306 $6 Trillion will be invested in New Energy Facilities over the Next 20 Years

$6 Trillion will be invested in New Energy Facilities over the Next 20 Years

The era of cheap energy is over. As a result, the yearly capital investment to provide the world’s energy will average $304 billion per year over the next 20 years. This is the new forecast in the online continually updated World Market for Your Products published by the McIlvaine Company.

The largest investment category will be new coal-fired boilers with an average investment of $48 billion/yr. However, the trend for coal will be down. This means that the investment in the first 10 years will be greater than in the last 10 years. In the first 10 years the average investment in coal-fired power plant upgrades will be $10 billion/yr but will average only $6 billion in the final 10 years.

Application	Billion $/yr Over Next 20 years	Trend
Refineries - new	32	down
Refinery upgrades	8	down
Coal-fired power - new	48	down
Coal-fired power - upgrades	8	down
Gas turbines	27	down
Coal gasification	9	up
Fossil synthetic fuels	35	up
Nuclear	15	up
Oil production	16	down
Natural gas production	25	down
Ethanol	10	up
LNG	12	up
Wind	30	up
Solar	13	up
Biomass	16	up
Total	304

Also the trend will be down for gas turbines, refineries, and production of oil and natural gas. Investment will instead turn to newer alternatives such as fossil synthetic fuels including tar sands and coal liquefaction.

Planned investments in LNG liquefaction plants, tankers, and regasification terminals already represent close to $100 billion in capital expenditures. The U.S. will be increasingly dependent on LNG to replace its shrinking natural gas production.

Coal gasification and nuclear power will take a larger market share of electricity generation over the next two decades. However, achievements in improving efficiency of conventional coal-fired plants, and therefore minimization of CO₂, will slow the transition.

Hundreds of ethanol plants are now in planning and construction. The promise of new technology to make ethanol from grass instead of corn will make this fuel competitive with a shrinking supply of petroleum.

Cost of wind power is now attractive and there is already a booming market for this category of power generation. Solar power promises to be an attractive option longer term, but costs are still relatively high. Biomass including waste-to-energy is already a big business and will grow modestly throughout the period.

The trend in each of these categories is shaped by developments in the others. Negative developments in one category will lead to positive growth in others, but in some cases the opposite is true. If oil production peaks in 2010 instead of 2020 and production declines faster than anticipated, then ethanol will be bigger. But conversely, if coal is more attractive, ethanol also increases. This is because the cost of ethanol production falls if cheap coal is used to generate steam.

There are a number of uncertainties which will lead to continuing adjustment of these forecasts as better insights are gained. The global warming issue is a big wild card. Technology developments in coal-to-liquids and solar power are also two big variables. New technology will play a big role in shaping this market.

The economic and political variables are major ones. If GDP in China continues to grow at its present rate, China would become the largest consumer of electricity and transportation fuels during the period. The average American uses 10 times as much energy as people in other countries. The demand impact of major increases in per capita energy consumption could be substantial.

The political variable is the largest. Dependency on Middle East political stability is a major risk. The vulnerability of nuclear, LNG, oil and gas production and refining facilities contrasts with the relative security of coal, wind, solar, biomass, and ethanol.

Suppliers of equipment, steel, plastics and other materials, pumps, valves, piping and other components, information technology including instrumentation and software, consulting services and chemicals are finding opportunities in all these segments. Some represent bigger opportunities than others. So the size of the future market is going to be shaped by the competition among these alternative energy supply sources.