EVs ready for world domination

The world is going electric, an International Energy Agency (IEA) report shows.

It’s forecasting a billion electric vehicles (EVs) on world roads within 22 years.

Electrification is not confined to transport either, with the contribution from renewables like solar and wind also highlighted.

Major transformations are underway for the global energy sector, from growing electrification to the expansion of renewables, upheavals in oil production and globalisation of natural gas markets. Across all regions and fuels, policy choices made by governments will determine the shape of the energy system of the future, the IEA’s flagship publication World Energy Outlook 2018 reveals.

The WEO’s scenario-based analysis outlines different possible futures for the energy system across all fuels and technologies, including those that can meet long-term climate goals under the Paris Agreement.

It finds mixed signals on the pace and direction of change.

Oil markets are entering a period of renewed uncertainty and volatility, including a possible supply gap in the early 2020s.

Demand for natural gas is on the rise, erasing talk of a glut as China emerges as a giant consumer. Solar PV is charging ahead, but other low-carbon technologies and especially efficiency policies still require a big push, the report says.

Energy demand is set to grow by more than 25% to 2040, requiring more than US$2 trillion a year of investment in new energy supply.

“Our analysis shows that over 70% of global energy investments will be government-driven and as such the message is clear – the world’s energy destiny lies with government decisions,” IEA executive director Dr Fatih Birol says.

In power markets, renewables have become the technology of choice, making up almost two-thirds of global capacity additions to 2040, thanks to falling costs and supportive government policies.

With higher variability in supplies, power systems will need to make flexibility the cornerstone of future electricity markets in order to keep the lights on, the report says.

The issue is of growing urgency as countries around the world are quickly ramping up their share of solar PV and wind, and will require market reforms, grid investments, as well as improving demand-response technologies such as smart meters and battery storage technologies.

Electricity markets are also undergoing transformation with higher demand brought by the digital economy, electric vehicles and other technological change, the report says.

The analysis finds that higher electrification would lead to a peak in oil demand by 2030 and reduce harmful local air pollutants. But it would have a negligible impact on carbon emissions without stronger efforts to increase the share of renewables and low-carbon sources of power.

Meanwhile, the report also notes EVs will hit price parity across the world during the next 10 years, while electric trucks should become cost competitive from the early 2030s.