深度报告-2026-02-24-Ember-2025电力科技革命未来能源图景前瞻报告_112页_4mb

> **来源：[研报客](https://pc.yanbaoke.cn)** # The Electrotech Revolution The shape of things to come Daan Walter Sam Butler-Sloss Kingsmill Bond, CFA September, 2025 # The Age of Electrotech Humanity is graduating from burning fossil commodities to harnessing manufactured technologies—from hunting scarce fossils to farming the inexhaustible sun, from consuming Earth's resources to merely borrowing them. This isn't a marginal climate substitution. It's an energy revolution. The magnetic centre is the electron: we are revolutionising how we generate, use, and connect electrons. Solar and wind are conquering electricity supply. EVs, heat pumps, and AI are electrifying major new uses. Batteries and digitalisation are connecting supply and demand. Three reinforcing shifts. One energy revolution. The electrotech revolution. At its core, this revolution is driven by physics, economics, and geopolitics. After all, the arc of energy history bends towards solutions that are leaner, cheaper and more secure. Short-terms setbacks matter, but fundamentals matter more. And the fundamentals are stacked in electrotech's favour. Physics. Electrotech makes a mockery of setting fossils on fire and losing two-thirds of the energy to heat. Electrotech is three times as efficient. Economics. Technologies get cheaper with scale. Commodities get more expensive the deeper you dig. Geopolitics. Three quarters of the world is dependent on fossil imports. $92\%$ of countries have renewables potential over 10x their current demand. Electrotech has grown exponentially for decades. The difference today is that it's too cheap to contain and too big to ignore. If current exponentials hold for five more years, global fossil demand will fall off its plateau. Welcome to the Age of Electrotech. Daan Walter, Sam Butler-Sloss, Kingsmill Bond # Contents 1 A new perspective 2 The rise of electrotech 3 Peak fossil demand 4 Fundamental drivers 5 Profound impact 6 Seize the opportunity # Chapter 1 # A New Perspective: The Electrotech Revolution 01 Electrotech is a better way to explain reality Most of the debate on the future of energy is between fossil gradualists and net zero advocates. We propose a third approach - the electrotech revolution - which better explains the extraordinary changes taking place in the energy system today. 02 Electrotech is electricity technology Electrotech describes exponential energy technologies revolutionising how we generate, connect and use electrons - technologies enjoying learning curves and rapid growth, such as solar, wind, batteries, and digital solutions. 03 Electrotech releases 100x more energy Electrotech enables us to harness the sun's enormous energy resources. The sun supplies Earth with as much energy every five days as all fossil fuel reserves combined. This makes possible a new energy era. # Two views on energy dominate the conversation. We propose a third # The dominant energy views in the energy debate today The incumbent energy view, centred on fossil fuels, slow change and business-as-usual EIA – Primary energy supply Source: Energy information Administration The climate view, centred on emissions, policy targets and the moral obligation to fix climate change IPCC – Pathways to net zero emissions Source: Intergovernmental Panel on Climate Change (IPCC) # A third way: the electrotech view The new electrotech view, centred on growth and innovation Rystad – Global useful energy demand 500 EJ of useful energy Source: Rystad Energy # This is a technology revolution in energy Electrotech is technology that revolutionises the supply, connection and demand of electricity # Supply # New ways to generate electricity Renewables as vectors of change Solar PV deployment (GW) Wind deployment (GW) # Connections # New ways to transport and store electricity Flextech/gridtech as vectors of change Battery storage deployment HVDC lines deployment (km) Demand # New ways to use electricity Electrification as vector of change EV sales Heat pumps sales # A century of evolution is converging into a decade of revolution The 2020s mark a great technology convergence ILLUSTRATIVE # This is the age of electrotech It is the latest in a long line of technology shifts Industrial Revolution 1st wave Iron WaterpowerMechanisation Age of steam and rail 2nd wave Steam engines Steam power Rail Age of steel and electricity 3rd wave Electricity Steel Heavy engineering Age of oil and mass production 4th wave Mass- producedautomobilesCheap oilPetrochem Digital Age 5th wave Information technologies Telecoms Software Electrotech Age 6th wave Renewable energy Electrification AI # Electrotech is the child of digital tech Electrotech is made of the same components as digital tech, and inherits its momentum # From burning old sunshine to using it real-time The sun supplies more energy to Earth every 5 days than all fossil fuel reserves # Foragers, Farmers, Fossils, Photovoltaics Electrotech enables another 100x leap in energy abundance # Chapter 2 The rise of electrotech 01 # Electrotech costs have fallen fast Electrotech costs have been falling for decades on established learning curves of around $20 \%$ for every doubling in deployment. They now challenge fossil fuels on cost, with Dolphin EVs retailing in China below $10,000 and solar- plus storage in India at $40 per MWh. As a result, capital is shifting, and two- thirds of energy expenditure is going into electrotech. 