SIEMENS

The trend is clear: Global demand for energy will continue to rise sharply. The International Energy Agency (IEA) estimates that global energy consumption will be around 36 percent higher by 2035 than it was in 2008. This development is primarily being driven by expanding economies in the emerging markets, as well as by world population growth. Fossil resources are limited, however, and using them to provide energy causes the biggest share of CO2 emissions.

The IEA believes this dilemma can be solved through more efficient use of energy and greater utilization of electrical power in applications where fossil fuels continue to dominate — assuming such electricity is produced without emissions. “We believe electricity produced from renewable sources will be the most important form of final energy in the future,” says Prof. Ulrich Wagner, member of the Executive Board of the German Aerospace Center (DLR). The range of future application possibilities for clean electricity is enormous, from household appliances, lighting, and machines, to heat pumps, desalination facilities, and electric vehicles. A study conducted by the German Physical Society (DPG) in 2010 concluded that “electricity is easy to generate and transmit, and it can also be used very conveniently and flexibly.” The IEA adds that for “no other form of final energy” will there be such a sharp increase in demand as for electricity. In fact, global electricity consumption could likely rise by around 70 percent by 2035, with most of the increase to be accounted for by emerging markets such as China.

Many homes and offices around the world are still heated with gas or oil. If electricity is to be produced in the future with low CO2 emissions, though, it makes sense to implement the necessary heating system upgrades in older buildings by installing electrical systems, according to the DPG. Because of this — and also due to higher demand for electrical devices in countries outside will rise by 1.5 percent between now and 2035, despite energy conservation measures. The share of global final-energy consumption accounted for by electricity will then likely rise from 27 percent today to 37 percent.

The potential for using electricity in automobiles is also tremendous. “Electric mobility can reduce petroleum consumption and prevent emissions of climate-damaging CO2 and other pollutants, provided no fossil sources are used to generate the electricity,” says the DPG. The German government expects one million electric vehicles on the road (in Germany) by 2020, and expects five million in operation by 2030 (including plugin hybrids equipped with both an electric motor and a combustion engine).

Plans in the U.S. and China are even more ambitious. Both of these countries want to have one million electric cars in operation by as early as 2015. A study conducted by investment bank HSBC in 2010 estimates that the market volume for electric vehicles will total $473 billion by around 2020. By that time, there are expected to be 8.7 million pure electric cars and 9.2 million plug-in-hybrids on the road.

The key to launching the new age of electricity is to ensure rapid de-carbonization of power generation. The IEA anticipates that the share of the world’s electricity produced with coal, gas, and oil will fall from 67 percent today to about 55 percent by 2035. During the same period, the proportion of power from renewable sources including water, wind, and the sun will rise from 19 percent to 32 percent. And these forecasts are reflected in the outlook for the market. Siemens experts believe that in 2020 more than half of total global investment in the power plant market will be accounted for by renewable energy facilities. HSBC expects the global market volume for low-CO2 energy production to increase from $422 billion in 2009 to $1.043 trillion in 2020.

Alongside hydropower, the main sources of CO2-free electricity in the future will be energy from the wind — and to a lesser extent solar energy. HSBC expects that by 2020 the wind-power industry will boast the lion’s share of the renewable energy market with a stake of $285 billion. Solar power will follow with a $116 billion share of the market.