This foresight study, running to 2030-2050 and tested against a panel of international experts, sets out twelve theses on how the energy sector will evolve under the combined effect of technology and public policy. They are offered with the humility the exercise demands: facing a deeply uncertain future, they represent our best estimate.
Demand and mix
1. Energy consumption will fall in Europe. While global demand will rise, driven by developing countries, it will fall sharply in Europe and France, including for natural gas, under the effect of energy efficiency policy. Electricity demand will decline or rise only slightly, despite significant transfers of end uses towards it.
2. Power mixes will become naturally near-decarbonised. New capacity worldwide will be overwhelmingly renewable, and systems more than 80 % decarbonised will become general across developed countries by 2050 at the latest, driven by falling generation costs and by the technologies enabling intermittent output integration.
Networks and flexibility
3. Network needs will grow while their utilisation falls. This contradiction is central: more network will be needed to integrate renewable output and exploit geographic smoothing, while self-consumption and decentralisation reduce utilisation. These opposing dynamics create a stranded asset risk.
4. Coordinating generation and network investment will become essential, on pain of network costs spiralling. Congestion already seen where generation sits far from consumption centres illustrates the point.
5. Flexibility will change the nature of networks and their operation. Needs will be met mainly through decentralised tools requiring aggregation of large numbers of dispersed points. Distribution operators will become true system operators, responsible for active network management and for organising local flexibility markets.
6. Battery storage will become an essential system component, driven by cost reductions comparable to those solar has seen.
7. The top-down architecture of large networks will evolve towards clusters of microgrids, profitable where economic and regulatory conditions allow, adopted for resilience in areas exposed to extreme weather, and structuring for electrification in emerging countries.
Markets and vectors
8. Wholesale markets’ ability to send relevant price signals may be called into question. The paradigm reverses: generation becomes more rigid as must-run output rises, while demand becomes flexible. Zero marginal cost volumes will weigh on price formation, to the point of threatening full cost recovery on investment. Wholesale markets will nonetheless continue to guide dispatch.
9. Gas infrastructure will keep an important role in Europe, driven by substitution towards green gas, growth in mobility uses and winter peak coverage. Falling demand should nonetheless rule out new investment outside security of supply or green gas development.
10. A hydrogen economy could emerge in the long run, subject to falling costs. It would allow energy to be stored or moved from favourable production zones to consumption centres, and would above all address large-scale decarbonisation of power and gas systems.
Consumers and pace
11. Consumers will take control of their supply. Households and SMEs will increasingly become self-generators, numbering in the millions in each major European country. They will be able to buy on peer-to-peer platforms and sell surplus output. For large companies, long-term PPAs with renewable generators will develop at scale.
12. The pace of change will accelerate considerably. Falling solar and battery costs, progress in offshore wind and the forceful arrival of information technology are reshaping at unprecedented speed an infrastructure industry with long time constants. Here too, with a risk of stranded assets.
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