Commodity Market Report
ERCOT power markets long-term outlook H2 2019: The view to 2050 as the transition accelerates
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Report summary
North American electricity markets continues to transition towards low cost renewables backstopped by low cost natural gas fired generation. In this outlook we extend the forecast for the first time through 2050, with markets more broadly transitioning away from fossil fuels. During this extended period renewable saturation begins to more uniformly outpace the impact of growth in gas and carbon prices, and prices begin to flatten or begin to decline in real terms.
Table of contents
- This outlook continues to assume a federal carbon price in the US starting 2028. This will also serve as a backstop floor price for all states under regional programs in the future.
- Despite the strongest YOY demand growth in a decade last year, this year has been more contained, as most markets are now trending negative YOY due to much milder weather.
- Future trends in demand remain heavily leveraged to new energies like energy efficiency, distributed generation and electric vehicles, which are expected to account for a fifth of electric demand in 2040. As step function efficiency gains begin to moderate, early signs of an expected recovery in demand are now emerging.
- Still, the days of 1% p.a. plus growth are not likely to return on a countrywide basis, at least until new end use electrification starts to take off.
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Renewables, storage & hybrid technologies
- (Renewables include utility-scale and distributed solar + onshore and offshore wind)
- While utility scale solar and wind are expected to dominate renewable generation, emerging technologies are set to radically increase their market share. Residential and commercial solar is expected to account for 30% of all solar generation in 2040, doubling from today's level. Offshore wind accounts for 20% of wind generation by 2040, up from negligible levels today.
- Utility-scale solar
- Residential solar
- Non-Residential Solar
- Onshore wind
- Offshore wind
- Battery storage (Grid scale)
- Hybrid systems (Solar plus storage, Wind plus storage)
- Technology LCOEs (levelized cost of energy):Cost of mature solar and wind technologies now below gas technologies across geographies in NA; expected to stay that way despite phase down of subsidies.
Tables and charts
This report includes 1 images and tables including:
- Figure 2: LCOE ($/MWh) forecast for various technologies
What's included
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