11.07.2019 | McKinsey's outlook on global energy perspectives
Electricity demand will double until 2050
Energy systems around the world are going through rapid transitions that will bring important changes to the way we fuel our cars, heat our homes, and power our industries. The consulting company McKinsey expects electricity demand to double until the year 2050. Renewables will make up over 50 per cent of generation as of 2035.
The outlook is based on contributions from hundreds of experts from around the world in fields such as oil, gas, renewable energies, etc. McKinsey states that overall trends and developments across 146 countries, 30 sectors and 55 energy types were considered in the Global Energy Perspective 2019.
«The number of electric vehicles sold will increase by a factor of 60 between 2018 and 2050»McKinsey, Global Energy Perspective 2019
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.
CO2 emissions
According to McKinsey, global carbon emissions will peak in 2024 and fall by 20 per cent by 2050 in comparison to levels in 2016. The main driver is the reduction of coal demand in China and in the area of power production.
However, McKinsey concludes the world will not achieve the goal set to reduce CO2 emissions (see graphic) "A 1.5-degree or even 2-degree scenario remains far away."
