Report: U.S. and Canada to spend $12 trillion on grid and renewables
The report states that the grid should expand its capacity 2.5 times by 2050 to support entry of renewable energy resources.
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USA/Canada: The report states that the grid should expand its capacity 2.5 times by 2050 to support entry of renewable energy resources.
The DNV’s Energy Transition Outlook North America report predicts a sharp decline in federal and household spending on energy in the U.S. and Canada due to reduced fossil fuel reliance. By 2050, $12 trillion will be invested in grid expansion and renewables, making energy costs roughly 2.5% of GDP, down from the current 4%. Renewables’ capital expenditure is projected to surpass fossil fuels by 2040, with fossil fuel demand dropping 60% by mid-century. The energy transition, propelled by electrification, will benefit consumers with household energy bills expected to decrease by half by 2050 due to the cheaper electricity generated by renewables. However, current transmission line bottlenecks could hinder the potential growth of renewable energy, emphasizing the need for policies to enhance grid capacity. In fact, the grid must undergo a vast expansion, increasing its capacity 2.5 times by 2050. Policies have already been initiated in the U.S. and Canada to address the lack of grid capacity, although ultimately DNV believes that transmission- and distribution-system operators will be driven by the unprecedented opportunity to capitalize on the vast market for renewable power.
“The cost efficiencies of renewable power are proving irresistible even in the land of big oil,” said Remi Eriksen, Group President and CEO at DNV. “The $12 trillion to be spent on renewables and grid infrastructure in the U.S. and Canada should be viewed as an opportunity to put the region at the heart of technologies essential to the global energy transition, such as hydrogen e-fuels, whilst reducing energy bills for households.”
The Inflation Reduction Act (IRA) and Canadian policies are accelerating decarbonization in the U.S. and Canada. The IRA stabilizes the renewables sector, previously affected by regulatory and fiscal changes, leading to a projected growth of solar and wind power by 2050. Due to IRA, investments in hydrogen, carbon capture and storage (CCS), and direct air capture (DAC) will peak in the 2030s, with green hydrogen surpassing blue hydrogen by mid-2030s. Fossil fuels, currently at 80% of the energy supply, will decrease to under 50% by 2050. Coal production will plummet by 85% due to competition from cheaper electricity sources. The rise of electric vehicles will cause domestic oil demand to decrease by 75%, while oil exports will triple. Natural gas consumption will halve by 2050 as renewables dominate, but exports will remain consistent.
By 2050, electrification will double, representing 41% of North America’s energy demand, largely due to electrified transportation, electrolysis for hydrogen production, and heat pumps. Solar is projected to dominate electricity production by mid-2030s, covering almost half of the region’s electricity by 2050. Wind is also set to contribute 35% by midcentury, despite current economic and supply challenges. However, despite progressive policies like the IRA, North America is not on track to achieve net zero CO2 emissions by 2050. Emissions will only decrease by 75%, with certain industries remaining significant contributors. Achieving the Paris Agreement goals would necessitate drastic efforts, requiring North America to be net zero by early 2040s which will require, among other things, even more rapid scale-up for CCS and almost 6 times as much DAC as is currently forecast.
Source: T&D World
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