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World energy markets will soon enter a period of “extreme flux,” according to a new report out from Citigroup.
The report, titled “Global Energy 2020: The Revolution Will Not Be Televised as Disruptors Multiply,” paints a bleak picture for the future of the oil industry, while predicting massive growth in the renewable sector. The report claims oil is being undermined by cheaper natural gas and more fuel-efficient vehicles.
More truck fleets are switching to natural gas and Americans are becoming generally less dependent on oil. However, natural gas prices could trend upward and oil would stay the same, resulting in a less drastic shift. The Telegraph’s Ambrose Evans-Pritchard not only points out that this is unlike, but the bigger force of change lies in renewables.
“Even if global gas fails to deliver as expected, this will merely accelerate the powerful shift towards solar power already under way, eroding the demand for oil more slowly by a different means,” he writes. “Citigroup said solar already competes in the growing regions of the world on ‘pure economics’ without subsidies. It has reached grid parity with residential electricity prices in Germany, Italy, Spain, Portugal, Australia and the US southwest. Japan will cross this year, Korea in 2018. It forecast that even Britain will achieve grid parity by 2020, a remarkable thought for this wet isle at 51 or 52 degrees latitude.”
Decreased installation and panel costs, as well as increased efficiency will continue to drive the cost of solar down and the level of accessibility up, accelerating its adoption. The report dismisses International Energy Agency forecasts of 662 GW of solar by 2035 and $1.3 trillion in investments as “highly conservative.”
“High electricity rates and some of the best solar economics in the world (i.e. Latin America) coupled with a need to diversify into other fuel mixes should translate into substantial growth opportunities over the next few years,” it reads.
In summarizing the outlook specifically for solar, the repot painted a picture of a industry that’s just starting to come into its own.
“We believe global solar growth will be driven by economics, fuel diversity and emerging financing vehicles as well as some country specific legislative overlay,” the report read. “Moreover, this growth looks set to continue for the long term, as solar takes an ever greater share of energy production.”
By. Kevin Smead of Energy Digital
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