02 # Growth has been exponential Key electrotech technologies have enjoyed exponential growth. We see this for generation (solar and wind), connections (batteries and software) and usage (EV and heat pumps). Change is led by China, and is now cascading into the emerging markets. ASEAN, for example, leapfrogged the US in electrification in 2023. 03 # The ceiling of the possible is high above us We already know how to get solar and wind to $70 - 80\%$ of generation at a cost comparable with fossil fuels and how to electrify around $75\%$ of end demand. So we can more than triple renewables and electrification. # The two vectors of the energy transition Renewables replace fossil electricity; electrification replaces fossil molecules # Global final energy demand in 2023 Share of final energy 100% Fossil-fueled power 80% 60% 40% Solar and wind 0% Other clean Electrons $\Theta$ 2 Electrification # Fossil fuel molecules Biomass and heat Share of final energy # Electrotech investment is twice as big as fossils And we spend more on solar capex than on oil Energy investment by category Solar and oil investment # Electrotech keeps getting better Decade after decade of innovation raises the ceiling of the possible Solar cell efficiency More efficient solar cells mean more space and material efficiency and lower cost Top-tier battery cell density Denser batteries mean longer EV ranges; new EV applications opening up and more material efficiency Heat pump coefficient of performance, US sales average Higher COP means a more efficient and powerful heating system # Costs have been falling for decades on learning curves Decades of steady cost innovation improved electrotech economics Solar PV module price \(/W, global price Logarithmic scale Wind installation cost $\mathbb{S} / \mathbb{k}\mathbb{W},$ global price Logarithmic scale Battery cell price $/kW, global price$ Logarithmic scale # Cheap enough to challenge incumbents After decades of cost innovation electrotech is now cheaper than fossils Wind Solar Battery # The manufacturing capacity is in place Outpacing projected demand of even net zero scenarios Solar PV manufacturing capacity Battery manufacturing capacity # Sunrise Solar has gone from smallest to largest source of capacity in 15 years Global installed electricity capacity # Solar and wind deployment is a global story From mature economies to emerging markets Mature markets Greater China Emerging markets Petroregions # The rise of new connections Flextech and gridtech smartly connect supply and demand # Battery storage capacity 150 GW total grid-scale storage capacity # High voltage DC transmission 450 GW installed capacity # Internet connected devices 20 billion units # Smart meters installed 1,200 million units # The cheaper it gets, the faster it goes The virtuous cycle between cost and volume is self-sustaining 3,000 2024 USD/kWh usable Utility-scale energy storage cost, global Utility-scale energy storage sales, global # The long march of electrification We’ve been electrifying the global economy for over a century # Electricity is the king of energy Electricity overtook oil as largest supplier of useful energy in 2007 Useful energy demand # The EV revolution is taking off Electric mobility is growing exponentially across vehicle sizes 2 & 3 wheeler Cars EV Trucks & vans Public charging points # EV deployment is growing exponentially Double digit growth across the world China North America & Europe Rest of World # China is moving at lightning speed Across renewables and electrification Solar and wind generation Electrification Electric vehicles # Emerging markets are leapfrogging Two thirds are ahead of the US in solar deployment and a quarter in electrification Share of EM ahead of US in solar uptake Example countries 25 % of generation Share of EM ahead of US electrification Example countries # Change is happening faster than it can be recorded Central grid statistics cannot keep up with what is happening on the ground # Solar capacity imported/installled Imports generally convert to reported installed capacity within a year or so. Across