ENERGY TRANSITION OUTLOOK 2017

EXECUTIVE
SUMMARY
Renewables, power, and energy use:
Forecast to 2050

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 DNV GL EXECUTIVE SUMMARY – RENEWABLES, POWER, AND ENERGY USE REPORT

Contents
02
Executive summary

07
A cleaner, more electriied world is within our reach

08
Enablers for a cleaner, electriied world

14
Our expert contributors

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DNV GL EXECUTIVE SUMMARY – RENEWABLES, POWER, AND ENERGY USE REPORT
EXECUTIVE SUMMARY
An era of abundant and cleaner energy lies ahead of us, according to DNV GL’s
modelling of the world energy system.
Three global themes emerging over our model’s
forecasting period are most relevant for this report
on its implications for renewables, power, and
energy use:
– Final energy demand plateaus around 2030 at 430
exajoules (EJ), 7% higher than in 2015, due mainly
to greater eficiency of end-users, less use of fossil
fuels at relatively low thermal eficiency, and slower
population and productivity growth.
– Electricity consumption increases by 140% and
becomes the largest energy carrier1 followed by
gas. Other energy carriers, such as coal and oil,
experience signiicant reductions or only slight
increases in consumption.
– Electricity production becomes dominated
by renewables – Solar photovoltaic (PV), onshore
wind, hydropower, and offshore wind, in that order.
Already mainstream today in many countries, these
renewables together will account for 85% of global
electricity production in 2050.
MAIN IMPLICATIONS
These three main themes and many others stemming
from the model’s results reveal a host of implications
– some immediately apparent, others not so obvious
– for stakeholders across the energy value chain
and for consumers, law makers and regulators. It is
clear, for example, that sweeping change will come
to the way in which the extensive and sophisticated
power grids of industrialized nations are set up and
operated, and to who can access them to buy or sell
electricity. Here, we summarize some of the main
implications.
1. GROWTH IN GLOBAL ENERGY DEMAND
CEASES WITHIN 15 YEARS
Realizing that future growth is not guaranteed,
market participants will switch from expansion-led to
defensive behaviour. In sectors set to slow or shrink,
big players will seek to diversify into predicted growth
1
i.e. for inal consumer demand; at the point of consumption
sectors: a strategy already visible in renewables and
electricity supply, where oil and gas majors are shifting
their focus into renewables.
2. ELECTRICITY GENERATION WILL GROW
While global electricity consumption will increase
slightly faster than recent trends, the average rate
will mask sharper change in individual countries and
speciic locations. These include areas with rapidly
expanding residential solar and/or electric vehicles
(EVs), and where major thermal generators are
closed. This will create challenges for electricity
network operators, regulators, and governments.
Such challenges are already being addressed in
areas where renewables are important generators.
As consumer-scale technologies such as PV and
EVs become cost-competitive without subsidies,
governments will lose the ability to control rates
of deployment. Change can then become rapid,
and may also be derived from increased electric
heating and better energy management systems
for buildings.
Network operators will modify the way in which they
analyse their systems and will pay greater attention
to what is connected to them. There will be a need for
changes to regulations governing use of and connec-
tion to electricity networks, and charging. This will
pose a political conundrum: should changes apply
across user classes, only in areas where a problem
exists, or only to those deemed to be responsible for
creating the conditions that demand change? Grids
will cease to be operated in the way they have been
since their inception. This trend has already started.
Increased monitoring and automation of networks
is a clear response. Very high levels of cyber security
will be needed. If hackers successfully attack, severe
