There’s a new era of power and energy being pushed hard by advances in technology.
Net-zero hopes are based on the fall in solar and wind power costs over the past few years. And it’s really happening. For example, a Saudi Arabian solar auction was won for $10.40 per MWh — making electricity generated this way cheaper than that produced by coal and natural gas.
In North America, a top priority is to reduce the stress put on the aging power grid. Most power and energy authorities – including the U.S. Department of Energy – believe renewable green sources of energy are the future for the planet.
And while great strides have taken place in the production of renewables, demand for energy is still lagging behind energy produced.
Yet, with the advances in renewable energies, some might say power and energy has entered into a new era.
This is clearly seen on several fronts such as the unstoppable political momentum behind action to counter climate change. President Joe Biden thinks doing it yesterday isn’t soon enough, while the generation of Greta Thunberg, the teenage Swedish climate activist, will soon make their voices heard at the polls.
Almost 70% of global emissions are covered by national net-zero commitments.
Additionally, the market is helping to push policy along, with trillions of dollars in environmental social and governance (ESG) funds encouraging companies to invest in the Green Revolution.
That said, supplying 7 billion people on this planet with power and energy is no small task.
Fortunately, this power and energy transformation is being driven at one end by the need to power a growing society in a way that makes sense for our environment.
At the other end, rapid change is happening all-around us, thanks to continuous progress in technologies for sourcing and storing energy from renewables such as solar, wind and hydrogen.
Even as the world shifts toward renewables, existing energy assets will continue to consume a massive amount of oil, which should result in a gradual shift in how capital is invested in different kinds of energy.
According to the IEA, 70% of global capital investments in energy supply have been in fossil fuels over the past 15 years. But looking forward, the IEA expects the balance to tip increasingly toward non-fossil fuels.
Between now and 2040, an estimated $44 trillion will be spent on energy supply, with 60% of that being spent on fossil fuels. That may not seem like a big shift, but that means a massive $17.6 trillion is set to be invested in renewables by 2040.
However, fossil fuels will not suddenly disappear. Analysts believe there will still be a big need for fossil fuels for transportation in 2040, particularly for aviation and moving freight. But these fossil fuels will be in the form of petrochemicals — chemical products made from petroleum.
These products will almost certainly be in much higher demand, as a more populous world will need more plastics, rubber, fertilizer, and dozens of other essential products.