By Frank Andorka, Senior Correspondent
According to the latest DNV-GL Energy Transition Outlook 2018: Power Supply and Use report, renewable energy will power approximately 80% of electricity generation by 2050, with the majority of that surge coming from wind and solar.
As prices for the technology continue to drop, DNV0-GL is predicting that 40% of all electricity generation will come from solar sources, while 29% will come from wind.
What’s more, the report suggests rapid electrification will continue to become a higher percentage of energy use, reaching 45% by 2050, with particular increases occurring in the transportation, building and manufacturing sectors of the economy. It also forecasts that 50% of all new vehicles sold in Europe within the next decade will be electric vehicles (EVs), significantly increasing the need for electricity production. When you dovetail the two predictions, you can see that solar and wind production increases will shape the economic future of not just Europe but the rest of the world as well.
What that will necessitate – no matter how much free market mavens don’t want to hear this – is greater regulation. Higher use of solar and wind is going to force governments to shift how their populations use electricity through using market mechanisms and changes to the electricity market fundamentals. And governments are going to have to intervene. In parallel, market-based price signals are essential to foster innovation and develop economically efficient flexibility options.
You might think the expansion of high-capital-cost renewables and electricity networks would drive prices up, but DMV-GL predicts the exact opposite. For example, the report suggests the total cost of energy expenditure, as a share of global GDP, will fall from 5.5% to 3.1%, a drop by 44%. Absolute energy expenditure will still grow by 30% over the forecast period, to 6 Tn$/yr. DNV GL foresees a shift in costs, from operational expenditure, principally fuel, to capital expenditure. From 2030, more capital expenditures will go into electricity grids and wind and solar than into fossil-fuel projects.