Dive Brief:
- The global energy mix will shift over the next 35 years to include a higher proportion of renewable energy, according to oil company BP’s 2015 Technology Outlook.
- Higher penetration levels of renewable in the energy mix will, in part, be driven by falling costs with solar power in particular falling as low as $0.21/watt by 2040.
- The biggest cost reductions for renewable power will come from advances in storage and integration technologies, such as stationary energy storage which could decline from $1,600/kWh to $260/kWh by 2040, according to the BP report.
Dive Insight
BP’s Technology Outlook for 2015 sees renewable forms of energy making continued inroads into the global energy mix over the next 35 years.
The report, which draws on data from both the International Energy Agency and Bloomberg New Energy Finance (BNEF), sees renewables moving from a current level of 3% of primary world energy to about 8% by 2035.
The oil company’s report sees a continuing role for hydrocarbons in meeting the world’s energy needs, driven by its estimate that energy consumption will grow by around 37% over the next two decades. An estimated 96% of that growth will come from less developed countries, in particular China and India, according to the authors. But that growth in demand will come at a cost; it could raise carbon dioxide emissions by 25% in the same time frame.
In that climate, political and cultural factors will continue to favor the adoption of both solar and wind power.
Citing work by BNEF, the report estimates that the cost of solar will fall by around 24% with the price of a solar module reaching as low as $0.21/watt by 2040. And, based on the current pace of innovation, BP also sees solar panels breaking through the 30% efficiency rate between 2030 and 2040.
As BNEF points out, while the major changes in the costs for solar and wind power over the past 10 years have come from advances in photovoltaic and turbine technology, the major drivers of cost declines over the next 40 years are likely to come from advances in energy storage and integration technologies. BNEF expects the average cost of residential stationary energy storage systems to fall from $1,600/kWh in 2015 to below $1,000/kWh in 2020 and to $260/kWh in 2040.
Some people may be wary that an oil company could provide an accurate timeline for the successful development of alternatives to fossil fuels, but it would not be the first time it happened.
In the 1980s, an Exxon report accurately predicted that solar power would become economic by 2012-2013. At the time, that was a long way off for Exxon. The author, Peter Eisenberger, who left Exxon in 1989 and is now a professor of earth and environmental sciences at Columbia University, advised Exxon to sell its solar assets. Exxon followed that advice, and Eisenberger went on to found Global Thermostat, a company that pulls CO2 from the air to sell it for industrial processes.