BP has published a technology outlook in which it sets out its view on technological developments over the next 35 years and how these might shape and influence the way we identify sources of energy and extract, convert, store, and consume them. The report considers security of supply, affordability, and the transition to a lowcarbon energy structure. As global energy demand rises, increased levels of energy need to be supplied at lower costs while at the same time making a transition to a lowcarbon energy system.
The report finds that while energy resources are plentiful, their use will be dependent upon technology, policy, and capital. For example, advances in digital technologies are expected to lead to faster and better decision-making in oil extraction and technological advances in enhanced oil recovery will improve productivity and encourage investment in the extraction of fossil fuels.
Similarly, technologies that reduce the cost of wind and solar power will change investment focus. The major advance in energy of the last ten years has been the reduction in the cost of wind and solar generation. Going forward, BP predicts the cost of onshore wind power will fall by 14% with every doubling of cumulative installed capacity while the cost of solar will drop by 24% with every doubling.
Technological advances in wind and solar are expected to continue up to at least 2050. For example, improvements in wind turbine design and the introduction of floating wind platforms mean that offshore generation can be located in deeper water. In addition, advances in solar cell technology will mean that a greater range of the light spectrum can be harvested.
While the world will be predominantly reliant on fossil fuel for years to come, renewables will see strong growth and the report shows particular focus on solar power combined with battery storage. The supply of wind and solar is often not in line with times of peak demand and, therefore, greater use of storage technology will be required. The intermittent nature of renewables means that as use increases, so will the need for flexible generation from fossil fuels such as Single Cycle Gas Turbines. In addition, increased levels of renewables will require increased integration between transmission and distribution networks.
BP observes that government policy must promote low-carbon technologies and enable energy companies in the transition to a low-carbon economy. The difficulty for governments is deciding which technologies to support. At present, only 8% of global primary energy consumption is from renewables. Analysis from BP shows that if there were a global carbon price of $40/ tonne, this would be expected to bring about a mix of gas and renewables generation replacing coal and gas in the US. A carbon price of $80/tonne would be required for solar to be competitive with natural gas by 2050.
To summarise, BP sees an effective transition to a low-carbon economy as requiring Green House Gas mitigation technologies to be utilised across the whole economy. Nuclear and renewables are low-carbon options, but new nuclear carries cost and safety implications while renewables will require backup from flexible sources such as gas generation. Carbon capture and storage (CCS) is currently at the demonstration stage, and BP believes that the carbon price would need to rise to $100 in order for CCS to be put into operation at large power plants. Emissions levels will be influenced by policy decisions, which at present are complex because they differ by country.
Through its analysis, BP’s report demonstrates the extent of government policy required to bring about a transition to a low-carbon economy and particularly what different pricing levels for carbon can achieve. Earlier this year, a group of major oil and gas companies, including BP, called for the United Nations to introduce a global price on carbon as a means of providing investment direction and certainty to energy companies. The full BP technology report can be found here.
Written By- Nikki Wilson