economic loss could result. Electricity networks may be
vulnerable because they are spread across extensive
territories, serve huge numbers of end-points, and
use equipment from multiple suppliers, with items
being added or modiied daily.
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 DNV GL EXECUTIVE SUMMARY – RENEWABLES, POWER, AND ENERGY USE REPORT
Changing demands on electricity networks will occur
faster and less predictably than in the past. Network
planning will no longer be treated deterministically,
even on lower-voltage distribution systems. This shift
requires new tools, and favours technologies that can
be installed quickly, such as protection upgrades, dyna-
mic rating and, perhaps, relocatable battery storage.
3. ELECTRICITY SUPPLY BECOMES
DOMINATED BY VARIABLE RENEWABLES
The very large increases in PV and wind capacity
and production do not appear to introduce any
insuperable new issues in order to maintain secure
electricity systems. Such major penetration is
beginning to take place in various European grids,
and the system operators have shown themselves
capable of addressing problems. As penetration
increases further, so will innovation.
There is no experience of managing electricity systems
in circumstances envisaged in the later stages of the
forecasting period. However, potential solutions
already exist and others are expected to be developed.
New business models will also develop to cover
variability of demand and renewable energy genera-
tion. They will present opportunities for new players:
local governments, housing authorities, equipment
suppliers, industrial users and possibly EV suppliers.
4. THE LINK TO HEAT SUPPLY
Variability is less challenging in regions of lower
seasonal variation in renewables supply; typically,
regions close to the Equator with PV resource, where
variations occur mainly on a daily timescale. Higher
latitudes with a substantial wind contribution face the
challenge of smoothing production over months.
Under conventional market conditions, investors in
wind generation will risk substantial periods of low
or zero prices for electricity.
Electricity can be coupled with other energy networks
that either store heat directly, or produce transportable
4
hydrogen or methane: both provide opportunities
for substantial seasonal energy storage. These options
are expensive, but in a future when heat must be
decarbonized, the current fossil-fuel options for
heating will be unavailable. Governments may
therefore have to justify heat supply becoming
signiicantly more expensive. They already face
decisions about decarbonizing heat, which involve
very large and long-term investments in gas or heat
supply infrastructure. Integration with renewables-
dominated electricity supply adds further variables.
5. CONSOLIDATION FOR THERMAL
Electricity production from nuclear and natural gas
changes only slowly over the forecasting period,
indicating that robust industries will likely continue,
doubtless with some consolidation.
Our model does not suggest a ‘nuclear renaissance’
or a ‘shift to gas’. However, and particularly for nuclear,
energy security and industrial policy issues may take
precedence over cost. These decisions are not
represented in our modelling.
6. GROWTH RATES FOR RENEWABLES
For both wind and PV, forecast growth depends
strongly on continuing cost-reduction trends.
This implies further technology developments,
and substantial learning by doing.
Our model’s forecast of short-term growth in renewable
generation, particularly offshore wind, relects the
fact that these technologies are now already cost
competitive with thermal generation. As the relevant
stakeholders across the globe wake up to this new
reality, installation rates are likely to accelerate.
In the short-term, 10-year horizon, it must be noted
that our forecast implies rapid changes – for example,
in regulation and in the supply chain, especially in
new markets – to reach the predicted installation rates,
particularly for offshore wind. Hydropower shows
less dramatic but continuing growth into the 2030s.
DNV GL 10 ENABLERS – RENEWABLES, POWER, AND ENERGY USE REPORT

