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The shift to renewables promises to be as transformative as from horse to car
It’s certainly an exciting time to be in the energy sector, and an apt time to reflect on the changing environment in which we operate, according to Statkraft’s Chief Executive Officer Christian Rynning-Tønnesen.
Global energy markets are going through a massive shift, and the pace of renewables assumes a larger and larger place in the energy mix in Europe and globally.
The renewable energy revolution
“In a historic perspective, this transition is comparable to the shift from horse-drawn carriages to petrol cars – or the shift from typewriters to personal computers. We are ready and well-positioned for capturing values in the new energy landscape and we invest 100% in renewable energy,” says Rynning-Tønnesen during the Financial Times Energy Transition Strategies summit.
As renewables remain the key ingredient in the recipe for a carbon-free future, governments, investors and society at large are increasingly focusing on green solutions. With technology costs continuing to fall, cheaper renewables are leading to increased volumes of renewables and even cheaper renewables. Solar capacity has grown 27 times over the last decade and is expected to be the world’s largest source of electricity from 2035. By 2050, we expect solar power to account for 38 percent of global power generation.
The electrification of “everything”
Electrifying our world will enable significant carbon reductions in the buildings, industrial and transport sectors. Statkraft’s Low Emissions Scenario 2020 states that almost all new passenger vehicles will be electric by 2050, and more than half of the heavier vehicles will run on battery or hydrogen. And when electricity simply isn’t an option, such as for long distance transport and high heating industry processes, emissions-free hydrogen will step in, in its various forms, including ammonia (produced from nitrogen from air and hydrogen from electrolysis). Batteries will play a key role in this future scenario, with costs declining 70% over the period driven by the large uptake of electric vehicles globally. Batteries, including smart charging of electric vehicles, will provide highly needed flexibility for the power markets.
“The renewables revolution and the electrification of everything will continue. Electrification of the transport sector will speed up globally and we expect electric vehicles to be competitive with petrol and diesel cars within 2025. We will also see a global race to gain technology leadership in hydrogen,” says Rynning-Tønnesen.
Post-pandemic energy sector
The world came to a grinding halt in the face of Covid-19, causing a significant decline in global energy consumption. While that meant stagnation across the sector, one area managed to maintain growth, even if lower than anticipated: Renewables.
“The energy transition has proven surprisingly resilient to the pandemic. As the crisis hit, grid operators sought the cheapest supply source – renewables – to balance the lower demand and several countries listed new records for renewable energy generation. In my view, we should take this opportunity to build an energy system that is future proof – not a mirror of the past,” concludes Rynning-Tønnesen.