emerging markets, there is a growing gap between official statistics and import figures, which implies imported solar panels are not centrally connected and counted but installed decentrally. Australia Pakistan Nigeria Colombia # Africa is turning to the sun Solar imports are up by $60 \%$ in the last 12 months Solar module exports from China to Africa # The renewables ceiling is high and rising Some $70 - 80\%$ penetration from solar and wind is within our reach today Wind and solar share of generation 6 solutions to manage variability Demand side flexibility Flexible generation Smarter grids Bigger grids Energy storage Overbuild solar & wind # The electrification ceiling is high and rising Over $75\%$ of the global energy system can now be electrified Already (largely) electrified Can be electrified economically Can be electrified technically Still under development Share of final energy demand by subsector and electrification potential (%) 2000 2025 # The majority of the energy system is within reach Renewables and electrification can triple # Global final energy demand in 2023 Share of final energy 100% 80% Fossil-fueled power 60% 40% Renewables potential within our reach Renewables Solar and wind today 20% 0% Other clean Electrons 2 Electrification Electrification potential within our reach Molecules Fossil fuel molecules Biomass and heat Share of final energy # Chapter 3 Peak fossil demand 01 # Peak fossil demand forelectricity The rapid growth of solar and wind enables them to take a rising share of the growth in electricity demand, with $64\%$ of the growth since 2018. In half of the world we have already seen peak fossil fuels for electricity, and initial indications for the first half of 2025 are that China has also peaked. 02 # Peak fossil demand for final energy Peaks are cascading from one area to the next. Fossil demand has been flat for industrial energy since 2014, for buildings since 2018, and for road transport since 2019 Meanwhile two thirds of the world has already seen peak fossil demand for final energy. 03 # Peak China means peak global fossil demand Fossil demand for final energy reached a peak in China in industry in 2012, in buildings in 2017, in transport in 2021, and in electricity in H1 2025. As a result total emissions are down by $1\%$ year on year. Meanwhile, China is the pivot nation, as it accounted for $95\%$ of the net growth in fossil fuel demand since 2018. As a result, a Chinese peak implies a global peak. # No space for fossils to grow in electricity Solar and wind are about to take all the growth Annual change in electricity generation # Electricity is taking all the growth in final demand Peak fossils in industry was 2014 and in buildings was 2018 Final energy demand by sector # EVs are driving a plateau in road transport And road transport is $75 \%$ of transport energy demand Oil demand in road transport in the IEA STEPS scenario and savings from EVs, 2010-2035 # Industrial peaks everywhere Only $6 \%$ of energy demand comes from sectors which still have structural fossil growth Fossils peaked and in decline Machinery Pulp and paper Wood products Textiles Other industry Agriculture Iron and Steel Non met. minerals Transport equip. Chemicals Mining Construction Nonfer.metals Fossil molecules — Electrons Share of industrial demand # Most of the world is past peak fossil fuels Two-thirds of the world is past peak fossils in final energy and nearly half in power generation # Share of the world past peak fossil demand for electricity Driven by clean power and efficiency # Share of the world past peak final fossil energy demand Driven by efficiency and electrification # After the peak comes the fall Countries don't have long plateaus although the world does Fossil fuel demand, peak = 100 # China is the pivot nation Fossil fuel demand has already reached a plateau outside China Primary fossil fuel demand Change in fossil fuel demand 2018-2024 # Fossil fuel demand is peaking in China Final fossil demand stopped growing in 2014 and fossil electricity in H1- 2025 Final energy consumption Electricity generation, 12-month rolling sum # Chapter 4 # Three fundamental drivers of change # Physics Electrotech is more efficient than alternatives # Economics Electrotech as a technology has learning curves and growth curves # Geopolitics Electrotech is a key tool of energy security # Chapter 4.1 The physics of change 01 Fossil fuels are very inefficient The fossil fuel system wastes two thirds of its primary energy. $4.6 trillion a year goes up in smoke, and this sets up a very attractive environment for more efficient solutions. 