7. PROJECT SIZE AND INVESTMENT

Large transmission network projects will likely increase
in number, thereby continuing the trend of connecting
new centres of high energy demand with locations
of signiicant generating capacity, including large
renewables plants, sometimes a great distance away.
These developments will include extended and
strengthened transnational and national electricity
interconnectors in regions such as Europe and Asia.

At the other end of the scale, much new generating

capacity may be ‘behind the meter’, particularly for
PV, producing power for on-site use at home or in
business premises. Even on industrial or commercial
sites, generating capacity per site may be no greater
than several hundred kilowatts.

The results of our modelling have important impli-

cations for investors. Portfolios of network projects,
some as small as residential installations, could
become more signiicant than single large projects.
Investment horizons will reduce from the 12 to 20
years currently deemed appropriate. This change will
also be seen in investments at residential, commercial
and industrial scale, such as battery storage, or energy
eficiency measures.

CRITICAL WATERSHED
The entire electricity industry and its supporting
infrastructure have reached a critical watershed, and
dramatic changes are in progress. The next few years
will be the last in which grids in industrialized nations
are organized and operated in the same way as they
have been for recent decades. Electricity will increas-
ingly be generated by different means, predominantly
from renewables, and across all generation scales from
massive offshore wind farms to domestic rooftop PV.
New owners, users and traders will spring up, and
the EV revolution is just about to start. By the end New owners, users and
of our forecast period in 2050, the electricity system, traders will spring up,
its culture, and its personnel will be unrecognizable.
Engineers, regulators, governments, business manage-
and the EV revolution
ment, and C-suites will need to rise to this challenge. is just about to start

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 DNV GL EXECUTIVE SUMMARY – RENEWABLES, POWER, AND ENERGY USE REPORT

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DNV GL 10 ENABLERS – RENEWABLES, POWER, AND ENERGY USE REPORT

A CLEANER, MORE
ELECTRIFIED WORLD
IS WITHIN OUR REACH
Our model of the world energy system up to 2050 shows that a cleaner, more
electriied world is within our reach. Rapid electriication continues, with the
electricity share of total energy demand increasing from 18% in 2015 to 40% in 2050.
By mid-century, 86% of electricity production will come from renewable sources.

However, we also found that the world is currently
still not on course to achieve the climate objectives
of the Paris Agreement. There is no single solution
that can achieve even the limited aim of 2°C. It takes
multiple achievable actions together to attain a cleaner,
more electriied world by 2050.
While there are many enablers along the path
towards a cleaner energy future, the following
four key actions and identified factors are
particularly significant:

Key actions 10 enablers

Greater and earlier adoption 1. Enabling growth of offshore wind

of renewables 2. Data analysis to optimize performance of wind, solar, grids, and use
3. Cyber security and investments to secure a robust electricity supply
4. Flexibility, balancing and cost-effective integration solutions
5. Grids to facilitate growth of wind and solar

Greater and earlier electrification 6. Electrical vehicles support the transition

of heat and transport 7. Decarbonization of heat

Greater improvements in energy 8. Strategic Energy Management

efficiency

Change in personal behaviour 9. Availability of subsidies

10. Public acceptance

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 DNV GL EXECUTIVE SUMMARY – RENEWABLES, POWER, AND ENERGY USE REPORT

ENABLERS FOR A
CLEANER, MORE
ELECTRIFIED WORLD

GREATER AND EARLIER

ADOPTION OF RENEWABLES

1. ENABLING GROWTH 2. DATA ANALYSIS TO OPTIMIZE PERFORMANCE

OF OFFSHORE WIND OF WIND, SOLAR, GRIDS, AND ENERGY USE

Onshore wind remains signiicantly larger than
offshore wind throughout the period. Growth rates
are high but not beyond the ability of the industry
to expand. However, for offshore wind the growth
rates in the immediate future (to 2025) are very high
(>30 GW/y) compared to other industry forecasts.
These growth rates can only be achieved if constraints
in the supply chain and political and regulatory
inertia can be improved.
To ensure that the renewables industry meets the joint
challenges of further cost reductions whilst maximizing
the value to the energy system, it will be necessary
for all stakeholders to take advantage of the learnings
that are available from the analysis of the huge
quantities of data generated during the project
lifecycle. Understanding how projects are performing
provides signiicant opportunities for both enhancing
their performance and also inluences the develop-
ment of new designs, particularly improved control.
To maximize the beneit of such learning in the wind
sector, it will be necessary to bring together all the
project lifecycle data so that the choices made at the
development phase are fully understood in the
context of operational performance. Also in solar PV
improvements in asset management and advanced
analytics, particularly of large datasets of operating
experience, will be necessary for the envisaged cost
reductions.

