Solar photovoltaics will be in an “unassailable position” as the cheapest source of new electricity by 2050.
This, according to DNV, one of the biggest global risk management firms in the world which delivered more than $2.3 billion in revenue last year.
In its latest energy outlook, DNV provided an exceptionally thorough analysis on the transition of the global energy economy.
Here are some highlights …
High energy prices and a greater focus on energy security due to the war in Ukraine will not slow the long-term transition.
- Europe aims to accelerate its renewables build-out to achieve energy security.
- In the rest of the world, tackling high energy and food prices may shift decarbonization down the list of priorities in the short term.
- The long-term influence of the war on the pace of the energy transition is low compared with main long-term drivers of change: plunging renewables costs, electrification, and rising carbon prices
Electricity remains the mainstay of the transition; it is growing and greening everywhere.
- With an 83% share of the electricity system in 2050, renewables are squeezing the fossil share of the overall energy mix to just below the 50% mark in 2050.
- Despite short-term raw material cost challenges, the capacity growth of solar and wind is unstoppable: by 2050 they will have grown 20-fold and 10-fold, respectively.
- Hydrogen only supplies 5% of global energy demand in 2050.
- Pure hydrogen use scales in manufacturing from the early 2030s and in derivative form (ammonia, e-methanol and other e-fuels) in heavy transport from the late 2030s.
- Green hydrogen from dedicated renewables and from the grid will become dominant over time; blue hydrogen and blue ammonia retain important roles in the long term.
If you have the time, I highly recommend reading the entire report. There’s a lot of good stuff in it. Check it out: https://www.dnv.com/energy-transition-outlook/download.html
One thing to note is that the continued and rapid proliferation of renewable energy is primarily the result of massive decreases in manufacturing and installation costs. Had the renewable energy industry not been able to drastically reduce these costs the way it did, none of this would be happening right now.
And these cost reductions continue to happen.
In fact, last week we got a look at a new report by Lumen Energy Strategy for the California Public Utilities Commission. The highlight of that report?
California’s energy storage portfolio could yield net grid benefits of up to $1.6 billion a year now that the state is looking to expand its grid-scale battery installations.
Folks, the only reason the state could see a net benefit of $1.6 billion is because over the past ten years, the cost to produce and install these grid-scale batteries has plummeted.
Utilities are’t installing these things at a record pace for fun.
These are well-calculated, strategic decisions that reward shareholders. And that’s all it ever really boils down to.