The year 2024 is a pivotal moment in the global energy transition. We now have a world where the pace of change has accelerated to such an extent that the landscape of energy production, consumption, and policy is unrecognizable from a decade ago.
The Unstoppable Momentum
Think back to the early 20th century when the world transitioned from horses to automobiles. In 1900, cities were clogged with horses, their waste creating environmental and health problems. Fast forward a few decades, and the streets were dominated by cars, that heralded a new era of mobility and urban planning. Similarly, in the 1990s, the advent of mobile phones and the internet revolutionized communication, connected the globe in ways previously unthinkable. These transitions were dominated by technological advancements, market forces, and the promise of a better future. Today’s energy transition is no different, but it’s unfolding at a scale and speed that dwarfs the historical ones.
In 2024, the urgency to mitigate climate change has driven a wave of innovation and investment across the globe. Green hydrogen pipelines, transmission lines stretching over 5,000 kilometers across Atlantic, the world’s largest copper mines switching to 100% renewable energy, and investment banks pouring billions into battery recycling are just a few examples of the sweeping changes.
The Drivers of Change
Several key drivers are accelerating this transition. Technological advancements are rapidly reaching economic tipping points, making clean energy solutions more affordable and scalable. Consider this: in 2022, 86% of newly commissioned utility-scale renewable power generation produced electricity at a lower cost than fossil fuels. Solar power, now the cheapest source of new-build electricity in many markets, highlights this trend. The global average levelized cost of electricity (LCOE) for solar photovoltaic (PV) is 29% lower than the cheapest fossil fuel alternative.
Sector convergence, driven by digitalization, is fostering unprecedented collaboration. When companies, including competitors, join forces, they amplify their collective knowledge and skills and accelerate innovation. For example, the world’s first offshore solar energy platform, launched in the North Sea in 2023, resulted from several offshore wind and engineering companies forming a consortium with common goals.
Consumers, particularly Gen Z and millennials, are increasingly prioritizing sustainability. Nearly half (48%) of global consumers across 18 markets are likely to buy an electric vehicle (EV) as their next car. The shift in consumer behavior is propelling the energy transition at an unprecedented rate.
Geopolitical dynamics have also redefined the importance of energy security. If there ever was a winner in the Russia-Ukraine war, it was renewables energy. The Europe realized that they need to find the RLNG alternate fast and if there is such a technology more ready to be integrated at speed and scale, it is the large-scale utility level solar and wind energy. In 2022, investment in low-carbon technologies surpassed $1 trillion for the first time, largely driven by policies like the US Inflation Reduction Act and the European Commission’s greentech provisions.
Multiple Transitions, Varying Paces
One of the most striking aspects of today’s energy transition is that there isn’t just one transition, but many, and each is unfolding at its own pace. Global renewable energy capacity is set to increase by 2,000GW by the end of the decade—equivalent to China and Europe’s entire renewable capacity today. However, the speed and nature of this change will vary widely across countries, markets, and sectors.
For instance, solar power is poised to become the dominant energy source in the US and South Asia, while Europe’s clean energy future will be led by wind power. The UK has already seen wind power capacity surpass gas power capacity. These regional variations will continue to underscore the complexity of the global energy transition, which in all likelihood will require tailored strategies to meet local needs and challenges.
Electrification and Beyond
The build-out of renewable generation will drive rapid electrification across all sectors. Industrial electricity demand is projected to grow by 159% by 2050, as technologies like electric heat pumps and electric furnaces become mainstream. This shift will be mirrored in residential and transport sectors, with EV adoption expected to outstrip sales of all other vehicles by 2030.
However, hydrocarbons will remain part of the energy mix for longer than anticipated. The demand for gas will stay strong due to its role as an interim fuel and its extensive use in existing infrastructure. The challenge will be to decarbonize these hydrocarbons through carbon capture, utilization, and storage (CCUS) and the development of green hydrogen and ammonia.
The Localized Energy Future and a Hyper-Integrated Flexible Connected Grid
As renewables and clean energy infrastructure are built out at scale, we will see a more localized energy system. Regions with abundant renewable resources will attract new generation assets, creating localized energy ecosystems that drive economic growth and job creation. Projects like Morocco’s undersea cable to the UK will continue to exemplify the innovative solutions which will be developed to connect regions with surplus clean energy to those in need.
The widespread adoption of renewable energy will place unprecedented demands on the grid. Europe’s flexibility requirements, for example, are forecasted to increase tenfold by 2050. This necessitates a grid that will manage intermittent renewables and bidirectional energy flows and will demand a combination of mature and emerging technologies, regulatory changes, and a robust supply of critical materials and skilled talent.
As we have always advocated to our clients, energy transition is a monumental business opportunity. Companies that will act now will secure their future and will contribute to a sustainable, resilient energy system. The stakes are high, and so are the rewards.