02 Electrotech is three times more efficient Electrotech is three times more efficient than fossil tech in sectors that make up two thirds of fossil fuel demand: electricity; road transport; and low temperature heat. Fossil fuels have to be burnt, requiring 17,000 million tonnes (mt) a year to be shipped around the world. Electrotech needs annual deployment of under 300 mt to build out the infrastructure required to harness the sun and wind. 03 Electrotech beats the rest of cleantech Electrotech is far more efficient than other cleantech solutions like CCS, biomass or hydrogen. # Energy is all about efficiency At its core, the energy system is about converting energy into useful forms as efficiently as possible # The current fossil energy system is incredibly inefficient We lose some two thirds of the energy we put into the system Global energy flows and waste, EJ per year, 2019 # Electrotech is 3x more efficient It offers a leap in energy efficiency across the economy Fossil thermal Supply Electricity generation 30-40% efficiency Demand Transport Internal combustion engine 25-40% efficiency Heating Gas boiler 85% efficiency Wind & solar Renewable electricity 100% efficiency Electricity Electric vehicles Renewable electricity 80-90% efficiency Losses Propulsion Heat pumps Ambient heat Losses Heat Renewable electricity 300-400% efficiency 2-3x as efficient 2-4x as efficient 3-4x as efficient # Electrotech enables us to get much more for much less Electrotech can provide the same useful services for three times less final energy Example: passenger cars Final energy demand The total global car fleet could run on about 13 EJ of electricity, which is equivalent to under $15 \%$ of total electricity demand today # The unbearable heaviness of the fossil fuel system The fossil fuel system requires over 50x more materials than electrotech # Total material demand for the energy transition for 25 years (2024-2050), Million metric tons # Fossil fuel extraction per year today, Million metric tons Total over 25 years # Borrowing, not burning If you recycle batteries and improve performance, you don’t need to extract new minerals # Efficiency differentiates electrotech from other cleantech Molecule- based cleantech does not enjoy the tailwinds of being more efficient # Chapter 4.2 The economics of change 01 # Technologies have learning curves Electrotech is small and modular with lots of opportunity to innovate. The more electrotech you deploy, the cheaper it gets because of learning curves of around $20 \%$ for every doubling of deployment. In contrast, fossil fuels need to fight a constant battle against depletion. 02 # Technologies grow exponentially Electrotech grows rapidly on standard S-curves that we have seen in many other technologies over decades. For 30 years, solar capacity has been doubling every three years on average, and since 2020 battery storage has been nearly doubling every year. 03 # Electrotech makes you rich Electrotech drives GDP growth, powers the industries of the future and supplies all the expected growth in energy jobs. # Learning beats digging Electrotech gets cheaper with scale, whereas fossil fuels get more expensive Solar panel price cost versus amount manufactured Cumulative solar PV capacity manufactured Oil price versus amount extracted Cumulative crude oil extracted, billion barrels # Technologies beat commodities on cost Electrotech is the triumph of brain over brawn Historical costs of energy sources # There is a huge solution space to explore The electrochemical solution space underlying electrotech is enormous Example: battery cell solution space # Learning by doing Electrotech is small, modular and cheap, allowing for a lot of experimentation and learning Cumulative units produced Typical deployment effort # S-curve as usual, not business as usual Successful technologies grow along S-curves # Individual products Technological adoption by household in the United States # Infrastructure systems Share of maximum size in the United States # S-curves are the signal in the noise Electrotech is growing on S-curves; timing varies but the shape is surprisingly uniform Solar and wind uptake by country – actual Solar and wind uptake by country - time-shifted # To the victor go the spoils Winning at electrotech means gaining cheap energy, jobs, growth, and future industries Change in energy employment, 2019-2030 Contribution of cleantech to GDP growth, 2023 # Chapter 4.3 # The geopolitics of change 01 # Fossil fuels create dependency and risk Fossil fuels are burnt every day and have to be bought again the next day, creating system risks for the buyers. Three quarters of the world live in fossil fuel importers, and regions like Europe are dependent on imported fossils for two thirds of their energy supply. In a world of rising tension, that is far too much risk to bear. 02 # Electrotech enables energy security Electrotech is the foundation of energy security because every country has access to the sun and wind, and can electrify end demand. Renewables added to the electrification of transport and low temperature heat can reduce fossil imports by $70\%$ . Once electrotech is bought, it lasts for decades, providing insulation from the vagaries of global pricing. 