Faster Now

Monday 19 August 2024

Cold Eye Earth is raising its estimate of average annual global power growth to the 3.00% - 3.25% range, from the present year to the year 2030. The change comes after the IEA recently announced a new and dramatic forecast for consecutive 4.00% annual growth in global power for 2024, and 2025. Unfortunately, should the IEA be correct in its outlook, that rate of growth entirely forecloses upon the newly popular idea that emissions in global power will soon start to decline. The world is simply not on course to cover such a large expansion in global power with clean sources, despite the spectacular growth of solar.

The IEA forecast is, however, confirmation that one of the key pillars of energy transition—making electricity the new platform for growth—is working well. We do, in fact, want to see soaring demand for power as it also confirms one of the longest-running themes here at Cold Eye Earth: the next unit of global GDP is far likelier to be built on the back of the powergrid, rather than on the 20th century growth fuel, oil. The downside of this goal is that unless we cover all marginal growth with clean sources, then the world will do what it has always done by calling upon natural gas and coal especially, to fill the gap.

Previously, Cold Eye Earth offered three growth scenarios to best capture the accelerated growth rate that was likely to unfold from 2024 - 2030. Using the historical rate of 2.5%, growth was modeled in a low, middle, and high case of 2.75%, 3.00%, and 3.25%. That lower case of 2.75% is now off the table. Without a global recession or a geopolitical conflict, two consecutive years of 4.00% growth would have to be followed by a very weak five year run to 2030 to average out at 2.75%. Hence, the growth scenario chart is now more simplified, as it shows outcomes for both the 3.00% and 3.25%, as a probable range, along with a very high case of 4.00% sustained to 2030. Despite the bias of Cold Eye Earth to project higher than expected power growth to 2030, we’re probably not going to see 4.00% sustained over seven years. But, it’s instructive to see how that would look, if it happened.

The problem is that 3.00% - 3.25% is a total power system growth rate that may also be difficult to cover entirely by renewables. Indeed, for the past two years, Cold Eye Earth has been warning that a higher growth rate was inevitable, and the only uncertainty remaining was the time of its arrival. That moment appears to now be at hand. Over these two years, Cold Eye Earth has made the following points:

• Advocating for new nuclear. Cold Eye Earth has acknowledged repeatedly that wind, solar, and storage are the decisive leaders of decarbonization in power, and that no technology, including nuclear, can match their cost and speed to deployment. Case closed. However, nuclear in a junior role would be enormously helpful to the cause, and the world can’t rely on China alone to build some. We don’t in the West need to build alot of nuclear, nor should we tell ourselves that only nuclear can lead decarbonization. But we should build some new nuclear to maximize the capability of wind, solar, and storage to plow through all power growth, and get emissions into decline. Those saying we don’t need any new nuclear are wrong. | further reading: Portfolio Nuclear

• Highlighting the big number. In a world absolutely brimming with celebratory reports on the rapid buildout of wind and solar, Cold Eye Earth has argued we should be paying even more attention to total system growth. There’s a global daisy-chain of non-profits and think-tanks constantly pumping out the good news of wind and solar growth, which is often paired with repeated (and failed) attempts at forecasting peak fossil fuel consumption, and peak emissions. That is what might be called an attractive nuisance—hopium reels in the crowds, but never delivers on the promise. If the IEA’s latest forecast doesn’t convince you to direct your attention first to total power system growth, you are probably beyond reaching. | further reading: The Big Number.

• The history of peak forecasting is awful. The road of energy analysis is littered with the bodies of those who called for peak supply, and now, peak demand. You can find peak natural gas, coal, and oil forecasts that go back decades. Constructively, most have given up on this project and accepted the sobering reality that the world contains not just vast reserves of recoverable fossil fuels, but more importantly, that humans are a wildly clever species, continually finding ways to economically recover fossil fuels with ever improving technology. Now we have a new, crowded trend: calling peak demand. This is not an unworthy project! But it must be undertaken with caution. Cold Eye Earth accepts the obvious in this domain—that OECD oil demand peaked nearly 20 years ago, that OECD coal demand is well past peak, that California gasoline consumption has now peaked, and that global oil demand has probably peaked but will oscillate for years and not decline any time soon. Mostly though, the world has a plateau problem—multiple examples of fossil fuel consumption that has stopped advancing, but isn’t declining either.

The world will not build enough new clean power capacity to force power sector emissions into decline this decade. At the new, stepped up growth rate of 3.25%, the world would need to bring on enough additional wind and solar—and nuclear and hydropower—to not just cover marginal system growth, but to actually start crowding out existing, dirty generation.

According to the previous chart, the world is going to add 7512 TWh of new electricity demand from 2023 to 2030. The assignment, therefore, is to not merely supply a fresh 7512 TWh of new generation from clean sources. That earns us a plateau of power sector emissions, and nothing more. To force emissions into actual decline will require going well beyond that volume of new generation. How much new clean generation is scheduled to come online?