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DNV GL: world energy demand will peak in 2035 prompting a reshaping of energy investment due to rapid electrification and inherent efficiency

Global spending on energy, as proportion of economic output, is set to slow sharply because the world’s energy demand will decline from 2035 onwards, according to DNV GL’s Energy Transition Outlook. The historically significant change in energy needs is largely down to rapid electrification and its inherent efficiency.

DNV-GL-ETO-2018-timeline

The decarbonization of the energy mix will be reflected in investment trends with money spent on renewables set to triple by 2050, according to the report. Conversely, fossil fuel spending will drop by around a third. Overall, the rate of energy expenditure will slow to such a degree that by mid-century, as a percentage of GDP, the world will be spending 44% less than today.

However, the report cautions, the rapid transition will not be fast enough to meet a sub-2 ⁰C climate goal. A strong combination of several measures is the only way for the world to meet the ambitions of the Paris Agreement.

The attention of boardrooms and cabinets should be fixed on the dramatic energy transition that is unfolding. As money and policy increasingly favor gas and renewables, the rapidly electrifying energy system will deliver efficiency gains that outpace GDP and population growth. This will result in a world needing less energy within half a generation from now.

The transition is undeniable. Last year, more gigawatts of renewable energy were added than those from fossil fuels and this is reflected in where lenders are putting their money.

—Remi Eriksen, Group President and CEO of DNV GL

Fossil fuels will play an important if reduced role in the energy future with its share of the energy mix set to drop from around 80% today to 50% by the middle of the century, with the other half provided by renewables.

Natural gas will become the single largest source in 2026 and it will meet 25% of the world’s energy needs by 2050. Oil will peak in 2023 and coal has already peaked. Solar PV (16% of world energy supply) and wind (12%) will grow to become the most significant players among the renewable sources with both set to meet the majority of new electricity demand, according to the report.

The electrification trend is already enveloping the automotive industry. By 2027 half of new cars sold in Europe will be battery-powered and the same will be true five years later in China, India and North America. This will contribute to an overall reduction in the transport sector’s share of global energy demand from 27% to 20% by 2050.

The reduced requirement for energy will be reflected in investment with overall expenditure set to drop to 3.1% of global GDP from 5.5% today. As fossil fuels will have a smaller slice of a smaller pie, spending will fall by around a third to US$2.1 trillion. This will be offset by the tripling of both renewables (US$2.4 trillion) and grid expenditure (US$1.5 trillion).

The nature of the spending will also alter with wind and solar projects typically requiring greater upfront CAPEX and then less operating expenditure, the opposite to oil and gas.

DNV GL serves both the renewables and oil & gas industries; the Energy Transition Outlook is an impartial voice on the energy future. In its second year, the model has been refined further and has produced a more aggressive electrification forecast (45% of energy demand by carrier versus 40%) while the total energy demand is slightly higher (6%).

Comments

Engineer-Poet

Another misleading phrase:

Last year, more gigawatts of renewable energy were added than those from fossil fuels

No doubt he means nameplate ratings.  Actual generation for "renewables" is limited by their capacity factor where they are installed, which for PV rarely exceeds 20%.  Capacity factor for nuclear in the USA is in excess of 90%, so 1 GW of nuclear generates as much electricity as 4.5 GW or more of PV (and it takes a lot more than that in most places).

HarveyD

Developers are learning that wind farms have to use larger turbines installed on higher towers and located where good steady winds exist. A small wind farm installed on mountains adjacent to Murdochvill, QC reached 52% of name plate for 2017.

Large wind turbines installed on high towers on Hudson Bay, Ungava and Labrador shores could also reach above 40% of name plate and replace all CANDU NPPs, CPPs and NGPPs installed in Ontario. and more.

HarveyD

Water from 12 unharnessed rivers in the same area could produce enough clean hydro electricity to fill in during lower wind farms productivity.

The $150B to $250B CAN required to replace/refurbish the 19 CANDUs and Ontario CCPs/NGPPs could help to harness and transport the wind/hydro energy plantsmentioned above.

Calgarygary

Five years ago, anyone who predicted that oil consumption would peak in the early 2020's was dismissed as a foolish and out-of-touch environmentalist. Today, apparently serious and presumably conservative financial institutions like DNV GL predict oil consumption will peak within 5 years. Statements like these really show the pace of change is accelerating (even when it has been delayed considerably with depressed oil prices for past 2-3 years).

Engineer-Poet
Large wind turbines installed on high towers on Hudson Bay, Ungava and Labrador shores could also reach above 40% of name plate and replace all CANDU NPPs, CPPs and NGPPs installed in Ontario. and more.

ORLY?  You think they could keep the lights and heat going throughout Ontario regardless of weather... because of which wind turbines are notoriously fickle producers?

You've taken leave of your senses, Harvey.  And unless you've got proof that your hydro reservoirs are deep enough and receive enough rainfall to make up the difference, you have not come close to supporting your claim.

HarveyD

The current 27 large water reservoirs are overflowing at the rate of 11+ TWh/year with only 4 TWh of local wind energy installed.

The future 20+ large reservoirs + the existing 27 could complement another 50 to 100+ TWh of wind energy, when Hydro is used as fillers. The high quality of shores winds and wide geographic distribution would ensure better steady production. Many current hydro plants could be equipped with extra turbines to better use the excess water due to increasing rain falls.

