McKinsey: Low Cost Renewables Will Outcompete Fossil Assets By 2030

SectorOil & Gas
CountryMiddle east

The energy transition is accelerating. 2020 saw renewables replace fossil fuels in Europe for the first time and one of the many impacts of COVID-19 has been on energy demand. According to the latest research from McKinsey, demand for fossil fuels will never return to pre-pandemic levels. McKinsey’s 2021 Global Energy Perspective report predicts not only that fossil fuel demand will not recover post-COVID-19 but that it is set to peak globally by 2029. The really big shift in energy demand though is expected to be towards electrification, and the report projects that power demand will double as this happens, with low cost renewables outcompeting fossil fuel assets by 2030.

 It also projects that by 2036, half of the global power supply will be generated by intermittent renewable energy sources. The shift in the energy mix is expected, not due to the behavioural shifts associated with the pandemic but rather “known” long-term shifts such as decreasing car ownership, growing fuel efficiencies and a trend towards electric vehicles, whose impact is estimated to be three-to-nine times higher than the pandemic’s by 2050. Christer Tryggestad, Senior Partner at McKinsey, says: “While the pandemic has certainly provided a substantial shock for the energy sector across all fuel sources, the more...