, with electric taxis hailed electronically reducing congestion and parking. As well, of course, as cheap electric-powered mass transit systems. A familiar Utopia!
Back in the world of today, there are some potential downsides to the rapid fall in renewable prices. Perversely, the success of this competitive “race to the bottom” makes it less attractive for generation companies to invest in more capacity – the profit margins are reduced. This so-called “market self-cannibalization” problem can be avoided if demand for energy is increasing – but is more demand growth what we want? Don’t we want to move to a sustainable stable-state system, to avoid ever more stress being placed on the environment? Or do these new clean technologies allow us to escape from that constraint, as some eco-modernists suggest? Although, apparently, some of them would prefer nuclear. Indeed, jumping over several steps in the usual debate over weapons proliferation and dual-use technology, some even say that expanding civil nuclear would be an aid to weapons-use deterrence.
Cutting demand
Maybe a less risky approach is just to push on fast with renewables, and also with energy efficiency. The latter recently received a new stimulus from a study claiming that “one quarter of the energy currently used in UK households could be cost-effectively saved by 2035; and this could increase to one half if allowance is made for falling technology costs and the wider benefits of energy efficiency improvements”.
Following that up, a UK Centre for Research on Energy Demand Solutions (CREDS) was launched in 2018, led by one of the paper’s authors, Professor Nick Eyre of the University of Oxford, and funded with £19.5 million from the Engineering and Physical Sciences Research Council (EPSRC) and the Economic and Social Research Council (ESRC). “The goals of a secure, affordable, low carbon energy system are only achievable if energy demand is reduced, decarbonized and made more flexible,” Eyre said. “Understanding how these changes can happen is a major interdisciplinary research challenge.”
A shift to flexible demand management is certainly now high on the agenda. That’s unsurprising, since it may turn out to be the cheapest way to respond to variable renewable supply. For example, introducing “time of use” electricity tariffs can shift demand away from times when renewable inputs are low. And it involves no extra capital cost, unlike installing storage capacity or using back-up supply capacity. What’s more, the consumer market system can hopefully be improved – there is certainly a need for some rationalization of the existing, sometimes perverse, pricing system for heat supply.
In parallel, the prospects for self-generation of power by prosumers are looking up, as is argued in the interesting series of essays published by the UK Institute for Public Policy Research, which explore decentralized renewable energy options, including storage and peer-to-peer trading of surpluses. It is visionary stuff, with the hope being that the new smart energy system “empowers citizens and communities to be more self-sufficient while being part of a connected, inter-dependent system that offers security of supply and resilience in the face of changing demand and climate”.
There are certainly changes underway in how we perceive local energy markets and in what they might deliver. And as I will be exploring in my next post, DNV GL is actually not alone in predicting big savings. In the US, Amory Lovins of the Rocky Mountain Institute also says that the result of all these changes, if an integrated approach is taken, could be massive energy efficiency improvements. Big changes do seem likely, with new approaches to electricity generation and use emerging. See Walt Patterson’s fascinating papers on the joys of electricity – if done right. Though, in a later post, I will ask if electricity is all we need.
