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Energy Mix Transitions: Looking Towards 2050

The worldwide evolution of energy systems represents a hallmark of modern times. This trend is expected to not just continue, but accelerate; car fuel, heating systems, and industry power sources in the coming decades are projecting drastic changes attributed to regulation and innovation.

Taking a look at the demand perspective, Global demand for energy is projected to peak around the year 2030, marking an end to over one hundred years of rapid growth and driven by the growth in the renewable energy industry in the energy mix. In recent years both, wind and solar, made up more than fifty percent of new power generation capacity. This growth is expected to accelerate, yet solar is projected to have much faster growth. By 2050 solar growth is expected to increase sixtyfold, with wind only growing at one fifth of that speed.

Major forces in energy transitions include rising incomes, declines in energy intensity (due to growth of service industries offsetting demand), electric vehicle sale expectation of 100 million

by 2035 (with more than 2 billion on the road by 2050), and a 85% increase by 2050 in Buildings-related electricity demand driven by higher living standards in non-OECD countries.

Meanwhile, Gas demand is expected to peak and then decline from 2035 on. This is mostly attributable to China’s gas demand growth which represents over half of demand growth and is larger than that of the next 10 largest growth countries. Oil and coal demand growth is going to slow down, with oil peaking in the early 2030s.

Keith Knutsson of Integrale Advisors commented, “Remaining on the frontier of energy supply & demand has defined the winners and losers of modern times; investors should remain vigilant on new opportunities, regardless of political stances.”

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