The power sector will play a critical role in the net-zero transition. Power generation contributes about 30 percent of global CO 2 emissions, primarily from combustion of fossil fuels. Many governments, utilities, and other companies are investing heavily in renewable sources of energy. As rapidly as renewables have scaled up in recent years, it’s unclear whether wind and solar—along with other emerging solutions, including carbon capture, long- duration energy storage, and hydrogen—can grow fast enough to meet net-zero targets and projected increasing electricity demand.
Its ability to scale up to meet rising demand, however, is in question.
According to McKinsey’s Global Energy Perspective 2022, global power consumption could triple by 2050 (Exhibit 1). The expected increase in demand will stem largely from a shift away from fossil fuels toward electrification of end uses, including transportation (electric vehicles), building operations (electrifying heat), and industrial processes (low-carbon steelmaking). The resulting need for new low-carbon and zero- carbon generation will be unprecedented in the history of the global electrical grid.
Nuclear power is a proven technology that can be called upon to play a bigger role in decarbonization.
Exhibit 1 Electricity demand is expected to triple by 2050 across a range of scenarios.
Global electricity demand, ¹ thousands of terawatt hours
2019–50 CAGR, %
Scenarios ²
80
1.5oC pathway Increased regulations and incentives to eliminate greenhouse-gas emissions create the need for extensive electrification across all sectors, including those that are hard to electrify today Achieved commitments Technological advance ment with strict regulations and targets further boost electrification even in sectors that are harder to electrify (eg, high-temp heat industries) - Further acceleration Technological advancement of proven solutions accelerates cost parity and triggers sooner and stronger electrification (such as heat pump adoption or electric vehicles) Current trajectory Consensus view on the key drivers of electricity consumption: increasing living standards and consumption per capita, electrifica tion across all sectors, and hydrogen uptake - Fading momentum Slower cost decline of zero-emissions technologies and lower fossil fuel price outlooks limit the fuel-switching trend
3.8
70
60
3.8
50
40
3.7
2.9% per annum
30
20
3.1
10
0
2.6
1990 2000 2010
2020 2030 2040 2050
1 Including demand for green hydrogen production. ² Scenarios center around pace of technological progress and level of policy enforcement. Source: World Energy Outlook 2021, IEA; Global Energy Perspectives 2022, Energy Insights, McKinsey
McKinsey & Company
Accelerating the journey to net zero
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