DNV report predicts $12T to be spent on renewables, grid infrastructure in United States, Canada by 2050
In a report titled Energy Transition Outlook North America, classification organization DNV estimated that the United States and Canada will likely spend a combined $12 trillion on renewables and grid infrastructure between now and 2050.
As large a number as that is, it would help with reductions in other ways. The same report found that energy spending would go from accounting for 4 percent of the GDP to 2.5 percent. Much of this would be driven by the expansion of electrification, which could halve household energy bills by 2050 – at least, if the grid undergoes the necessary expansions to increase its capacity 2.5 times over the same period.
As the transition continues, domestic fossil fuel demand is expected to fall – likely by 60 percent by 2050. In fact, capital expenditure on renewables could overtake fossil fuel spending by 2040. This has been helped by new policies in North America that have encouraged massive investment into new technologies to address lack of grid capacity and more.
“The cost efficiencies of renewable power are proving irresistible even in the land of big oil,” said Remi Eriksen, Group President and CEO at DNV. “The $12 trillion to be spent on renewables and grid infrastructure in the U.S. and Canada should be viewed as an opportunity to put the region at the heart of technologies essential to the global energy transition, such as hydrogen e-fuels, whilst reducing energy bills for households.”
Still, while solar and wind power is expected to grow 15 and 8-fold respectively by 2050, and hydrogen share of the North American energy mix could rise to 9 percent, bottlenecks in transmission lines remain an issue. DNV noted that if not properly addressed, they would dampen the appeal of wind and solar installations.
The report gave special credit to the U.S. Inflation Reduction Act (IRA), which built off of the intentions of the Biden administration, for progressive policies that have actively hastened the energy transition. It still isn’t enough to get the U.S. and Canada to net zero CO2 emissions by 2050 — they are on track for well short of that, at a 75 percent reduction – and the significant changes that would require are unlikely in the time left.
Even so, electrification will likely double by 2050 and natural gas demand will nearly halve by 2050, although its export will remain stable. Solar should become the largest energy producer by the mid-2030s and account for nearly half of all electricity generated in North America by 2050. Wind, once it overcomes inflationary and supply chain pressures, should likewise grow to account for 35 percent of electricity supply by 2050.
