Renewable energy such as solar and wind will become cheaper and more competitive with fossil fuels and play a larger role in the global economy’s energy mix, according to the McKinsey Global Institute.
In a new report – ‘Beyond the supercycle: how technology is reshaping resources’ – McKinsey predicted global electricity supply from renewable power growing to 36% in 2035 from 4% currently.
The change would be driven by rapid advances in technologies, such as artificial intelligence, automation and data analytics, the report said.
It added that technological advances will reduce energy intensity and raise energy efficiency, potentially increasing energy productivity by 40-70% in 2035.
The reduction in energy demand together with productivity gains by producers could save between $900bn and $1.6 trillion in 2035, said McKinsey.
Director Jonathan Woetzel said: “Changes in the resource sector in the past often came about as a result of regulation but now it is technology that is driving the shifts.
“Our new research shows that the global economy has a significant opportunity to make substantial savings on energy in the next two decades by adopting and embracing technological change.
He pointed out, however, that those savings are not guaranteed. “Policy makers and resource companies both have a role to play in capturing the dividend from technological innovation.”
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Innovation to ‘fuel green growth’
McKinsey report says renewables supply could rise to 36% by 2035
By EBS