03 # China is leading the race to the top China is leading the electrotech revolution and deploying its technology at scale and speed into the emerging markets. Other countries seeking independence and influence will need to compete in this race to the top for the superior technologies of the future. # Fossil import dependency is widespread Over 50 countries import more than half their primary energy as fossil fuels Fossil net imports as a share of primary energy demand 2022, % # Fossil fuel imports are very expensive A quarter of the world spends over $5 \%$ of GDP on annual fossil fuel imports Fossil fuel net imports $(-)$ and exports $(+)$ value as share of GDP, 2022 # Renewables are available to all They are 100x bigger than fossil fuels and every country has enough to be self-sufficient Renewable potential as a multiple of energy demand in 2022 Share of population endowed with replete or better renewable resource Replete to superabundant # Renewables, EVs and heat pumps set you free Just a few technologies can reduce global energy imports by $70 \%$ Global net spending on fossil fuels by importers # Electrotech brings energy security More domestic renewables and electrification can drastically curb energy dependence Global energy demand in 2023 # You can't turn off the sun A solar panel provides 30 years of energy freedom # Electrotech saves you from fossil volatility Once installed, electrotech costs remain stable – even if global supply chains falter or fuel costs rise Total cost of ownership breakdown, %, US examples Residential heating Passenger cars Inflation risk after deployment # Electrotech offers a path to permanent energy security When fossil flows stop, the economy stops. When electrotech flows stop, only growth is at risk # From fossil import dependency... to electrotech import dependency... to full circular energy independence. In an economy running on fossil imports, when imports stop, all activity stops In an economy running on imported electrotech, when imports stop, only growth is inhibited. In an economy running on local circular electrotech, trade shocks have little impact At immediate risks without imports Not at immediate risk # China is the first major electrostate And that sparks a geopolitical race Inventing Patents Annual cleantech patents Producing Manufacturing Battery manufacturing Exporting Cars Deploying Renewables Solar & wind generation Electrification % of final energy # China is exporting the electrotech revolution to the world Gaining allies along the way — especially in the emerging markets # Chinese exports Solar PV Batteries Electric vehicles # China is exporting the capacity to build electrotech Over $100bn of outbound FDI on electrotech since 2023 Chinese electrotech investment since 2023 # Chapter 5.1 # Profound impact on the energy system 01 Electricity 2.0 speeds up change Electrotech solutions are converging into a river of change which will drive more rapid electrification and a continuation of the growth of renewables up S curves. 02 The emerging market leapfrog continues The emerging markets will continue their energy leapfrog, led by the growth nations of Asia. Many emerging markets are deploying renewables more rapidly than developed markets did before them and are electrifying end demand more quickly. 03 Fossil fuel demand will be in decline by 2030 Fossil fuel demand is on a bumpy plateau at present, but the continued rapid growth of electrotech will increasingly push fossil fuels into decline by the end of the decade. This is substitution not addition. And that creates vulnerability for areas such as refining or LNG. # Electrotech will get cheaper driven by learning curves From competitive to irresistible Wind costs Solar costs Battery costs Sources: IRENA, BNEF, Ember Futures extrapolation based on learning rates; a method set out in detail by Oxford INET among others. Costs are derived by extrapolating historic growth rates and learning rates for each of the key technologies for the next decade. Solar assumes growth (g) of $15\% - 18\%$ and learning rates (LR) of $20 - 30\%$ . Wind $8 - 13\%$ (g) growth $12 - 17\%$ (LR). Batteries $19 - 22\%$ (g & 19 - 29% LR. # Electricity 2.0 is here Electrification will speed up driven by cheaper, more efficient, local and digital electricity Electricity 1.0 Driven by inefficient burning Reliant on imported fuels Volatile costs set by commodities Centralised generation Analogue, static demand Non-fungible