Article Top 6 takeaways from IEA’s World Energy Outlook through 2040

Top 6 takeaways from IEA’s World Energy Outlook through 2040

Each year, the International Energy Agency (IEA) releases its World Energy Outlook, which takes a deep look at energy markets and how today’s choices will reverberate for years to come. In this case, the report released in November 2019 looks at energy trends from 2020 to 2040.

Here are our top takeaways from the latest World Energy Outlook:

Takeaway #1: As companies adopt new digital technology and renewable energy grows, energy security will be increasingly critical in the electricity sector.

The rise of renewables is giving way to real-time settlements which means power companies must adopt new and better technology that ensures a stable power grid despite an increasingly unpredictable power supply. Additionally, more consumers are becoming prosumers as they purchase solar PVs and electric vehicles and ultimately expand distributed generation when they connect to the power grid.

As the market fundamentally shifts, considerations must be given to safeguarding customers from any possible data security or energy security risks with storage, distributed generation, and grid management. Partnering with leading innovative and secure technology companies with healthy investments in research and development will become increasingly critical for market participants.

Takeaway #2: Renewable energy growth is set to exceed previous predictions.

Offshore windfarms currently provide 2% of the EU’s electricity, but IEA predicts this will  grow to 18% in the next 20 years, surpassing previous expectations. And this remarkable growth won’t be limited to the EU. Experts expect global windfarm growth will continue at rates previously unexpected. As renewable energy continues to grow, market participants will need to prepare for rapidly changing power markets.

Takeaway #3: Africa is the new China and India.

Africa’s population will grow by 500 million people by 2040 — a faster growth rate than previously seen even in China. This means African countries need to immediately grow their energy infrastructure to accommodate swiftly expanding populations. Experts posit these countries may well take advantage of solar power — a solution that is well-suited to meet their growing electricity needs. But still, the continent’s consumption of oil and gas will expand at unprecedented rates over the next 20 years. Global energy exporters should take note.

Takeaway #4: Natural gas growth continues as countries look to meet growing energy demand.

The U.S. is likely to become the largest oil and gas producer by 2025, supplying 30% of the world’s gas production through 2030. Even as renewable growth gains ground globally, U.S.-driven shale production will continue to drive growth in the natural gas supply — ultimately reshaping global energy markets.

Still, major players like Russia and countries in the Middle East will be integral to meeting ongoing growth in demand from Asian countries like India.

Takeaway #5: Coal still has a crucial role to play in the coming decades — especially in Asia.

Investment in new coal-fired power generation is on the decline, but coal consumption is still on the rise as countries like China, India, and Indonesia look to meet growing electricity demand. While many countries are looking to replace coal with natural gas, coal will remain a critical component in developing economies in the next two decades.

Takeaway #6: Battery capacity growth is driving greater investment in electric vehicles (EVs).

While 2 million EVs are currently sold each year today, that number could increase to as many as 30 million by 2040. It’s entirely possible that technological advancements in batteries and EVs could result in a demand peak for gasoline and diesel in the next decade — even as oil demand grows by as much as 2 million barrels per day in the near term. This fundamental market shift will also have implications for power generation and distribution as EVs integrate into power grids.

Each of these takeaways represents enormous opportunity for energy and commodity markets. To prepare, companies need visibility into changing market conditions in order to make profitable decisions and manage risk.

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