Power generation’s rising importance in carbon neutrality

It currently dominates the carbon abatement cost spectrum.

As global demand is projected to reach 97,000 terawatt-hours by 2070, power generation is seen to take a bigger role in the push towards decarbonisation.

“The role of power generation is, in our view, only likely to increase in the coming decades, as the penetration and pace of electrification are rapidly increasing across sectors that are progressively following their own de-carbonization path,” Goldman Sachs said in a report.

Power generation is currently contributing 35% of global carbon emissions.

Goldman Sachs' analysis showed power generation, specifically renewables with its mature technologies and declining costs, dominates the low-cost end of the carbon abatement spectrum.

“We expect renewable power capacity additions to continue to accelerate, reaching >550GW by 2030, a c.20% increase compared to 2023,” the report read.

Goldman Sachs said this growth should be supported by energy storage solutions, specifically utility-scale batteries and hydrogen.

“We incorporate both of these technologies in our path to net zero and expect utility scale batteries for energy storage to reach c.3,000 GW by 2050,” it said.

Hydrogen, meanwhile, could be used to offset the seasonal mismatch between power demand and renewable output.