Electricity 2.0 Directly from the sun, without combustion Local Falling costs set by technologies Decentralised generation Digital, adaptive demand Fungibility from batteries # Electrotech unleashes a virtuous spiral Advances in one area make the other areas more attractive 1 Electrified demand scales renewables, driving costs lower 2 Variable renewables need smoothing and create arbitrage opportunities for flextech 3 Using electricity when it's cheapest incentives demand 4 Cheaper, local renewables make electrifying more attractive 5 More demand to pool & optimise 6 Flex & gridtech enable higher penetration # Renewables and electrification will keep growing The momentum will continue Solar & wind share of global generation Electricity share of final energy # Don’t expect the road to be smooth Global curves are smooth; but locally it is a bumpy ride of lagging and leading Smooth global curve Global EV car sales Bumpy local curves Larger-than-expected slowdown Faster-than-expected acceleration Emerging market EV sales # The emerging market leapfrog has strong momentum Change is happening faster than in the West Solar & wind share of electricity generation, time-shifted China and Asia are leapfrogging the OECD in electrification # Road transport is the soft underbelly of the oil system Sales translate into stocks within 15 years or less Electric vehicle sales Oil demand for road transport # The growth of electrotech means the decline of fossil fuels After taking all the growth by the end of this decade, electrotech will start to push fossils out Global coal demand Global oil demand Global gas demand # Skewed oil demand will disrupt refining For the first time in history, the demand for a certain part of the barrel will start to structurally decline... ...which will put many refineries which are dependent on gasoline and other product revenues under pressure Growth in world oil demand by product, 2024-2030 Typical yield of one barrel of oil in a refinery As demand for gasoline, fuel oil and other products falls, it depresses prices for over half of typical refinery output Only more complex refineries can shift (some) of the barrel to kerosene or other chemical products — many refineries cannot and will struggle # A battle between overcapacities LNG versus solar is the great battle for the future of energy LNG overcapacity – supply and demand Solar PV module overcapacity – supply and demand # Solar will win the battle for the energy future Because solar offers a better deal: more efficient, faster, cheaper, and local Steps to deploy new energy # Chapter 5.2 # Wider implications of changes in energy 01 Energy change means system change IT and AI have brought the marginal cost of information down to the marginal cost of electricity. Electrotech is now doing the same for energy itself, pushing its marginal cost toward zero. Together, this unlocks a world of abundant energy and information. That means the end of oil intensive development. 02 Winners will be digital and solar-powered A new class of industrial nations will rise—those with both abundant sunlight and the AI to harness it. The opportunity is greatest in the global sunbelt. 03 Losers will be those who cling to the old As fossil demand slips off the plateau, price swings will intensify—triggering crises for countries and companies that remain dependent on fossil revenues for too long. Fossil assets at the top of the cost curve will be stranded, and returns to new fossil projects will disappoint. # Everything is driven by energy So energy transition means economic transition The conventional, wrong view of the energy sector The more accurate, systemic view of the energy sector # Tech is coming for the energy sector The same people and places that made digital tech, mainly in China, are now making electrotech ILLUSTRATIVE AND NON-EXHAUSTIVE Electrotech is manufactured in the same places as digital tech # Many electrotech leaders started in digital tech # CATL Robin Zeng Yuqun Founder & Chairman Spent a decade at ATL developing Li-polymer batteries for iPhones and other smartphones # 34D Wang Chuanfu Founder, Chairman & CEO As GM at BAK Battery Co., scaled Li-ion cells for Nokia & Motorola phones # SUNTECH Shi Zhengrong Founder & Chairman (until 2013) Led thin-film PV R&D at UNSW, pioneering semiconductor-style solar cell fabrication before commercial scale-up. # NIO William Li (Li Bin) Co-founder & CEO Built Bitauto app as an online auto-services platform, before starting Nio # LONGI Li Zhenguo Founder & President Early role at Huashan Semiconductor Materials, processing wafers for PC & mobile chips, building semiconductor expertise. XPENG He Xiaopeng Co-founder & Chairman Co-founded UCWeb, developing China's leading mobile browser, then applied that mobile-tech