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BCG report finds advanced biofuels, concentrated solar power, and solar photovoltaic tracking to make significant market impact sooner than commonly assumed

BCG’s analysis finds that cellulosic ethanol is on the verge of becoming cost-competitive with gasoline at $3/gal US. Click to enlarge.

Advanced biofuels, concentrated solar power (CSP), and solar photovoltaic power (PV) will see accelerating adoption and growth and are on track to change the global energy mix far earlier than is often assumed, according to a new report from The Boston Consulting Group (BCG). The costs of these alternative energy technologies are falling rapidly, and they are on the path to becoming cost-competitive within the next five to ten years, if not sooner.

The report, “What’s Next for Alternative Energy?,” also sees steady adoption of on-shore wind and electric vehicle technologies, but suggests that off-shore wind and carbon capture and sequestration look likely to fade or decline. The report examines the state of those seven technologies and assesses each in terms of three issues:

  • Can it achieve cost-competitiveness with conventional energy by 2020 and be economically viable without subsidies?
  • Can it overcome barriers to rapid adoption once cost-competitive?
  • Can it reach penetration levels by 2025 that disrupt the status quo?

The fortunes of alternative energy have historically waxed and waned with the price levels of oil, gas, and other energy sources, rising when prices are high only to fall once they retreat. For the most part, the focus has been on the technical feasibility of various technologies, required subsidies, or need for carbon prices to make those technologies viable. We believe, however, that this time is different. The debate is moving to when and how—not whether—alternative energy can move beyond the realm of subsidies to compete with conventional energy sources. For some alternative-energy industries—CCS and off shore wind, for example—real competitiveness is still a distant probability. For others, that reality could be a lot closer than is commonly assumed.

—“What’s Next for Alternative Energy?”

The high level findings include:

  • Advanced biofuels are moving rapidly down the cost curve and are on a path to becoming cost competitive in the next few years. Once they are cost competitive, advanced biofuels will face several structural barriers to rapid adoption, the biggest of which is likely to be the vast investments needed to build the necessary conversion capacities and other infrastructure.

    If these barriers can be overcome, advanced biofuels could significantly disrupt the status quo in fuel markets.

  • Bcgev
    Base case economics for EVs in North America are very challenging, absent significant disruption in oil price or battery cost. Click to enlarge.
    Electric vehicles (EVs) will become economically attractive for lead market segments by 2020, but broader adoption will require major declines in battery costs.

    EVs are likely to achieve a 5 to 10% share of new-vehicle sales by 2020; however, under aggressive assumptions regarding battery cost declines or fuel prices, EVs could become economically attractive to more than 20% of some vehicle segments. However, even with higher adoption rates, EVs are unlikely to become a material part of the vehicle fleet in the coming decade, because fleet turnover is slow.

    If there is insufficient low-carbon power-generation infrastructure, EVs will struggle to be seen as a solution for reducing carbon emissions significantly.

  • CSP is also moving quickly down the cost curve and could become competitive with conventional generation sources in lead markets even in the next five to ten years. By 2020, CSP could provide power at $0.10 or less per kilowatt-hour and be competitive with conventional energy sources.

    Coupled with the ability to utilize thermal storage to provide on-demand power, CSP is a likely candidate to disrupt the status quo in power generation by 2025 if major barriers, such as limitations in transmission infrastructure, can be overcome.

  • Solar PV’s costs are also declining rapidly, and the technology will see accelerated adoption; on-shore wind, already cost competitive in many instances, will see steady adoption.

    Without breakthrough declines in energy storage costs, however, inherent challenges posed by the intermittent nature of these technologies will limit their combined penetration to no more than approximately 25% of the total power-generation mix. Even at these levels, these technologies could have disruptive effects on the status quo.

  • Off-shore wind will struggle to move beyond purely subsidy-driven growth or to reach economic viability on its own before 2020. Its growth will be limited to a few regions or countries hat are committed to meeting aggressive carbon-reduction targets but have few other renewable resources.

  • Cleaner coal through carbon capture and sequestration will have very slow adoption and won’t be viable for the next decade or two. However, the technology is vital for cutting global carbon emissions from the vast existing and rapidly growing global coal-fired power-generation fleet and for addressing the energy security concerns of countries such as China.

    There are a number of reasons why it will develop slowly, including the technology’s slow progress toward demonstrating large-scale viability and moving down the cost curve.

The report concludes with a discussion of the implications of these findings for oil and gas companies, utilities and power producers, emerging alternative-energy pure-play companies, industrial suppliers, and governments.



