Rapid electrification and rise of wind and solar drive massive expansion, DNV GL finds

• Electrification of energy demand doubles: 45% in 2050 – 50% of all new cars in Europe are expected to be electrical vehicles in 2027. 80% of global electricity production will come from renewables.

• Major grid infrastructure growth: Total installed power line length and capacity will triple by 2050 to deliver a surge in electricity demand and address the dispersed nature of wind and solar.

• To speed up the transition regulators and politicians need to rethink electricity markets to provide additional flexibility including storage, demand-side response and interconnection capacity.

Rapid electrification of energy demand and the rise of energy from wind and solar sources will lead to massive growth of the world’s electricity transmission and distribution systems. This is one of the main conclusions of DNV GL’s Energy Transition Outlook 2018: Power Supply and Use report, which provides an outlook of the global energy landscape up to 2050.

The report forecasts continuing rapid electrification, with electricity’s share of the total energy demand expected to more than double to 45% in 2050. This is driven by substantial electrification in the transport, buildings, and manufacturing sectors. In the transport sector, the uptake of private electric vehicles (EVs) will continue to escalate rapidly, with 50% of all new cars sold in 2027 in Europe expected to be EVs.

The surge in global electricity production will be powered by renewable sources accounting for an estimated 80% of global electricity production in 2050. As the costs for wind and solar continue to fall, those two energy sources are set to meet most of the electricity demand, with solar PV delivering 40% of electricity generation and wind energy 29%.

The rapid electrification will lead to major expansion of electricity transmission and distribution systems both in the length and capacity of transmission lines. DNV GL predicts that the total installed power line length and capacity will more than triple by 2050.

The system operators’ tasks will become substantially more complex; yet there may well be less energy flowing across the networks, resulting in fixed costs becoming a greater part of the bill.

High fractions of solar and wind will create a need for increased use of market mechanisms and changes to the electricity market fundamentals in many countries. This requires major regulatory intervention. Market based price signals are crucial to incentivize innovation and develop economically efficient flexibility options.

Despite major expansion of high-capital-cost renewables and electricity networks, energy will become more affordable. It is predicted that the total cost of energy expenditure, as a share of global GDP, will fall from 5.5% to 3.1%, a drop by 44%. Absolute energy expenditure will still grow by 30% over the forecast period, to 6 Tn$/yr. DNV GL foresees a shift in costs, from operational expenditure, principally fuel, to capital expenditure. From 2030, more capital expenditures will go into electricity grids and wind and solar than into fossil-fuel projects.

Despite the positive outlook on the expansion of renewable energy and the electrification of key sectors, the energy transition will not be fast enough to meet global climate targets. In fact, DNV GL found that the first emission-free year will be 2090, if the energy transition continues at the pace predicted in its report.

“The Energy Transition Outlook has some very encouraging findings, and the good news is that the energy transition is achievable and affordable. However, the rapid transition we are predicting is still not fast enough to achieve the goal of the Paris Climate Agreement,” commented Ditlev Engel, CEO of DNV GL’s Energy business. “If we are to decarbonize the world’s energy system at the required speed, we need to adapt and automate our electricity grids, and regulators and politicians will need to re-think, re-shape and take major policy decisions about market models.”
The full Energy Transition Outlook ‘Power Supply and Use’ report is available for a free download at eto.dnvgl.com. This publication is part of DNV GL’s suite of Energy Transition Outlook reports

How is the Energy Transition Outlook derived?
DNV GL has designed a model of the world’s energy system encompassing demand and supply of energy globally, and the use and exchange of energy within and between ten world regions. The core of this is a system-dynamics feedback model. The model incorporates the entire energy system — from source to end use — and simulates how its components interact.

About DNV GL

DNV GL is a global quality assurance and risk management company. Driven by our purpose of safeguarding life, property and the environment, we enable our customers to advance the safety and sustainability of their business. We provide classification, technical assurance, software and independent expert advisory services to the maritime, oil & gas, power and renewables industries. We also provide certification and supply chain services to customers across a wide range of industries. Operating in more than 100 countries, our experts are dedicated to helping customers make the world safer, smarter and greener.

DNV GL in the power and renewables industry
DNV GL delivers world-renowned testing and advisory services to the energy value chain including renewables and energy management. Our expertise spans onshore and offshore wind power, solar, conventional generation, transmission and distribution, smart grids, and sustainable energy use, as well as energy markets and regulations. Our experts support customers around the globe in delivering a safe, reliable, efficient, and sustainable energy supply.

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