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DNV GL 10 ENABLERS – RENEWABLES, POWER, AND ENERGY USE REPORT
3. CYBER SECURITY AND INVESTMENTS
TO SECURE A ROBUST ELECTRICITY SUPPLY
Ensuring a robust electricity supply in an environment
of increasing uncertainty, will require new analysis
tools and improved forecasting. New tools, processes
and standards will also be needed to counter the new
cyber-security threats.
DSOs in principle can have more visibility of what is
happening on their network than TSOs, but tradition-
ally there has been relatively little measurement and
monitoring. There will be major advantages in
substantial increases in monitoring, communications
and control functions for distribution networks, which
are part of what is often loosely termed ‘smart grids’.
These systems also represent a cyber-security threat,
and DSOs should add new skills, tools and processes
to counter this threat.
4. FLEXIBILITY, BALANCING AND
COST-EFFECTIVE INTEGRATION SOLUTIONS
As the number of large thermal generators in
operation reduces, to be replaced by converter-
connected sources such as PV and wind, stability
in response to disturbances becomes an issue.
Balancing services including frequency response
and inertia are required. Examples are: power-low
steering technology, such as phase shifting trans-
formers and highly controllable embedded Voltage
Source Converter HVDC links, electrical vehicle
charging, utilizing the power electronics converter
capabilities of renewables and reactive power for
voltage control, grid connected storage and dynamic
capabilities of overhead lines and cables, for
example based on weather conditions. For many
of these capabilities new computational tools will be
needed, both for design and operation.
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 DNV GL EXECUTIVE SUMMARY – RENEWABLES, POWER, AND ENERGY USE REPORT
GREATER AND EARLIER
ADOPTION OF RENEWABLES
5. GRIDS TO FACILITATE GROWTH
OF WIND AND SOLAR
The transmission system of the future becomes an
essential enabler for much more renewable energy,
speciically PV and wind, for all regions. In many
regions, substantial transmission reinforcement or
expansion will also be required, to respond to
the increase in electricity demand. This will require
substantial co-ordination on an international scale.
Major technical changes are likely, including higher
voltages, and greater use of high-voltage DC for
very long distances. As prosumers become more
prevalent, the volume of electricity transported by
the distribution system may decrease markedly:
but the costs to provide a secure and stable system
will remain constant or increase. This presents
dificulties for methods of charging for these costs,
and new charging methods and business models
are likely to evolve.
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GREATER AND EARLIER ELECTRIFICATION
OF HEAT AND TRANSPORT
6. ELECTRIC VEHICLES WILL
SUPPORT THE TRANSITION
Use of electric vehicles will generate energy savings
and emissions reduction. Electric vehicles require
roughly one-third less primary energy than their
internal combustion counterparts. Net reductions in
carbon emissions per light vehicle average 2.2 tonnes
per year, given the typical generation fuel mix in
advanced economies and average annual distance
driven of 16,000 km. Electric vehicles also have load
management and grid beneits. Broader adoption of
EVs will contribute to higher levels of generation and
distribution system capacity utilization, especially if
EV owners charge their vehicles during off-peak hours.
DNV GL 10 ENABLERS – RENEWABLES, POWER, AND ENERGY USE REPORT
7. DECARBONIZATION OF HEAT
Domestic or residential space heat accounts for 20%
to 30% of total energy use in buildings in developed
economies, and fossil fuels account for 70% to 80%
of all energy used for residential space heat. Recent
advances in ductless heat pump technology have
lowered the capital cost of purchase and installation,
and increased operating eficiency. These changes
have vastly improved the economics of converting
fossil fuel residential space heat systems to electricity.
Electric heat pumps can also stimulate energy savings,
reduce emissions and manage loads and grids.
Beyond heat pumps, free-standing hot water heaters
provide opportunities to drive the decarbonization
of heat by using hot water tanks for thermal energy
storage on the grid. Furthermore, recent technical
advances provide opportunities to reduce energy use
and emissions in this end use. However, the inancial
beneits to individual customers in adopting new
heating technologies are currently marginal in many
cases. Policies and support to encourage adoption
are required.
GREATER IMPROVEMENTS
IN ENERGY EFFICIENCY
8. STRATEGIC ENERGY MANAGEMENT
Engineering case studies have long demonstrated
that total energy use in most existing commercial
buildings can be reduced by 10% to 15% through
best practices in energy management. The rapid
decreases in the cost of building energy system
sensors and data communication infrastructure,
combined with advances in wireless data communi-
cation have increased the ability of building operators
and managers to focus their efforts on operating
improvements that will yield the greatest savings.
Major international property managers are adopting
Strategic Energy Management in their leased
portfolios, to ensure high levels of tenant satisfaction
and reduce turnover. We anticipate that adoption
of Strategic Energy Management will increase over
the forecast period.
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 DNV GL EXECUTIVE SUMMARY – RENEWABLES, POWER, AND ENERGY USE REPORT
CHANGE IN PERSONAL BEHAVIOUR
9. AVAILABILITY OF SUBSIDIES
The newest generation of heat pump water heaters
consume 50% to 60% less electricity than comparably
sized conventional resistance heating models, with
average energy savings of ~ 2,000 kWh/year.
However, even under the most favourable assumptions,
the difference in life cycle costs between gas and
electric heat pumps is negligible. Without subsidies,
most customers would be unwilling to undertake
the perceived risk and inconvenience of substituting
a new technology for one that is very well-established.
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10. PUBLIC ACCEPTANCE
The rapid growth in renewable generation,
electric vehicle and heat pumps depends on
continued public awareness and acceptance.
Given the current relative prices of gasoline and
electricity, consumers in advanced countries can
reduce personal transportation fuel costs by switching
to an electric vehicle. In the U.S., this amounts to
savings of $500 - $600 per year. Despite these
savings, consumer demand for electric vehicles
continues to be inhibited by the following barriers:
DNV GL 10 ENABLERS – RENEWABLES, POWER, AND ENERGY USE REPORT

