Electricity demand will double until 2050

In their outlook experts anticipate that in many countries production costs for renewable energies will drop to the point that in the next five years wind and solar energy can compete directly with existing, conventional power plants. As a result, the report indicates a further acceleration of wind and photovoltaic construction.

Because the costs of batteries will continue to decline in next five to ten years, electric vehicles will become "more economic than internal combustion engine vehicles. This is true for passenger cars as well as for most truck segments." Consequently, McKinsey also sees the following general trends:

Global energy demand

According to McKinsey’s prognosis, after more than a century of rapid growth, global primary energy demand will plateau as of 2035 despite strong population expansion and economic growth.

Energy intensity will fall as service industries take up a larger share of the global economy, and end use segments continue to become more efficient. According to McKinsey more efficient technologies will become available in all sectors "driving down energy consumption even in large industrial countries like China."

However, McKinsey points out that there are regions where energy demand will continue to grow. While most OECD countries see a decline, demand in Africa and India will roughly double until 2050.

In its Global Energy Perspective McKinsey projects overall slower energy demand growth as compared with other long-term outlooks.

Electricity demand

Electrification across key end uses will lead to a doubling of electricity demand until 2050. McKinsey believes this can be attributed to increased demand in the building sector and developments in transport where electric vehicles will likely dominate.

And "Renewables will become cheaper than existing coal and gas in most regions by 2030. As a consequence, by 2035 nearly half of global total capacity will be in solar and wind, with China and India as the main contributors."

Furthermore, McKinsey projects that with the stronger role of intermittent resources (wind/solar) in total generation, power systems will see a strong demand for balancing needs (control energy). This will be the case when solar and wind energy combined reach a share of over 30% of total generation.

Gas demand

Gas is the only fossil fuel to grow in its share of global energy demand until 2035 albeit at declining growth rates. McKinsey experts point out that even considering substantial fluctuations, gas demand will remain robust within a +/-3 per cent range.

However, in the long term (post-2035) gas demand will decline driven by a decrease in demand in the electricity sector. This prognosis is valid for various gas price scenarios up to a price reduction of 50 per cent in comparison to today. This trend is driven by increasing competition from renewables.

Oil demand

Despite stable historical growth of more than 1% p.a., oil demand growth is projected to slow in the next decade. McKinsey forecasts that this will lead to a projected peak in demand in the early 2030s with a volume of 108 million barrels.

Based on a scenario with rapid electrification of the global vehicle fleet and a significant expansion of plastic recycling, the demand for oil products will reach half of today's level by 2050.

You will find more details on the study here and here