News | Headlines


‘Power consumption to triple by 2050’ – McKinsey report


Wordwide Energy trends McKinsey & Co has launched its 2022 ‘Global Energy Perspective’ report, an annual in-depth examination of the trends and issues facing the global energy industry, and offers a long-term view on its potential economic and environmental impacts. According to new research, the energy transition will continue to gather steam, with oil demand projected to peak in this decade, perhaps as soon as 2025.


The report finds that power consumption is expected to triple by 2050 as electrification and living standards grow, and that renewables will become the new baseload, accounting for 50% of the power mix by 2030.


This report launches when global energy markets are facing an unprecedented array of uncertainties, including the conflict in Ukraine. Nonetheless, the long-term transition to low-carbon energy systems continues to see strong momentum and, in several respects, acceleration. Leading up to COP26, a total of 64 countries, covering more than 89 % of global emissions, have pledged or are legislated to achieve net zero in the coming decades. To keep up with these net-zero ambitions, the global energy system may need to significantly accelerate its transformation. The report projects a rapid shift in the global energy mix, with the share of renewables in global power generation expected to double


in the next 15 years while total fossil fuel demand is projected to peak before 2030, depending on the scenario. However, even with current government commitments and forecasted technology trends, global warming is projected to exceed 1.7°C by 2100, and reaching a 1.5°C pathway is increasingly challenging.


Christer Tryggestad, a senior partner at McKinsey, commented: “In the past few years, we have certainly seen the energy transition pick up pace. Every year we’ve published this report, peak oil demand has moved closer. Under our middle scenario assumptions, oil demand could even peak in the next three to five years, primarily driven by electric-vehicle adoption.


“However, even if all countries with net zero commitments deliver on their aspirations, global warming is still expected to reach 1.7°C. To keep the 1.5°C pathway in sight, even more ambitious acceleration is needed.”


The report presents specific outlooks per fuel type such as natural gas, oil, coal, hydrogen and sustainable fuels, as well as a view on the role of CCUS in decarbonising the energy sector. Key findings include: ● Going forward, the global energy mix is projected to shift towards low-carbon solutions, with a particularly strong role for power, hydrogen and synfuels;


● Renewables are projected to grow 3x by 2050, accounting for 50% of power


generation globally already by 2030 and 80-90% by 2050;


● Hydrogen demand is expected to grow 4-6x by 2050, driven primarily by road transport, maritime, and aviation;


● Hydrogen and hydrogen-derived synfuels are expected to account for 10% of global final energy consumption by 2050;


● Rapid technological developments and supply chain optimisation have collectively halved the cost of solar, while wind costs have also fallen by almost one-third. As a result, 61% of new renewable capacity installation is already priced lower than fossil fuel alternatives. Battery costs have also fallen by nearly half in the past four years;


● Global oil demand is projected to peak in the next three to five years, primarily driven by EV uptake;


● By 2050, CCUS could grow more than 100-fold from an almost non-existent footprint today, with investment opportunities exceeding LNG markets today;


● Future growth in energy investments will almost entirely be driven by renewables and decarbonisation technologies;


● Despite net-zero commitments from governments and corporations, an 85% renewable power system by 2050, and the rapid update of EVs and decarbonisation technologies, global warming is projected to exceed 1.7 degrees.


European renewables prices rise 27.5% in a single year Europe Energy prices


European renewable Power Purchase Agreement prices have surged 8.1% quarter over quarter and 27.5% year on year, with the crisis in Ukraine the latest development in the deepening energy crisis according to LevelTen Energy’s ‘European Q1 2022 PPA Price Index’. Despite this uncertainty, demand for renewables has remained strong, leading to a shortage of projects for buyers. As the war in Ukraine further deepens Europe’s energy crisis, PPA prices have continued to climb for a fourth consecutive quarter. Year on year, European P25 solar and wind prices (the P25 Index is an aggregation of the lowest 25% of wind and solar PPA offers) have increased 27.5%, exacerbated by unusually high natural gas


6 | May 2022 | www.modernpowersystems.com


prices compounding existing regulatory challenges and supply chain constraints. Despite the dynamic conditions of the market, LevelTen Energy’s survey of leading sustainability advisories found that 55% of utility scale renewable energy buyer’s procurement timelines are unchanged, while 20% are accelerating theirs. This buyer appetite is quickly creating an imbalance between demand for renewables and supply, as developers struggle to match the pace of demand due to a combination of supply chain, interconnection and regulatory challenges. In Spain, more than 73 GW of solar projects are in the pipeline to be constructed, but only 18.6% have received appropriate permitting.


European governments, notably Germany


and Italy, have taken steps to streamline challenging permitting processes, but it will take time for these to be reflected in the market. Italian P25 solar prices increased by nearly 23% year on year, and German P25 solar PPA prices by 25% in a year. “We need to use every tool in our toolbox to enable PPAs to get done in order to help Europe shift to renewables faster,” said Flemming Sørensen, LevelTen Energy’s VP Europe. “We ... are working with buyers and developers on contract innovations to navigate this challenging landscape and still get PPAs done.” ● The Index series created by analysts LevelTen energy, analyses over 4000 wind and solar pricing offers listed on the LevelTen Marketplace across 21 countries in Europe and North America.


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45