Electricity Could Beat Oil Sooner Than We Think

February 9, 2017 | 10:00
Image by David Falconer
Image by David Falconer
It’s notoriously hard to predict when a new technology will take off to disrupt the status quo. In 1943 Thomas Watson, CEO of IBM at the time, reputedly said the global market for computers would amount to ‘maybe five’.

The International Energy Agency knows all about that. Every year it publishes a forecast about the growth of renewable energy and every year it has it wrong. The annual forecasts - which are used to make decisions about long-term energy investments - consistently underestimate the growth of green tech. So much so that they have been accused of holding back the transition to a low-carbon energy system.

A new study by the Carbon Tracker Initiative seeks to remedy this with a simple and rather convincing maxim: Use the latest available data about the state of a technology as the basis of your predictive model. For example: if solar has been growing exponentially for decades, don’t plot your projections in a linear line.

Using this method the study’s authors have calculated the growth rates for solar PV and electric vehicle adoption. They estimate that solar power could supply 23% of global electricity generation in 2040 and 29% by 2050.

For EV the study predicts that price parity with internal combustion engine cars will be achieved as early as 2020. (More on this in the Elektor Energy section). That will be the point when electric driving really takes off. Already in 2025 the use of EVs will reduce oil demand by some two million barrels of oil per day (mdb). That’s roughly equivalent to  the surplus of oil that flooded the market in 2014 and 2015. The supply-demand balance shifted a mere 2% resulting in the oil price collapse that sent the industry scrambling. Once electric driving has lift-off oil will be faced with a decline in demand that will only progress over time.

Image by David Falcone [Public domain], via Wikimedia Commons
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