Roger Pham

That's what I've been stating all along in the past several years. However, the cost of fossil energy is not fixed, but will come down, way down, with more replacement from renewable energy. This will put a brake on the continual advancement of renewable energy, and will stall all renewable energy incentives and efforts.

Yet, we desperately need renewable energy development for job creation and environmental sustainability. Therefore, the government will need to play a major role in insuring that the prices of fossil energy will not come down from the present. Better yet, to insure a slow but steady rise in the cost of fossil energy yearly in order to spur PRIVATE investment in renewable energy development. The rise in fossil energy prices will be slow so as not to create additional burden in the economy...yet, due to the large PRIVATE investment on alternative energy infrastructures, this will cause an ECONOMIC BOOM that will solve most of the global economic woes today. Jobs will be created, tax base will increase, budget deficits will be more economic losses from oil spills and other polluting spills...and the future will be bright for humanity.

Henry Gibson

The US should immediately build many coal to liquid fuels factories to created many more jobs and to reduce the expenditures on oil imports. There is sufficient coal for hundreds of years and the factories can be designed to use hydrogen generated from surplus nuclear power at first as well as thermochemical hydrogen and natural gas when it is cheap. A permanent duty on imported oil of at least $35 would make the facilities always profitable and not increase the present price of liquid fuels and immediatly provide funds for the building of the facilities. The price of fuel would not increase because the fuel can be made far cheaper from coal than from crude oil at present prices for coal and crude oil. Gas from landfills and gas created from wastes delivered to landfills can be used also to create liquid fuels or waste biomass can be used alongside the coal.

There is no reason for the US or any other country with coal and some without to use crude oil for fuel when coal is one fourth the price or less. Many spills of oil into water would be eliminated.

Carbon capture and use in oilfields to increase production reduces the release of CO2 in the making of gasoline or diesel to below that of production from crude oil, and it is likely that even without CO2 capture, there would be less CO2 release because of better and more local control of the production processes and less requirement for transportation.

Nuclear heat and power can be used in the mining and other processes in the production of liquid fuels from Coal to further reduce the CO2 release in addition to the Coal that is not burned for electric production can be used for fuel production with much less loss. Nuclear heat is far cheaper than coal heat or any other kind of heat including solar because of the cost of the land and the collectors. ..HG..


Lots of things we COULD do, but will we have the capital to DO them? After a $3 trillion hole blown out of the economy with sub prime insanity, we do not have what it takes to do a lot of these things. Reality bites.

Henry Gibson

People are still paying large sums of money for gasoline and this money is immediatly available, and an import duty on petroleum will also make money available. The money that is paid for the duty will pay for the interest on the money needed to build the factories and the the factories will begin to pay back their loans in a year or so and the money will not be going outside the country. The import duty will also make more local oil available.

Within a few months, the factory in North Dakota that makes ammonia and natural gas out of coal can also start making methanol or even ethanol, and when natural gas is cheap, it can also make methanol out of natural gas. The combined efforts of two CSIRO researchers could even make home methanol production from natural gas possible.

Just by feeding compressed natural gas or propane into the input airstream of many automobiles, the gasoline fuel use of the engine can be reduced. A simple valve connected to the accelerator pedal might work or the injector pulsed monitored for opening the valve when the car is not idling. No complicated system is needed to save some liquid fuel.

Also lead acid batteries are cheaper now than $400 per kWh. One Kwh gives a distance of 5 miles in a Prius. The EFFPOWER battery can give brief high power and any deepcycle lead battery can store energy cheaply. Atraverda might be getting ready to produce a higher energy density version that would also eliminate the need for a high power battery for acceleration. FIREFLY wasted their time trying to get someone to buy their technolgy rather than just making and selling any battery to anyone that wanted them with either their long lived positive grid or their low sulphation negative foam or both. Range extenders will work with any size battery five miles or fifty miles. I only need a five mile battery. ..HG..


The free market world will find a way to create another $5T bubble before 2030. Could it be for 2029? The build up leading to the next bubble may very be related to energy and ground transportation. In principle, the $xxT used to import crude oil during the last few decades may find ways to come back as investments in multi trillion dollars energy and ground transportation projects.

Many of those projects will attract many million small investors. When the bubble has been inflated enough, it will burst again. Public B$$$ will ounce more come to the rescue of banks and large investors. Small investors will lose again. Ounce again, many will take a step down to lower middle class.

How many cycles and bubbles can we have before 1929+ is replayed?
Can we erect effective protection walls. It is doubtful that the interested groups would allow it.


