How the Energy Sector Will Look in 2030 and Beyond

Published on March 31, 2021 by Mahesh Agrawal

The global energy landscape is undergoing a transformation and could witness radical changes over the next one to two decades. The major factors driving this change are worsening climate change and growing awareness of the ill effects of environmental pollution globally. Technological advancements towards the sustainable and efficient use of energy have been helping countries plan zero- or even negative-emissions policies for the longer term that could be instrumental in achieving targets/commitments related to climate goals. The pandemic has likely slowed or delayed some of these changes, but we see no material adverse effect on cleaning up the energy sector in the medium to long term.

1. Switch to electric vehicles — Most countries are focused on reducing their emission footprint, and switching to electric vehicles is considered to be one of the most viable options for doing so. Although challenges such as low mileage per charge, high initial cost and lack of infrastructure remain, increasing investment in the sector, improving technical efficiency, regulatory policies in favour of the switch and increasing awareness among consumers are likely to help electric vehicles gain traction. Deloitte estimates that the share of electric vehicles in global automobile sales could increase to around 32% by 2030 1versus market share of around 4.2% in 2020 2. Many automobile manufacturers, including GM 3, Ford 4and VW 5, have set targets to switch a significant part of their current portfolio from petroleum to electric over the next decade, and have made large capital commitments to this end.

2. Switch from coal to gas/renewables — The electricity sector is one of the most polluting globally, accounting for nearly 31% of all manmade emissions 6. The primary reason is large-scale use of coal for electricity generation due to its relatively low cost and the lack of alternatives. However, increasing production of natural gas globally, including shale gas in the US, and technical advancements in renewable energy provide competitive alternatives to coal in the current environment. The Paris Agreement on climate protection further accelerated the switch from coal to achieve the time-bound emissions targets. Many European countries including the UK have targets in place to eliminate the use of coal over the next decade, and emerging economies including China and India have also been investing heavily in cleaner power sources.

3. Cleaner and efficient use of traditional fuels and biofuels — Traditional fuels play a pivotal role in economic development and could be difficult to replace quickly without disturbing the economic balance. However, these fuels can be modernised to meet emissions targets, and many countries appear to be taking steps in that direction. Stricter emission limits on petroleum fuels including petrol/diesel are already in place and could be tightened even further to reduce carbon and nitrogen emissions. Refiners would need to invest in upgrading refining facilities to meet stricter regulatory standards. Biofuels have also been emerging as a fuel of choice given their net near-zero emissions and are being adopted increasingly as a blending component to reduce overall fuel emissions.

4. The increasing cyber threat to energy operations — The interconnectedness of energy infrastructure brings significant efficiency to all energy-related operations and helps automate and manage processes better. However, an unintended consequence of networking is that it exposes these processes to outside interference, namely cyberattack. Energy infrastructure is considered to be critical infrastructure in any country, and an attack could prove to be disastrous. Cyberattacks could be launched to demand ransom, sabotage, or as an act of terrorism or competition. A Deloitte report says that nearly 20% of cyber incidents in 2016 were related to the energy sector in the US 9. Companies in the energy sector need to be prepared to handle these cyberattacks and invest proactively to strengthen their networks.

5. Distributed energy systems — Electricity production has historically been a large-scale business, with a few production plants serving large areas and populations. However, the adoption of renewables is pushing energy production to smaller or individual units. Home solar plants can fuel a single home, while small-scale wind or solar plants can generate electricity for one village or community. While distributed electricity production helps isolate supply-related incidents, it creates more instability in the system, as forecasting energy supply and demand becomes challenging. Open access to energy systems provides consumers with multiple options for power supply, making it very important for companies to build relationships with consumers.

How can energy companies navigate the sector transformation?

Energy systems are evolving fast, and companies operating in the sector need to adopt new operating models and business strategies to survive and thrive in the changing environment. The energy transformation presents both opportunities and challenges. Success or failure of a business would largely depend on its ability to adapt to new realities. We detail below steps companies could take to better explore these opportunities:

How Acuity Knowledge Partners can help

Acuity Knowledge Partners provides expertise for market research on industries, economies and commodities. Our team has a firm grasp of macroeconomic and market concepts, and expertise in technical and quantitative analysis to provide in-depth market insights on relevant topics. We enable clients to manage increasing demand on their teams by providing customised managed services solutions, based on specialised skills and technology, and by delivering operational efficiency, resilience, and significant cost savings.

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About the Author

Mahesh, Assistant Director, has over 11 years of experience in commodity research and has been associated with Acuity Knowledge Partners since Sep 2012. At Acuity Knowledge Partners, he supports a leading European investment bank’s commodity research desk in analyzing commodity markets, preparing research notes and making presentations for conferences and client interactions. Mahesh holds a Masters in Science (Energy Trading) from the University of Petroleum and Energy Studies, Gurugram and a Bachelor of Science from Bikaner University, Bikaner.



We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points.

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Acuity Knowledge Partners

We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points.