Even when established energy efficiency measures put in place, along with a growing number of customer owned distributed, small-scale renewable energy projects such as Residential and Commercial Solar Rooftops, electricity demand continues to rise in certain global markets. Over the past few decades, the increase of new technologies such as smartphones, , tablets and smart home devices, combined with decreasing cost and financing solutions of household appliances and entertainment products, are putting upward pressure on electricity demand. As a society, we are becoming more mobile and more connected to each other than ever before, which is a long-term trend that is unlikely to reverse itself.
The ability to remain connected and mobile is primarily supported by lithium battery-based devices that are allowing society to be wire-free while also driving up demand for electricity. This is a clear macroeconomic trend that will continue to prevail in the coming decades. The establishment of the lithium battery supply chain to support a growing roster of mobile technologies has opened the gateway to the electrification of the transportation industry. Societies primarily focus on passenger vehicles but there is a tremendous opportunity to electrify all urban and industrial drive systems including: passenger vehicles, scooter, delivery trucks, coaches, heavy-duty mass transit fleets, Yellow School Buses, airplanes, materials-handling vehicles and so on.
The primary rationale for the switch to electric drive is to reduce tailpipe emissions in dense urban environments and thereby provide cleaner living conditions for citizens. Building sustainable and inclusive communities that incorporate the use of clean energy technologies and zero-emission transportation is becoming an increasingly pressing topic for urban planners. While the shift to electric drive has the immediate benefit of reducing ground-level emissions in urban centers, it is also important that those energy sources are themselves derived from a clean or renewable energy source such as solar, wind, hydroelectric or natural gas amongst others.
In the years ahead, as electricity demand grows modestly, it is critical to begin to dismantle older, less efficient fossil fuel units while boosting production of renewable energy and natural gas. Stubbornly low natural gas pricing, coupled with favorable costs for renewable energy generation, could easily result in natural gas and renewables becoming the primary sources of new generation capacity to support societies’ requirements to be connected and mobile, as well as to support the forthcoming shift to electric drive.
Although it is highly unlikely that coal-generating assets will permanently be eliminated over the next decades, it is clear that production will continue to decrease as power plants become uncompetitive and are forced to retire. Further, nuclear power generation is also expected to continue its decline in the USA and then stabilize at lower output levels for the decades following. With coal and nuclear power declining, the focus is on renewables and natural gas power production.
Despite coal production declines over the past decade, renewable energy power plants across the USA only produce one third of the amount of power that coal plants produce, but renewable energy is expected to exceed national coal production by 2025. The transition point is a reflection of a rise in renewable energy generation capacity since 2010 and the freefall of coal energy generating capacity during the same interval. On the other hand, natural gas power production has been steadily on the rise since the late 1990s and is expected to continue to rise until at least 2050. By 2020, natural gas and coal power production should be equal to each other.
Although natural gas is a much cleaner burning fuel source, persistently low prices have also decreased the competitiveness of coal-fired power generation. This will allow natural gas valuation to continue the steady rise that began to occur in the late 1990s and will last until at least 2050, representing 50 years of growth.
From an environmental and health standpoint, coal has come under extreme pressure in recent years as governments around the world have committed to shuttering production capacity as a move to combat emissions.
European nations have already set bold targets as they position to move away from coal to cleaner and renewable energy sources. France has committed to ending coal energy production by 2022, Italy and Ireland by 2025, Denmark, Spain, Netherlands, Portugal and Finland by 2030. Germany is planning to shut down its remaining 84 coal fired power plants by 2038. The impact is starting to spread throughout other regions of the world too, as Chile has announced it is planning to shut down 8 coal fired power plants by 2024. The domino effect will likely continue on a global scale as cleaner energy sources become more cost-competitive than traditional production sources.
According to the Sierra Club, more than 100 cities and towns have made pledges to source 100% of electricity requirements from renewable energy sources, while the American states of New York, Nevada, Hawaii, New Mexico, Puerto Rico and California will hit 100% renewable energy targets as late as 2050. Consider that the populations of the states of California and New York amount to approximately 60 million people. The 100% renewable energy targets established by these leading economic regions will establish a blueprint for the balance of the USA and other regions of the world to shift to clean energy sources of electricity.
Recently, Britain has moved to be the first G7 country to commit to reach net-zero emissions by 2050, a target requiring a big increase in low-carbon power and an even steeper reduction in fossil fuel use.
With many coal-generating stations expected to be shut down in America, Europe and other select regions of the world, it is without a doubt that financing the construction of these assets will become increasingly challenging. Over the next years, growth in coal-fired generation capacity may become muted due to the lack of new capital to finance such assets in the Western World.
In conclusion, as societies continue to demand more electricity in order to remain connected and mobile, as well as demonstrate the need to reduce emissions, these factors will stimulate the shift to electric vehicles and, at the same time, the demand for clean electricity will rise. Undoubtedly, clean and renewable energy generation are set to grow over the next 30 years, providing a pathway to a true zero-emission network of vehicles and reducing emissions in heavily populated urban regions.