A recent Hitachi ABB Power Grids study indicates that the North American energy industry’s future is undeniably green.
Titled ‘North America Power Reference Case: Spring 2020,’ the study forecasts that renewable energy production will see double-digit growth in the next 25 years. The report is based on data gathered by the intelligence service of the business organization, Velocity Suite, informed by its proprietary capacity expansion model, and its well-established cost model of PROMOD production.
Renewable energy and natural gas are projected to dominate North American power generation for the next two decades, powered by declining capital costs and conflicting federal, utility, and corporate clean-energy goals and regulations.
The study projects that by 2044, nearly 50 percent of coal production would cease, with economics being the single largest factor leading to one-third of that decrease.
At that time, solar is estimated to generate twice what coal now produces — four times the expected growth from where we stand today.
In addition, it is anticipated that wind power will hit 191 GW, almost twice what coal will produce in 2044.
“By 2044, North America’s dependency on fossil fuel-based energy sources will be a fraction of what it is today. Combined, the global pandemic and the oil price shock have led to a forecasted 20 percent decrease in overall energy spending for 2020, whilst major oil companies have left capital investments in renewables untouched, thus reinforcing the future of sustainable energy in North America.”Greg Toothaker, vice president, energy portfolio management at Hitachi ABB Power Grids.
“ARC views Hitachi ABB Power Grids’ forecasts as timely and relevant, and holds this research in high regard. We also feel that this insight would be valuable to any participant in the North American energy market seeking to deliver more renewables to the energy mix.”Ed O’Brien, ARC Advisory Group.
- Natural gas vital to investment in renewable energy. Cheap prices of natural gas and the capacity of the energy source to fill in where renewable energy falls short would drive growth in investment. Natural gas prices should stay below $4 / MMBtu until the early 2030s. Natural gas is likely to account for over 43 percent of total North American consumption by 2044 and is anticipated to remain the largest source of energy supply, outstripping wind and solar energy production. Gas is used as a ‘stop-gap’ option for renewables as an energy source.
- Load growth from COVID-19 expected to rebound in 2021. The growth of loads in 2020 is projected to be about five percent lower on average across all regions relative to pre-economic downturn estimates. The pandemic has impacted the oil and gas industry in ways previously unseen, despite lower energy usage, significantly influenced by reaction steps such as social distancing and stay-at-home, resulting in shifts in energy consumption patterns. The study forecasts a full economic rebound for the oil and gas sector by 2023.
- Renewable construction costs drop year-on-year. The study also forecasts that onshore wind construction costs would decline by two percent per year until 2030. In turn, the cost of solar construction is projected to drop to around $1,100 / kW in 2044 from its current cost of $1,400 / kW. Combined with a four-and-a-half percent decrease in prices of some battery storage systems, these lower construction costs continue to increase the attractiveness of renewable energy sources.