Solar and wind power will dominate the global energy market at the end of the decade as they become cheaper to install than the operational costs of fossil fuel facilities, according to a report published by management consultancy McKinsey & Company.
The 2021 Global Energy Perspective study predicts solar and wind power plants will make up almost half the world’s power generation capacity by 2035 and cites the cost competitiveness of renewables-powered green hydrogen by 2030 as another game changer for the energy transition.
With global coal-fired power demand having already peaked, according to the report, the high point for oil will be hit in 2029 and for gas, in 2037, McKinsey predicted. That would add up to the world’s thirst for all fossil fuels combined peaking in 2027.
The McKinsey report considers four future energy scenarios and, under its business-as-usual reference case, predicts the world is currently “significantly off of the 1.5C [degrees Celsius] pathway,” in terms of the maximum desired level of global heating. To keep global temperature rises to no more than 1.5C this century would require carbon emissions to halve this decade and to fall 85% by mid century, according to the study, which expects the world to burn through its 2100 carbon budget in the “early 2030s.”
In addition to the gloomy reference case, the study posits two positive future outlooks: one consistent with a 1.5C global heating pathway and a more ambitious scenario in which 10 existing trends, such as the move to electric vehicles, are accelerated. The final, worst-case outlook is predicated on the world’s policymakers prioritizing an economic recovery from Covid-19 to the detriment of energy transition-driven legislation.
The impact of Covid-19 is estimated to have hit global energy demand to the extent a recovery could take 1-4 years, according to the McKinsey report, with electricity and gas demand bouncing back faster than oil.
However, the report considers the continuation of pre-pandemic trends such as reduced car ownership to be a more influential driver of the energy transition than the impact of the world health crisis.
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My prediction – this will happen a lot sooner than McKinsey is predicting.
When you say it WILL be cheaper it is an incomplete analysis because you are NOT taking into account ALL the numbers. Some of them are both direct (federal subsidies – 5X great than solar) and indirect costs (environmental, effect on peoples’ health and health care costs), costs of clearing up dirty plants, cost of cleaning up waste from plants into water and soil, among others. You have to count ALL the numbers or the analysis is simply inaccurate and misleading. Renewables, if you count all the numbers, was cheaper at least 10 years ago. I was an equity analyst and investment banker on Wall Street and if one of my employees came in and told me a company’s numbers were great and DID NOT show me the Free Cash Flow (the only number that is very difficult to change to improve the numbers) I would explain it to them and if they did it again – they would be let go. Use all the numbers – or stop pretending you know what you are talking about. You are incorrectly painting a picture of the present to destroy the future, whether or purpose or not – it is ALL the same.
The economics of solar and wind don’t lie. These are sources of energy that are becoming more and more affordable, all the while fossil fuel resources are becoming scarcer and scarcer. These factors converge to tell a reality we have all been expecting: a future built on renewable energy.
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