know-how to EVs. NEBULA # Li Auto Huang Shilin Former Vice Chairman & Deputy GM, CATL Spun off ATL's CE-battery arm into EV focus, leveraging his battery-tech background in consumer electronics. Li Xiang Founder, Chairman & CEO Created Autohome as a data-driven car-sales & AI platform, blending digital-marketing and automotive retail. # AI accelerates change AI may raise electricity demand, but it is of tremendous benefit to scaling electrotech AI energy demand growth in context Impact of scaling AI on electrotech, examples # The zero marginal cost economy is coming Between AI and electrotech, the marginal cost of energy and information will fall dramatically ILLUSTRATIVE Cost of information # The energy technology frontier has moved East Patents are a leading indicator of where the leading companies of the future will be Annual applications for patents in clean energy technologies # The end of oil-intensive development China’s per capita road oil demand peaked at a tenth of US levels – other emerging markets are set to follow Per capita road oil demand and GDP # Electrotech liberates the power of the Sunbelt The emerging markets will have the lowest electricity cost # The automotive sector is a warning sign for other industries In four years, China went from small to dominant Car exports: China is taking over, enabled by EVs Role of automotive in selected economies # The first few million barrels decline will hurt Companies and countries dependent on the price of oil will face hardship as prices fall Global oil supply cost curve # Notes Top quartile is dominated by independents and majors, and fewer national oil companies. Even a few percent decline in oil demand can evaporate most of the production of some players. Many petrostates need oil prices well over $50/bbl to have government finances break even: Fiscal breakeven oil price Saudi Arabia: $98/barrel • Iraq: $84/barrel - Kuwait: $88/barrel • UAE: $51/barrel # Fossil demand decline will have much wider implications For example, ports all over the world are set to lose major customers Share of global shipping from fossil fuels Fossil ports around the world # Chapter 6 Seize the opportunity 01 # The time is now This is the decade that everything changes. Leaders will build the capacity,electrotech prices will become irresistible,electrotech will continue to grow up S-curves, and fossil demand will start to decline. It is time to rethink standard energy models because by 2030 the new reality will be priced into markets. 02 # Change is hard Inertia and the lobbying power of incumbents combine to make change difficult. It is hard to deploy new technologies and identify future leaders. Even policymakers who want to drive change can pick the wrong solutions. 03 # Intelligent policy action is vital Policymakers who wish for their countries to reap the benefits of the electrotech era need to rethink their strategy. That means getting the price of electricity down and electrifying end demand. It also means experimenting with policy, and moving on from failed solutions. # This is the decisive decade A century in the making, electrotech will define this decade Manufacturing capacity is built: Batteries S-curves hit their steepest parts: Solar Electrotech get too cheap to resist: Batteries Fossil fuel demand enters terminal decline # Beware of the limits of old energy models Complex models are missing the reality of exponential change New solar additions EV share of sales US coal demand # Nobody said it was easy Investing in technology revolutions is always risky Car companies in the US Registered cars in the US # Normal playbook 01 Brutal competition drives overcapacity and shakeouts 02 Most new entrants fail in the early stages 03 Companies and investors chase growth before profits 04 Market volatility is highest during the early phase 05 The winners win big 06 Failure at the firm level is a necessary part of advancement at an economy level # Focus on the Fundamentals Three key questions to gauge new energy technology in times of peak confusion # Physics Does it make the energy system more efficient? # Economics Is it small and modular, so it can be manufactured at scale and benefit from learning curves? # Geopolitics Does it enhance the independence and security of its user? # Pick technologies that have the wind in their back Many popular solutions will struggle in the face of reality Physics Does it make the energy system more efficient? Economics Is it small and modular, so it can be manufactured at scale and benefit from learning curves? Geopolitics Does it enhance the independence and security of its user? CCS × No × No × No Biofuels × No × No × No unless you are Brazil Green hydrogen × No × Not really except for the electrolyser ✓ Yes unless imported