Released October 31, 2022 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Long-term capital planning entails a number of risks and uncertainties, which tend to rise with the duration of the planning horizon. The farther one looks into the future, chances grow that plans will be scrambled by a "black swan" event, which is a low-probability, high-impact action, such as Russia's invasion of Ukraine earlier this year.
But as the International Energy Agency (IEA) (Paris, France) looked out to 2050 in its World Energy Outlook 2022 (WEO), released October 27, one thing is clear: Decarbonizing the global electric power industry will be enormously expensive.
For an overview of the WEO 2022 report, see October 28, 2022, article - IEA Sees Potential Shift Toward Lower-Carbon World Amid Energy Crisis.
The agency continued using scenarios found in last year's WEO report to assess how changes in governmental policies could affect the overall energy ecosystem. To recap, the scenarios are:
That trend will have to escalate dramatically over the next three decades if the world wants to avoid the worst impacts of global climate change, according to the IEA report.
Specifically, global capital investment in electric generation will have to rise from a recent annual average of about $806 billion per year to between $1.2 trillion to $2.1 trillion annually over the 2022-2050 period, depending on which scenario--SP, AP or NZE--one considers. The IEA, alarmed for years about the growth of carbon dioxide (CO2) emissions from the global energy sector, urged readers to adopt the more aggressive NZE scenario.
But sharply higher investments in electric generation is only part of the cost to decarbonize. As the world increasingly electrifies, and grows more reliant on renewable generation, numerous new transmission & distribution (T&D) projects also need to be built to transmit those green electrons from where they will be generated to where they will be used. Worldwide project spending on T&D systems will have to jump from an estimated $300 billion per year to between $550 billion and $830 billion each year until 2050, the energy agency calculated.
Electricity demand around the world could triple under the agency's most climate-aggressive scenario, NZE. But under all three scenarios, solar and wind generation rise sharply and unabated coal declines markedly. Nuclear and hydropower also rise to 2050 under all three scenarios.
Click on the image at right to see the IEA's projection of how the world's electric generation capacity will shift under three scenarios, at 2030 and 2050.
The IEA calculated the global investment needed in all segments of the Electric Power industry under two scenarios--SP and AP. The investment need under the more climate-aggressive NZE scenario was not provided, but it is sure to be higher than the other two scenarios. A significant portion of these investment needs are in emerging markets and developing economies, IEA estimated.
Photovoltaic (PV) solar generation is expected to account for a large and growing share of the electricity fuel mix. But increased reliance on PV has made some wonder if there is enough manufacturing capacity, and critical materials, to meet future demand.
Despite the IEA's expectation that global annual PV capacity additions will more than triple by 2030--from less than 200 gigawatts (GW) to more than 600 GW--the agency calculated that worldwide PV manufacturing capacity is expected to remain ahead of demand, assuming all proposed factories are built as planned. The agency also projected a surge in demand for PV-critical materials like copper, silicon and silver between 2021 and 2030.
Click on the image at right to see the IEA's projected worldwide additions to PV generation capacity, PV manufacturing capacity, and the availability of critical materials needed to manufacture PV generation.
The IEA then took a broader look forward at selected critical minerals that will be needed across the value chain to achieve a low-carbon electricity future. The agency embedded a number of critical assumptions in its estimate, specifically that battery storage is limited to utility‐scale and home energy storage and does not include demand for EV batteries. Also, copper demand excludes demand for EV motors and lithium demand excludes demand for EV batteries.
As national representatives prepare to gather in Sharm el-Sheikh, Egypt, in November for the 27th U.N. Congress of the Parties global climate change conference, this IEA report illustrates the scale, scope, and enormous cost of the challenge to decarbonize the world's electricity industry.
To its doubters, the IEA could point to the tens of billions of dollars in property damage around the world each year that can be traced to global climate change and say, "What about the cost of doing nothing?"
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
But as the International Energy Agency (IEA) (Paris, France) looked out to 2050 in its World Energy Outlook 2022 (WEO), released October 27, one thing is clear: Decarbonizing the global electric power industry will be enormously expensive.
