Alternative Energy Sector Expected to Rival Conventional Sources by 2020

A report issued by Boston Consulting Group Incorporated is optimistic about the future of solar-thermal power and biofuels. Authors Justin Rose, Balu Balagopal and Petos Paranikas published the report as a guide for policy-makers and investors looking at emerging environmentally friendly energy technologies. The International Energy Agency estimates that almost $5.7 trillion will be pumped into renewable energy electric generation projects by 2035.

Gasoline may get some stiff competition from ethanol by 2020. The alternative fuel, made from non-edible substances including sugar-rich grasses, will benefit from recent technological improvements and increased production. The authors said, “Technologies in some alternative energy sectors are approaching inflection points in their development and are on the path to becoming viable on a stand-alone basis, either completely decoupled from subsidy programs or requiring much less assistance.” Solar-thermal project costs could be slashed by 50%, dropping to 10 cents per kilowatt-hour.

Production costs in the alternative market will decrease as output increases. Each time production is doubled, biofuel production costs could drop by 20 percent. Enzymes and feedstocks required for refining fuels may fall as much as 50 percent. Bloomberg New Energy Finance data suggests that the development of large-scale biofuel plants could boost the supply of next-generation biofuels to 10 times greater than its current level. Current production sits at almost 480 million liters, with a worldwide supply of more than 138 billion liters.

Photovoltaic energy is another predicted area of growth. The United States and Spain currently utilize the vast majority of the nearly one gigawatt of installed capacity now available. As solar-thermal capacity spreads throughout the world, installed capacity could climb as high as 185 gigawatts in the next two decades.

The Boston Consulting Group noted, “Even promising alternative energy industries face barriers and uncertainties.” Onshore wind should fare well, but it shares a common hurdle with solar-thermal. Energy storage from these sources is still cost-prohibitive, and until storage becomes more economically viable, growth will be limited. Electric vehicles need readily available recharging stations, but should also see growth by 2020.

Carbon capture and storage and offshore wind power are not as likely to be competitive. According to the authors, these alternative sources will be adopted more slowly and will require significant government funding to move forward at all. Financing for infrastructure can prove to be a greater obstacle to development than “the technologies’ economic viability or technical feasibility.” According to the report, the industries most likely to surge in the coming years could have an effect on worldwide energy consumption even sooner than commonly predicted.