CSP will be cost competitive with conventional power generation in the not to distant future. CSP is a low tech clean solution to the global energy problem.

No nuclear waste, no carbon sequestration, no depletion of scarce resources etc. are some of the reasons why such low tech solutions will ultimately win out in the market.


CSP will be cost competitive with conventional power generation in the not to distant future.

I came across this a few months ago;


At $2 per watt installed, the new CSP they are planning for the California desert is a good investment. Considering they can sell their power at a premium for all the air conditioners in the summer, they should do well.

Donough Shanahan

Despite so called 'cost competitiveness' at this time or soon the IEA still suggest that solar will only account for 10% of world energy production in 2050. And how can they say that onshore wind already cost competitive while also saying that it needs storage to penetrate? If it does not penetrate, it is not cost competitive. Maybe they should read E.on's reports on wind energy.


In the real world, Solar power needs more hours of energy storage and/or back up capacity than Wind. Both are predictable enough to allow the use of Hydro and/or NG power plants as back up.

There are many very good quality wind (on shore) areas. The Labrador and Hudson Bay coastal areas are good examples. Those two very large areas have a very high potential. Being close to very large existing and future hydro power plants, the water reservoirs make excellent back up. Hydro power plants can be turned on and off very quickly on an as required basis. Unused water can be stored or be allowed to overflow when reservoirs or full. Ultra high voltage (735 Kilo-Volts) power lines are nearby and their capacity could easily be doubled.

The potential wind capacity in that area is close to 80,000 megawatts. (that's equivalent to 80 large nuclear plants of 640 mini one) The production factor is over 50% when appropriate turbines and control systems are selected.

The existing 40,000+ megawatts of hydro power in the same area could be doubled to 80,000 megawatts in the next 20-30 years.

The surplus clean sustainable power could be enough for all(6) Provinces east of Manitoba and/or many North Eastern States.

Long term (25+ year) contracts would be required to finance the very high initial cost ($125 to $250 B) over 25 years or about $5B to $10B a year.


Roger and Henry,
The increase in renewables will likely produce a positive feedback loop which will cause reduced production of fosil fuels. The costs and risks of digging coal or exploring for new oil become less tennable once competitive alternatives are available with predictable investment and returns. So, oil and coal may come down in price if it is from existing wells (they will sell what they can at market prices), but new production will not come online.

Also, I did not see anything about CHP. Distributed production, transition to DC, re recylcling of batteries from cars to home storage will change things in ways not yet predictable.


A VERY interesting, positive report. JMartin has a good point with regard to lowered ROI expectations as alternatives come online. These alternatives will include wind, solar, biofuels, geotherm AND new nuclear, CSP, CTL, AND Combined Heat and Power where there are existing NG connections.

This portfolio of new energy systems, plus a stabilizing imported oil tariff (to slow escalate imported oil cost) - would provide a solid foundation for new energy investment.

The primary goals would be:

1) ECONOMY - immediately reduce the volume of imported petroleum and reallocate those funds to domestic, sustainable energy production.

2) Implement the full portfolio of alternatives in geographic advantageous areas. i.e. CHP/distributed in colder climates, CSP in deserts, hydro, wind, geotherm, biofuels, etc. - where it makes most economic sense.

3) Reduce the national grid foot print by replacing outdated power lines and coal-fired plants with Residential Power Units (CHP)and geographically tuned alternatives.

NOTE: The Report says: "off-shore wind and carbon capture and sequestration look likely to fade or decline." Accurate simply from the economic perspective. Any off-shore energy project will be far too costly for a reasonable ROI in the face of so many alternatives.


If 10% is solar and 10% wind in 40 years, that can take the edge off of increased fossil fuel consumption due to population increases and developing countries. Every little bit helps and if it is cost effective it actually might happen.


Guys, take a look at
This is a real time breakdown in English of Spain´s consumption and generation split into generation types. At this moment the installed capacity of 1900 MW wind power is supplying 8000 MW which is about 22% of demand. A look back at the last week shows wind supplying between 20 and 50% of demand continuously. Also shown is the "special regime" which includes solar generation. Also listed is hydro electricity production. Together it would appear that far more than 25% of demand can already be provided by renewables right now, not in another forty years. (another report shows that over the last year Spain generated about 39% of it´s power from renewables.) The charts show that the system has a flexible hydro system which also incorporates pumped storage and the system is interconnected with four other national systems; what is not so obvious is the shrinkage of coal based generation over the last few years. Although in U.S terms the system is not particularly big it does show that integrating renewables to carry a major part of the load is already possible.

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