For an overview of the WEO 2022 report, see October 28, 2022, article - IEA Sees Potential Shift Toward Lower-Carbon World Amid Energy Crisis.
The agency continued using scenarios found in last year's WEO report to assess how changes in governmental policies could affect the overall energy ecosystem. To recap, the scenarios are:
- Stated Policies Scenario (STEPS), which maps out a trajectory that reflects current policy settings, based on a detailed sector‐by‐sector assessment of what policies are actually in place or are under development by governments around the world.
- Announced Pledges Scenario (APS), which assumes that all long‐term emissions and energy access targets, including net zero commitments, will be met on time and in full, even where policies are not yet in place to deliver them.
- Net Zero Emissions by 2050 Scenario (NZE), which sets out a pathway for the global energy sector to achieve net zero carbon dioxide (CO2) emissions by 2050, updating the landmark IEA analysis first published in 2021. While the first two scenarios are exploratory, the NZE Scenario is normative, as it is designed to achieve the stated objective and shows a pathway to that goal.
That trend will have to escalate dramatically over the next three decades if the world wants to avoid the worst impacts of global climate change, according to the IEA report.
Specifically, global capital investment in electric generation will have to rise from a recent annual average of about $806 billion per year to between $1.2 trillion to $2.1 trillion annually over the 2022-2050 period, depending on which scenario--SP, AP or NZE--one considers. The IEA, alarmed for years about the growth of carbon dioxide (CO2) emissions from the global energy sector, urged readers to adopt the more aggressive NZE scenario.
But sharply higher investments in electric generation is only part of the cost to decarbonize. As the world increasingly electrifies, and grows more reliant on renewable generation, numerous new transmission & distribution (T&D) projects also need to be built to transmit those green electrons from where they will be generated to where they will be used. Worldwide project spending on T&D systems will have to jump from an estimated $300 billion per year to between $550 billion and $830 billion each year until 2050, the energy agency calculated.
Electricity demand around the world could triple under the agency's most climate-aggressive scenario, NZE. But under all three scenarios, solar and wind generation rise sharply and unabated coal declines markedly. Nuclear and hydropower also rise to 2050 under all three scenarios.
Click on the image at right to see the IEA's projection of how the world's electric generation capacity will shift under three scenarios, at 2030 and 2050. The IEA calculated the global investment needed in all segments of the Electric Power industry under two scenarios--SP and AP. The investment need under the more climate-aggressive NZE scenario was not provided, but it is sure to be higher than the other two scenarios. A significant portion of these investment needs are in emerging markets and developing economies, IEA estimated.
Photovoltaic (PV) solar generation is expected to account for a large and growing share of the electricity fuel mix. But increased reliance on PV has made some wonder if there is enough manufacturing capacity, and critical materials, to meet future demand.
Despite the IEA's expectation that global annual PV capacity additions will more than triple by 2030--from less than 200 gigawatts (GW) to more than 600 GW--the agency calculated that worldwide PV manufacturing capacity is expected to remain ahead of demand, assuming all proposed factories are built as planned. The agency also projected a surge in demand for PV-critical materials like copper, silicon and silver between 2021 and 2030.
Click on the image at right to see the IEA's projected worldwide additions to PV generation capacity, PV manufacturing capacity, and the availability of critical materials needed to manufacture PV generation.The IEA then took a broader look forward at selected critical minerals that will be needed across the value chain to achieve a low-carbon electricity future. The agency embedded a number of critical assumptions in its estimate, specifically that battery storage is limited to utility‐scale and home energy storage and does not include demand for EV batteries. Also, copper demand excludes demand for EV motors and lithium demand excludes demand for EV batteries.
As national representatives prepare to gather in Sharm el-Sheikh, Egypt, in November for the 27th U.N. Congress of the Parties global climate change conference, this IEA report illustrates the scale, scope, and enormous cost of the challenge to decarbonize the world's electricity industry.
To its doubters, the IEA could point to the tens of billions of dollars in property damage around the world each year that can be traced to global climate change and say, "What about the cost of doing nothing?"
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
