10-10-2023
By 2043, renewables are expected to make up 60% of total electricity. This is vital, as electricity production causes around 30% of CO2 emissions.
The future of electricity – sustainable and local?
During the “Dare to Shape the Future” initiative, Swiss students worked with the support of KPMG coaches on bold predictions regarding ESG topics (Environmental, Social and Governance) with an outlook on 2043. The following prediction was developed by Fabienne Vollenweider and Jan Flückiger, from the Universität Zurich and ETH Zurich.
Electricity production currently causes around 30% of global CO2 emissions. However, the industry is looking toward a more sustainable future with an anticipated 60% renewable production in 2043, driven by technology, production cost reductions, increasing political goals, and societal efforts.
Dominik Moser
KPMG Switzerland
Predictions
In 2043, due to electrification, global electricity demand is projected to soar from 35,200 to 90,000 TWh, comprising 40% of total energy demand, up from today’s 20%. Renewable electricity is expected to grow from 20% to approximately 60%, with the remainder primarily coming from non-renewable sources, mainly gas.
In 20 years, households, especially homeowners, will generate most of their own electricity, mainly through solar energy. A typical Swiss household will require 22m2 of solar panels by 2043, up from 18m2 today. Meanwhile, people living in cities will band together to build shared capacities.
It is predicted that companies will build their own energy production capacities but will still rely on external sources due to energy-intensive production. The combined capacity of wind and solar will surge from 2,900 TWh in 2023 to 27,000 TWh in 2043. By comparison, 2022’s pledges for 2030 totaled 10,600 TWh. However, pledges and actions will be more numerous and ambitious by 2043 and various other renewable sources will have emerged, such as geothermal and experimental fusion reactors.
Efficient energy storage tech, led by battery and green hydrogen advancements, will manage the variable supply from solar and wind, allowing redistribution of electricity peaks. However, reserve gas plants, particularly in winter, will remain essential for energy security.
Countries will aim to produce as much electricity as possible within their own borders. However, full self-sufficiency is neither feasible nor economical. This means that international electricity exchanges will remain and continue to help countries to smooth fluctuations in demand and keep production cost efficient.
Why did this happen?
Events in the past, such as the war in Ukraine, have accelerated the energy transition and concerns for energy security. Between 2023 and 2043 other extreme events, especially those caused by climate change, have further increased pressure, provoking reactions in societal, economic, and political circles.
Over the past decades, society has grown more conscious about environmental issues and has become increasingly focused on living sustainably. The higher demand for sustainability has prompted companies to set sustainability targets, which they meet by building their own capacities, increasing their efficiency, and putting pressure on their energy suppliers to become more sustainable.
Pledges on sustainable development have increased in number and ambition (in 2022 there were 36 updates, 22 of which were new pledges). In addition, the gap between promises and policies has narrowed, as governments have increased their efforts, for example through initiatives like the EU Green Deal. As a result, governments have invested in local production and technology research. Concrete political measures for reporting, subsidies, steering levies, and limitations were introduced – for example, a CO2 tax and a cap for emission trading.
The increase in funding and interest has greatly advanced renewable energy technologies, making established sources more efficient, easier to produce, and more versatile. Additionally, new energy sources have been developed. Thermal and fusion energy is being commercialized.
Due to an increase in demand and government subsidies, the production of renewable sources has grown, causing the supply to rise. Due to the advancement of process technologies and the increase in experience, production has also become cheaper.
Impact
In 2043, global life will be increasingly electrified and more sustainable, reducing reliance on conventional sources. Developed countries will be leading the shift, supporting developing nations’ move toward renewables and electrification. This will reduce household dependence on polluting fuels, cutting premature deaths from air pollution (6.7 million cases in 2023). Decentralized renewables, such as solar panels, will improve electricity access, especially in unstable grid areas. However, the risk of a North-South divide will remain, due to infrastructure costs.
The energy landscape will shift toward individualized and renewable production, causing a change in the electricity industry. Electricity providers will manage more diverse assets, including energy storage, changing grid layouts and dynamics. The advent of AI will help to navigate the planning and coordination of these changes.
Nevertheless, fluctuating renewable output will be likely to cause power rationing and higher peak prices. However, cheap storage and backup gas plants will mitigate this risk. The shift is an important contribution to limiting global warming to below 2°C, with fusion energy potentially bringing about an abundance of clean electricity post-2043.