Shell Sees Solar as Biggest Energy Source After Exiting It

Photographer: Peter Endig/dpa via AP Images

In 2004, the Shell Solar GmbH had the world's largest solar power plant in operation, in Espenhain, Germany. Shell’s wind, solar and hydrogen projects were suspended by former CEO Jeroen van der Veer in 2009. Close

In 2004, the Shell Solar GmbH had the world's largest solar power plant in operation,... Read More

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Photographer: Peter Endig/dpa via AP Images

In 2004, the Shell Solar GmbH had the world's largest solar power plant in operation, in Espenhain, Germany. Shell’s wind, solar and hydrogen projects were suspended by former CEO Jeroen van der Veer in 2009.

Royal Dutch Shell Plc (RDSA) says solar power, a business it abandoned four years ago, may expand into the world’s biggest source of energy in the next half century.

The proposition that photovoltaic panels will be the main power source by 2070 is one of the New Lens Scenarios Europe’s largest oil company published today in a report on energy demand this century. A second has natural gas as the main fuel by 2030. Both come with risks to energy producers and the climate.

“The world is complicated, and it’s a little messier going forward,” Chief Executive Officer Peter Voser said today at an event in Washington.

Shell’s solar estimate, which assumes higher energy prices, follows an industry boom that saw capacity grow to about 102 gigawatts in 2012, according to data compiled by Bloomberg New Energy Finance. That compares with a figure of 1 gigawatt in 2000, based on figures from the International Energy Agency.

Lower costs and state support will boost solar to about 600 gigawatts in 2035, or more than 2 percent of power generation, from a small fraction in 2010, the Paris-based group has said.

Shell’s wind, solar and hydrogen projects were suspended by former CEO Jeroen van der Veer in 2009 before Voser took over in July that year. Today’s study is its longest term outlook, after spending $2.3 billion on alternative energy and carbon capture and storage research and development in the past five years.

Carbon Zero

Energy demand may double in the next 50 years on population growth and rising living standards, according to Shell, based in The Hague. At the same time, it sees “global emissions of carbon dioxide dropping to near zero by 2100” under both scenarios.

The first scenario, “a more prosperous, volatile world,” projects oil demand plateauing after 2040, and wind power and carbon capture growing more slowly on a lack of public and policy support. Solar power will dominate, making up almost 38 percent of supply, with oil providing 10 percent and natural gas 7.5 percent in 2100, Shell said. Solar ranks 13th now.

Natural gas demand also will increase, said Jeremy Bentham, the report’s chief author. “The underlying pent-up demand for gas is very” strong, he said. No matter how much is produced, “we see it being sucked up, every molecule.”

In the second scenario, with more moderate economic growth, demand for oil will peak in about 2035. By the century’s end, electric and hydrogen-powered vehicles will dominate roads and there’ll be wide use of technology to trap carbon emissions.

Output of hydrogen now accounts for 2 percent of energy content, mostly for making ammonia and refining oil, Shell said in the second scenario. By 2060, transportation uses of hydrogen will overtake industrial demand, allowing it to rise “phoenix- like” from failed “1990s hype” about hydrogen-powered cars.

Shell decided in 2009 to focus on biofuels in the renewable energy industry and in 2010 set up the Raizen ethanol venture with Cosan SA Industria & Comercio. In 2010, it saw the share of renewables in transport fuel doubling this decade, and since then has focused its research on biofuels made from sugar cane- farm waste after ending an algae project in Hawaii in 2011.

To contact the reporters on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net; Sally Bakewell in London at sbakewell1@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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