Green Electricity Can Become The Cheapest Form of Energy by 2050

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“Our computer simulations show that together with global carbon pricing, green electricity can become the cheapest form of energy by 2050, and supply up to three quarters of all demand,” says Gunnar Luderer, author of the new study and researcher at the Potsdam Institute for Climate Impact Research as well as professor of Global Energy Systems Analysis at the Technical University of Berlin.

“Today, 80 per cent of all energy demands for industry, mobility or heating buildings is met by burning – mostly fossil – fuels directly, and only 20 per cent by electricity. Our research finds that relation can be pretty much reversed by 2050, making the easy-to-decarbonise electricity the mainstay of global energy supply,” adds Gunnar Luderer.

Cost-slashing innovations are underway in the electric power sector and could give electricity the lead over fossil-based combustion fuels in the world’s energy supply by mid-century. When combined with a global carbon price, these developments can catalyse emission reductions to reach the Paris climate targets, while reducing the need for controversial negative emissions, a new study finds.

“For the longest time, fossil fuels were cheap and accessible, whilst electricity was the precious and pricier source of energy. Renewable electricity generation – especially from solar photovoltaics – has become cheaper at breath-taking speed, a pace that most computer simulations have so far underestimated. Over the last decade alone prices for solar electricity fell by 80%, and further cost reductions are expected in the future. This development has the potential to fundamentally revolutionize energy systems,” Luderer explains.

The reasons lie mainly in the ground-breaking technological progress in solar and wind power generation, but also in the end uses of electric energy. Costs per kilowatt hour solar or wind power are steeply falling while battery technology e.g. in cars is improving at great speed. Heat pumps use less energy per unit of heat output than any type of boiler and are becoming increasingly competitive not only in buildings, but also in industrial applications. “You can electrify more end-uses than you think and for those cases actually reduce the energy consumption compared to current levels,” explains Silvia Madeddu, co-author and also researcher at the Potsdam Institute.

“Take steel production- Electrifying the melting of recycled steel, the so called secondary steel, reduces the total process energy required and lowers the carbon intensity per tonne of steel produced,” says Madeddu. “All in all, we find that more than half of all energy demand from industry can be electrified by 2050.” However, some bottlenecks to electrification do remain, the researchers point out. Slowest in the race to decarbonisation are long-haul aviation, shipping, and chemical feedstocks, i.e. fossil fuels used as raw materials in chemicals production.

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