The proposed Wind farms could be installed near or colocated with existing/new Hydro power plants. Very high voltage (up to 1,000,000 VAC) power lines (grid) could transport clean energy to Ontario, Quebec, NFld, NS, NB and a few Eastern States,

This approach is progressively being installed with a few new wind farms every 2 or 3 years and new Hydro plant every 5 to 8 years. The current (limiting) problem are cheap NGPPs in USA and aging CANDUs in Ontario.

The progressive arrival of 100,000,000+ electrified vehicles (of all sizes) in USA and Canada will justify those developments.

Engineer-Poet
The current 27 large water reservoirs are overflowing at the rate of 11+ TWh/year with only 4 TWh of local wind energy installed.

Net Ontario electric consumption in 2017:  132.1 TWh, a dozen times the hydro figure you claim and 33 times the wind figure.  Storable hydro is no doubt much less than total generation.

I don't know what's more pathetic:  that you can't even be bothered to look such easily-discovered figures up for comparison, or that you believe obvious disinformation.

HarveyD

New Quebec Hydro plants + potential 100 TWh wind farms (in Ontario & Quebec) could produce a major portion of the 132 TWh required by Ontario. Of course Ontario could-would have to progressively phase out the 19 CANDUs and CPPs. Their NGPPs and newer NPPs could be retained as fillers.

There is nothing pathetic about progressively using more REs (with on and off shore Winds in this case and/or solar in other sunny places) complemented by new and existing Hydro to progressively and selectively replace older CANDUs, polluting CPPs and eventually NGPPs.

Where Hydro potential does not exist, NGPPs and NPPs could be used to complement REs.

Engineer-Poet

Harvey, are you a paid shill for the natural gas and oil industries?

Even if your scheme could be implemented, it would be a huge step backwards even if only the electric grid is considered; you'd be far more dependent on natural gas and have much more emissions than currently.  Further, you have no path forward to de-carbonize transport, industry or home heating.

Once you understand all the diversions, evasions and lies, you know that renewables are a scam.  Nuclear is the only thing which has ever de-carbonized a fossil-fired electric grid, and it's the only thing that can.

HarveyD

E-P, are you a paid promoter of nuclear energy?

If you are, you could (maybe) promote the use of smaller, much lower cost, mass produced, transportable NPPs? The latest larger NPPs have huge cost overruns and very few countries can really afford them. The total delivered energy cost is close to $0.25/kWh and will probably reach $0.30/kWh by 2020/2025. That will be close to 10 times more than clean REs.

Regardless of what we think or say, many countries (and/or States) will use (by 2045/2050 or so) up to and over 50% clean REs (with storage) for e-energy including the e-energy required for HVAC, lighting, electrolyzers, FCEVs and EVs. The use of bio/fossil fuels will be progressively restricted and/or banned.

NB: Our new GREE (made in China) very high efficiency heat pumps are doing very well. Anxious to see how they will perform at -30C.

Engineer-Poet

Apparently Typepad hates my reply.  I can't find any trigger words in it, so I guess I have to post in pieces to find out what's new on the verboten list:

E-P, are you a paid promoter of nuclear energy?

I wish.  I could use the money.  But I'll do what's right anyway.  France's 58 gCO2/kWh is right.  "Green" Germany's 560 gCO2/kWh is wrong.

you could (maybe) promote the use of smaller, much lower cost, mass produced, transportable NPPs? The latest larger NPPs have huge cost overruns and very few countries can really afford them.

Harvey, you may have overlooked the little catch that no such thing is even available for pre-order yet.  OTOH there ARE several AP1000s in commercial operation.  They may be in China, but the reason ours are having trouble is political, not technical.

Or maybe you didn't overlook it.  Talking about some as-yet-unavailable nuclear technology as "the solution" as long as it remains unavailable is a stock anti-nuke tactic.

Engineer-Poet

One thing is for certain.  Emulating role models which have achieved dismal results is no way to solve a problem, but that's exactly what you advise.

Regardless of what we think or say, many countries (and/or States) will use (by 2045/2050 or so) up to and over 50% clean REs (with storage) for e-energy including the e-energy required for HVAC, lighting, electrolyzers, FCEVs and EVs.

This is not going to happen, Harvey.  When the availability of the energy runs opposite to the need for it (like solar anywhere north of about 40 degrees) it becomes prohibitively expensive to create technological substitutes for the attributes that nature provides for free with "non-green" energy sources.  And because money is a proxy for resources (including energy), you are going to run out of energy trying.

Engineer-Poet

Man, that one last sentence triggers the living daylights out of SOMETHING no matter how it's rephrased.

gryf

I worked at Southern Company in the 1970s when Vogtle 1 was being constructed and it had cost overruns even then (costing $10 Billion at that time) and needed help with low cost loans from MEAG and Oglethorpe Power. I don't think it was political because Duke Power was building Nuclear Power Plants for $4 Billion. Also, the AP1000 in China had cost overruns as well so design must be a factor.
I still believe Nuclear Power has an important role if we are going to meet these electrification goals, however costs must come down. I have always thought that the size of the large power plants is a key factor in these cost overruns and in safety issues.
The record of the US Navy is a good example both in scale and standardization of reactor design, I only wish they would follow the French Navy and use LEU fuels or revisit the Shippingport Light Water Breeder.
Maybe now that Electric Utilities are able to manage Distributed Electric Power Generation they will forget about 1000 Megawatt Nuclear Power Plants and focus more on Small Modular Reactors.

Engineer-Poet
Also, the AP1000 in China had cost overruns as well so design must be a factor.
Inevitable.  The first-of-a-kind build is when the oversights in design are discovered.  The Chinese also put construction on hold for a while after Fukushima; the enforced idleness drove up costs.

Neither of these things will be a problem again.

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