According to Royal Dutch Shell, solar could overtake oil as the world’s dominant energy source within the next 50 years. While analysts have long debated how much and how quickly solar could displace oil, this is probably the first time that a supermajor oil company has – through its own analysis – come up with quantifiable numbers. Chevron and Exxon-Mobil, two other supermajors who are increasing their renewable portfolios at exponential rates, also foresee a similar picture, although not quite as quickly.
It’s important to note that this analysis does not necessarily imply that oil production will experience any major downturn in that period – that would have been surprising considering the ongoing efforts in Canada and the United States to extract oil from previously difficult to access areas. What it does mean, though, is that as the world’s energy consumption grows over the next 50 years (by up to 80%), the vast majority of this need will be met through renewable sources, with solar playing the leading role.
Some of this will worry conventional oil producers given the saturation of the current global market with product and stagnation of economic growth in India and China, which have jointly kept prices lower than expected and prevented the launch of expensive oilsands projects. The last thing they need is solar, a clear alternative, becoming cost competitive and eroding the bottom line even further. Assuming that energy consumption grows by 80% in the next 50 years, however, both sectors should be able to grow side by side. For this to happen, the oil companies will have to take steps to ensure that they producing efficiently to reduce costs and prevent an environmental backlash as this generation of ‘green consumers’ grow up and choose their energy delivery methods.
Going back to solar, this news is not completely surprisng. I was fortunate to converse with the Director of Renewable Energy of the Energy Commission of Nigeria just over a year ago. According to him, the country’s solar potential could provide over 100 times the current demand for power in the West African nation. Extrapolate this to other desert areas of Africa, the Middle East, Asia and the Americas and it’s clear that the only things standing in the way of solar dominating the energy market are reliability and cost. The first has grown in leaps and bounds over the last decade; the second is not far behind.