The energy sector must find a way forward through shifting dynamics and disruptive trends within the next five to 10 years in order to achieve energy security, grow energy access and meet environmental goals, the World Energy Council (WEC) has said.
In a report released this week at the World Energy Congress in Istanbul, Turkey, the WEC said it expects disruptive trends to create “a fundamentally new future” for the energy sector, bringing with it the need to address the world’s growing power demand, integrate new technologies and find ways to deal with the obsolescence of older business models and the uncertainty of new ones.
Under three possible scenarios – a ‘digitally disrupted’, innovative and market-driven world; a world in which more ‘intelligent’ and sustainable models for low-carbon growth emerge; and “weaker and unsustainable economic growth with inward-looking policies” – the WEC offered the following predictions:
Global demand for electric power will double by 2060 while primary energy demand will slow and per capita energy demand will peak before 2030. Final energy consumption to 2060 was predicted to grow between 22 per cent and 46 per cent, while per capita energy demand under all scenarios was projected to peak at a maximum annual per capita usage of 1.9 TOE.
Electric power consumption is expected to reach between 25 and 28 per cent of final energy consumption by 2060, with investment in power generation capacity ranging between $35trn and $43trn.
Power generation capacity growth worldwide will be dominated by non-fossil fuels, driven by “phenomenal” growth in solar and wind power due to cost reductions for renewable technologies which could reach 70 per cent lower than current costs by 2060.
Solar and wind power are projected to reach 20-39 per cent of global power generation by 2060, with support from hydropower and nuclear capacity additions as well as various kinds of energy storage, and the largest growth seen in China, India, Europe, and North America.
Fossil fuel’s share of the global energy mix will fall to between 50 and 70 per cent by 2060, with coal peaking before 2020 in two of the WEC’s three scenarios and supplies falling to 724 MToE by 2060 in the third. Oil is set to peak in 2030 in two scenarios, at between 94 mb/d and 103 mb/d, and to plateau between 2040 and 2050 in the third.
The rate of natural gas growth “varies broadly” across the three scenarios, the WEC said.
Limiting global warming to a two-degree scenario will require “substantial infrastructure investments and systems integration”, the group warned, adding that “leaders are faced with important decisions in the context of high political, financial, technological, and social uncertainty about the future of energy”.
“The decisions taken in the next five to 10 years … will have profound effects on the development of the energy sector in the coming decades.”
Ged Davis, the WEC’s executive chair of scenarios, added: “It is clear that we are undergoing a Grand Transition, which will create a fundamentally new world for the energy industry. Historically people have talked about Peak Oil but now disruptive trends are leading energy experts to consider the implications of Peak Demand.”
These “key implications for the energy sector … will need to be carefully considered by leaders in boardrooms and staterooms,” he said.
Meanwhile, in an opening speech to the World Energy Congress, Khalid al Falih, Saudi Arabia’s minister of energy, industry and mines, said the world’s energy transformation “will not be linear” but that there will be “setbacks”, and that that the world will need to “skillfully navigate the uncharted waters of the energy transition.”
And Marie-Jose Nadeau, the WEC chair, said: “No company, no country, no consumer will be unaffected by the changes we are set to witness. We call this the grand energy transition. None of us can continue business as usual. Those we do not adapt will eventually lose.”
The full report is available here.