Three trends that radically change the energy market - Bloomberg New Energy Finance

Michael Liebreich, the founder of Bloomberg New Energy Finance, set forth three trends the global energy market is being through. They mark the “age of plenty”:

1. Cheap fossil fuels are here to stay since production costs are declining.

2. Intermittent renewables will dominate electricity supply by 2040, with huge challenges for grid managers.

3. Demand for electricity is flattening out, losing its link with economic growth.

The thing is that energy will be plentiful for years to come, Liebreich said in a presentation Tuesday at the research group’s conference in London.

Oil will remain near $50 a barrel than to $90, and renewables will gain market share, he said.

“There has been an enormous amount of innovation in the unconventional gas industry,” Liebreich said adding that the reductions of cost have resembled what is happening in solar.

Costs of renewables are declining to the levels of fossil fuels.

All the variety of LED light bulbs are beginning to have an impact. Electricity demand is under pressure due to energy-efficient technologies of all kinds. The chart below demonstartes Australia’s experience. Actual power consumption is shown by the green line. The gray lines signal demand forecasts made each year since 2010 by regulators, and the blue line is their most recent forecast.

Together, the trends may damage coal hardest, as limits on pollution push up the cost of burning the dirtiest fossil fuel.

There is great supply and poor demand, Liebreich said. “The price of coal is on a gentle glide path toward the shutting of large amounts of capacity.”