Electricity demand expected to double by 2050, driven by cost parity of electric vehicles: McKinsey
Electricity demand will double by 2050, according to McKinsey’s Global Energy Perspective 2019. This rise in electricity consumption will be due to an uptake in Electric Vehicles (EVs).
EVs are expected to reach cost parity with conventional fuel vehicles between 2020 and 2025 and will become the lower cost option within the next 10 years. This will mainly be driven by a decrease in costs for battery packs, from US$220 per kilowatt hour in 2017 to US$73 per kilowatt hour by 2030. By 2050, road transport is expected to comprise 27 per cent of final energy consumption, with China leading the electrification of transport.
Electrification in buildings and industry will make up the rest of electricity demand in 2050. Higher living standards in countries like China and India will lead to an increased use of space cooling and appliances. This will contribute about 40 per cent to total electricity demand growth for buildings.
Here are some other observations the report highlights:
- The role of renewables in power generation is growing at an accelerated pace and will make up more than 50 per cent by 2035. Solar is projected to comprise 29 per cent of the global power capacity, while wind will make up 14 per cent. This is because renewables will become cheaper than existing coal and gas in most regions by 2030.
- Oil demand is projected to slow as increased adoption of EVs and increased recycling rates of plastics contribute to a significantly reduced reliance on oil. Oil demand is now expected to peak by 2033.
- Gas demand is expected to grow until 2035, to about 20 per cent more than current levels. This is largely driven by industrial demand in China. However, investments in new renewable generation capacity will cause gas demand to dip after 2035.
For a more detailed look into the report’s long-term projections, please read the full report of the Global Energy Perspective 2019.