• Lack of customer awareness of the availability • Charging time, compared to refuelling

and performance attributes of the product a conventional vehicle

• High irst costs (i.e. capital cost) compared • Lack of standardization in charging
to the alternative infrastructure and systems.

• Actual and perceived shortfalls on charging

infrastructure (range anxiety)

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 DNV GL EXECUTIVE SUMMARY – RENEWABLES, POWER, AND ENERGY USE REPORT

OUR EXPERT
CONTRIBUTORS

STRATEGIC RESEARCH & INNOVATION

TECHNOLOGY
& INNOVATION KJERSTI AALBU
LUCY CRAIG JØRG AARNES
SVERRE ALVIK
BENT ERIK BAKKEN
THEO BOSMA
FUTURE ENERGY
ERVIN BOSSANYI
STORAGE
HENDRIK BRINKS
PAUL GARDNER
CHRISTOS CHRYSSAKIS
CAROLINE BRUN ELLEFSEN
ANNE LOUISE KOEFOED
ONUR ÖZGÜN
ASUN ST. CLAIR
BJØRN JOHAN VARTDAL

ONSHORE & OFFSHORE WIND

ROB RAWLINSON-SMITH
SUSTAINABLE ENERGY USE
PAUL NOBLE
PETER LINDERSEN
MITCHELL ROSENBERG
ULRIKA WISING
HYDROPOWER MATTHEW FITZGERALD
THOMAS BJØRNERUD

RENEWABLE ENERGY
TECHNOLOGY
MARCEL CREMERS
TOM GEURINK
BART IN ’T GROEN
RONALD MEIJER
PATRICK WOLBERS

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DNV GL OUR EXPERT CONTRIBUTORS – RENEWABLES, POWER, AND ENERGY USE REPORT

Our Renewables, Power, and Energy Use report has been prepared by DNV GL
as a cross-disciplinary exercise between DNV GL’s Energy business area and
a core research team in our central R&D unit

TRANSMISSION & DISTRIBUTION

PETER VAESSEN

MARKETS, POLICY & REGULATION

ERIK DUGSTAD
GURO FASTING
JUAN JOSÉ DÍAZ GONZÁLES
CHRISTIAN HEWICKER
KAMAL SOUNDARARAJAN ASSET & OPERATIONS

WIM VAN DER VEEN CARLOS ALBERO

JONATHAN FARLAND
JASON SYMONDS GAS TESTING & ANALYSIS
JOHAN HOLSTEIN

ENERGY ADVISORY
GUNNAR HEYMANN 
ROBERT RAMIREZ

FUEL & ENERGY TRANSITION

PAULA SCHULZE

SOLAR OPERATIONAL EXCELLENCE

RAYMOND HUDSON MATTHEW FREEMAN
RUBÉN RON TIM POHLENZ

CYBER SECURITY
LEO AKKERMAN

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