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IEA predicts rapid transfer to electric cars and cheaper renewable energy

Headline news

As a result of major transformations in the global energy system that take place over the next decades, renewable energy sources and natural gas are the big winners in the race to meet energy demand growth until 2040, according to the latest edition of the World Energy Outlook, the International Energy Agency's flagship publication that was released on 16th November.

A rapid growth in the take up of electric vehicles, and significant reductions in the cost of renewable energy, especially solar PV (photo voltaic), are forecast for the coming decades. Coal consumption barely grows in the next 25 years, as demand in China starts to fall back thanks to efforts to fight air pollution and diversify the fuel mix.

The gas market is also changing, with the share of Liquefied Natural Gas (LNG) overtaking pipelines and growing to more than half of the global long-distance gas trade, up from a quarter in 2000.

Those are the key headlines. Here we provide just some of the detail from the IEA forecasts for electric vehicles and renewable energy.

Electric vehicles ready to move

The projected rise of electricity consumption in road transport is emblematic of the broader trend, as electric cars gain consumer appeal, more models appear on the market and the cost gap with conventional vehicles continues to narrow. The worldwide stock of electric cars reached 1.3 million in 2015, a near-doubling on 2014 levels. In the IEA's main scenario, this figure rises to more than 30 million by 2025 and exceeds 150 million in 2040, reducing 2040 oil demand by around 1.3 million barrels per day.

Although battery costs continue to fall, supportive policies - which are far from universal for the moment - are still critical to encourage more consumers to choose electric over conventional vehicles. If these policies, including tighter fuel-economy and emissions regulations as well as financial incentives, become stronger and more widespread, the effect is to have some 715 million electric cars on the road by 2040, displacing 6 million barrels per day of oil demand.

Renewables break free

The electricity sector is the focus of many pledges for the 2015 Paris Agreement (to limit global average temperature rise to "well below 2degC") ratified during October/November. Nearly 60% of all new power generation capacity to 2040 in the IEA's main scenario comes from renewables and, by 2040, the majority of renewables-based generation is competitive without any subsidies. Rapid deployment brings lower costs: solar PV is expected to see its average cost cut by a further 40-70% by 2040 and onshore wind by an additional 10-25%.

Subsidies per unit of new solar PV in China drop by three-quarters by 2025 and solar projects in India are competitive without any support well before 2030. Subsidies to renewables are around $150 billion today, some 80% of which are directed to the power sector, 18% to transport and around 1% to heat. With declining costs and an anticipated rise in end-user electricity prices, by the 2030s global subsidies to renewables are on a declining trend from a peak of $240 billion.

Renewables also gain ground in providing heat, the largest component of global energy service demand, meeting half of the growth to 2040. This is mainly in the form of bioenergy for industrial heat in emerging economies in Asia; and solar thermal applications for water heating, already an established choice in many countries, including China, South Africa, Israel and Turkey.

The World Energy Outlook report can be found on the IEA website www.iea.org.

November 2016

Businesses can bridge UK electricity capacity gap by 2020 says new report

Manufacturing sites, hospitals and retail stores could provide the equivalent electricity supply of 6 new power stations and address the UK's electricity capacity concerns, says a new report from the Association for Decentralised Energy (ADE) during July.

The new report says that up to 16% of the UK's peak electricity requirement, or 9.8 gigawatts, could be provided by businesses through flexing their electricity demand and making better use of onsite generation.

One part of the solution is to engage energy users to manage their energy use and onsite generation to help the electricity system in return for payments, known as demand side response. By turning down demand instead of increasing supply, and by employing more local, efficient generation, demand-side response reduces emissions and helps the UK meet its carbon targets.

This potential for demand-side response would represent a nearly 10-fold increase and shows the scale of support that business energy customers could provide to help fill the gap in keeping the nation's electricity supply and demand in balance.

As old power stations shut down and new renewable generation like wind and solar are not always available (until better electricity storage technologies are developed) the ability for the nation's electricity supply industry to keep the lights on by 2020 is a cause for concern, but the report shows there are solutions.

The full from ADE report can be downloaded here: Bringing Energy Together - ADE report (external link to pdf, opens in new window)

July 2016

Whitehall changes on energy and the environment

Following the change of Prime Minister from David Cameron to Theresa May, the government has dissolved DECC and merged the department with BIS to create an expanded department of business, energy and industrial strategy. A DECC spokesperson was reported as saying the new department would retain all of DECC's responsibilities, including the climate change portfolio.

Greg Clark had been appointed as business, energy and industrial strategy secretary. The new Secretary of State at Defra is Andrea Leadsom.

July 2016

Other relevant news websites

  • GOV.UK - news announcements from all Government Departments

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1. Management of oursouthwest. From 1999 - 2010 this website was originally managed by Phil Harding whilst a Senior Policy Adviser (climate change, resource efficiency and sustainable development) at the Government Office for the South West (GOSW) in Bristol (UK). GOSW closed in 2011 but this site continues to be managed by Phil Harding on a freelance not-for-profit basis.

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