19 August 2014
Citi Research Predicts Bright Future for Solar
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Looking at the evolution of energy industry trends through 2020, a report by Citi Research forecasts an “increasingly bright” outlook for global solar power, driven by economics and a diversification imperative.

Overall, the report describes the energy industry as “going through a period of extreme flux” with “no sign of abating.”

citi28 July 2014: Looking at the evolution of energy industry trends through 2020, a report by Citi Research forecasts an “increasingly bright” outlook for global solar power, driven by economics and a diversification imperative. Overall, the report describes the energy industry as “going through a period of extreme flux” with “no sign of abating.” The 64-page report draws from previous reports by Citi, and forecasts and reports by international companies and organizations, including the International Energy Agency (IEA).

Among its main conclusions regarding key trends in the global energy market, the report identifies: a spread of the shale revolution from North America; acceleration of inter-fuel substitution; transformation in inter-regional energy trade; and renewables becoming viable without subsidies.

According to the report, the current state of the energy market can be characterized by: a significant change in supply from the shale revolution; a transformation on the demand side driven by inter-fuel substitution; and shifts in power generation technologies, with renewables replacing coal and natural gas in power generation, and natural gas substituting oil in transportation.

The report notes that fuel substitution from oil to natural gas, and hybrid or electric vehicles is occurring across all areas of transport except aviation. It estimates that higher fuel efficiency and substitution will reduce annual global oil demand growth to 0.5 million barrels/day by 2020. However, the analysts predict that, in the US electricity sector, growing generation from renewables could take over market shares from coal and natural gas, prompted by portfolio standards, environmental rules and falling technology costs of renewables.

Regarding renewables, the report expects solar to grow through 2020 and beyond in new regions and markets, including the UK, China, Japan, the US, India, Latin America and the Middle East, driven by, inter alia, “improving economics against fossil fuels” and the need for fuel diversity. It describes the projections for solar energy in the IEA baseline scenario, featured in the IEA’s World Energy Outlook, which indicate cumulative installations of 662 GW between 2012-2035, as “highly conservative.” It notes that in a number of countries, including Germany, Spain, Portugal, Australia and the South-West of the US, residential-scale solar has reached “grid parity” with average residential electricity prices. The report also argues that “as solar economics continues to become favorable on an unsubsidized basis, the growth in solar is less influenced by government policy.” [IISD RS Story on the IEA 2013 World Energy Outlook]

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