Electrotech ✓ Yes ✓ Yes ✓ Yes # Avoid the distractions Some cleantech only gets louder; electrotech actually delivers Global installed CCS capacity 2,000 million tons $\mathrm{CO}_{2}$ per year avoided 1,500 1,000 II A E The incumbent narrative Wind and solar avoided emissions # Incumbents resist change because the status quo is so profitable Governments need to decide what is in their country's best long-term interest Oil rents Fossil fuel subsidies Oil and gas lobbying in the US # Back the builders not the blockers Unlock the queues of electrotech that want to come online Clean energy stuck in the connect queue Typical deployment time # It's not all about manufacturing The user benefits are 100x greater than the manufacturer profits The economics of putting up a couple of solar panels with 1kWp of capacity, UK example Profits # The electrification imperative Many countries are building renewables; few an electrostate Wind & solar generation share increase since 2010, %-pt Direction of travel in the two races of the energy transition Population size OECD Emerging markets Petro Regions Greater China # Econ 101 Lower prices incentivise uptake Electricity price Electrification, 2022, % # The West can get back on track with electrification Europe and the US were able to grow electricity demand rapidly for decades before 2008 Europe electricity demand US electricity demand # Tax what you want to phase out High taxes on electricity will only slow down electrification # Experiment with policy and regulation Just as we experiment with new tech, we should test new policies and regulations New electrotech Different tech specs versus fossil incumbent Example policies and regulations to experiment with to better match new tech Utility-scale wind & solar Variable with weather; available everywhere; zero marginal cost Regional pricing Nodal/local battery tenders Power price-setting reform Rooftop solar & microgrids Consumers become prosumers; power flows two ways Connection fast tracking Locational tariffs Microgrid resilience payments EVs and heat pumps Loads get more local, mobile, and can be flexed sub-hourly; availability varies by user behavior and season TOU and availability pricing Storage buffer incentives Interoperability / API sandbox Industry electrification Very large, shiftable electricity demand for some sites; hard baseload for other sites Zonal demand tenders Flexible industrial contracts CfD for offtake prices Grid upgrades & advanced sensing New sensors and controls give fast, local visibility and automated options Dynamic line rating Performance-based payments Private power lines # Falling emissions are a consequence of the Electrotech Revolution The faster electrotech grows, the faster emissions will fall Global $\mathrm{CO}_{2}$ emissions from energy # The time is now 01 For the first time in history, we can harness the exceptional power of the sun through electrotech 02 After a century of evolution,electrotech is now coming together in a decade of revolution; surging globally, replacing fossil fuels, and powering emerging economies 03 Change is driven by the fundamental forces of of physics, economics and geopolitics, not just climate action 04 This revolution will come faster and go further than most think, stranding more than just energy assets, and reshaping global leadership 05 This is the decisive decade. Surf the electrotech wave or be dragged under # About Ember Ember is an independent energy think tank that aims to accelerate the clean energy transition with data and policy. Its vision is a world with a safe climate, powered by a clean, electrified energy system for all. # About Ember Futures This report is the first annual pitch deck from Ember Futures, a new research initiative established to help leaders navigate the rapid rise of electrotech and the decline of fossil fuels, and what this transition means for energy, financial markets, and geopolitics. # Acknowledgements Data visualisation: Chelsea Bruce-Lockhart, Reynaldo Dizon. Data: Sam Hawkins, Euan Graham, Nicolas Fulghum. Strategy: Phil MacDonald, Harry Benham, Bryony Worthingon, Dave Jones, Kostantsa Rangelova, Richard Black. Communications: Hannah Broadbent, Ardhi Arsala Rahmani, Rashmi Mishra, Rini Sucahyo. Asia team: Aditya Lolla, Muyi Yang, Dinita Setyawati, Ruchita Shah. With thanks to: Arthur Downing, Assaad Razzouk, Amory Lovins, Bill McKibben, Bruce Douglas, Chris Goodall, Freya Newman, Greg De Temmerman, Hannah Ritchie, Hauke Engel, Jon Hansen, Jules Kortenhorst, Kate Bassett, Leonardo Buizza, Liza Rubinstein, Mark Campanale, Maria Pastukhova, Michael Collins, Michael Seckler, Mike Hemsley, Nigel Topping, Paul Dickinson, Tom Steyer. Cover image: NanoStockk, Getty images # Authors Daan Walter Sam Butler-Sloss Kingsmill Bond, CFA