Category: Report

A Kardashev scale civilization uses all the energy it has available. Hence this 16-page report explores ten futuristic uses for global energy, which could absorb an additional 50,000 TWH pa by 2050 (60% upside), mainly from solar. And does this leap in human progress also allay climate concerns better than pre-existing roadmaps to net zero?

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Most long-term energy forecasts simply lack imagination. In particular, most energy transition scenarios leave little room for new demand, which is why AI was a shock in 2024. But what if civilization was capable of harnessing vastly more energy?

The Kardashev scale was proposed by Nikolai Kardashev, in 1964. It measures the technological advancement of a civilization according to the amount of energy it is capable of harnessing and using. Kardashev Level 1.0 equates to a civilization that can use all the available energy on its planet. Currently, the useful energy consumption of all human civilization is equivalent to about 0.01% of the solar energy reaching the Earth’s surface at ground level, as discussed on pages 2-3.

In this note, we will go full sci-fi, and indulge the fantasy of near-infinite energy, e.g., from vast quantities of future solar available at 1c/kWh? How much incremental energy demand might human civilization want? Where could it go? And does this produce better human outcomes than limiting global energy demand in order to reach net zero by 2050?

Incremental demand for living space and material possessions are probably the two most obvious yet boring use cases, with demand sensitivities on pages 4-5.

More interesting and futuristic, however, the bulk of this note explores advanced materials that push the limits of engineering (page 6), an unstoppable rise of AI energy potentially culminating in Matrioshka Brains powered by Dyson Spheres (!) (page 7), a return of supersonic aviation (page 8), aerial vehicles (page 9), greening 1bn acres of desert (page 10), infrastructure projects that transform urban landscapes (page 11), electrochemical DAC to construction materials (page 12) and of course space-faring (page 13).

We propose how low-cost solar would provide the vast majority of the energy needed for these futuristic new energy uses, yet oil runs sideways and gas use still rises, in this future energy system (chart below), based on the economic reasoning on pages 14-16.

We started this note as a science fiction fantasy. But after writing it, we think this kind of energy transition is actually more likely to play out than our last published roadmap to net zero, whose deliverability has recently started to seem less likely.

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Absorption chillers perform the thermodynamic alchemy of converting waste heat into coolness. Interestingly, solid oxide fuel cells and absorption chillers may have some of the lowest costs and CO2 for powering and cooling AI data-centers. This 14-page report explores the opportunity, costs and challenges.

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Some power generation sources produce both electricity and waste heat. Absorption chillers can convert that waste heat into coolness. Hence could this combination provide both data-center power and data-center cooling, more economically and with lower carbon, than the traditional approach of using electrically-driven HVAC? This question felt interesting to explore in a dedicated research note.

A fascinating avenue to get net zero back on track, more broadly, while also enhancing energy security and competitiveness, would be to capture more waste heat, including by turning heat into coolness, via absorption chillers. Market sizes are quantified on pages 2-3.

How does an absorption chiller work? The four key stages, in the evaporator, absorber, generator and condenser, are described clearly and concisely on pages 4-5.

What does an absorption chiller cost? Capex, opex and total costs of cooling are drawn from our economic model of absorption chillers, in cents per ton-hour and in $/kW-th, and compared with mechanical HVAC equipment on pages 6-8.

Hence how do the costs compare for powering and cooling a data-center using (i) grid power and mechanical HVAC (ii) CCGTs and mechanical HVAC (iii) simple cycle gas turbines and absorption chillers (iv) Solid Oxide Fuel Cells and absorption chillers? The answers on this comparison surprised us, per pages 9-11.

Challenges with fuel cells and absorption chillers should be considered, before getting overly excited, hence some recent successes and issues are summarized on pages 12-13.

Companies producing absorption chillers and solid oxide fuel cells, including our review of Bloom Energy’s patents, are on page 14.

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What if achieving Net Zero by 2050 and/or reaching 1.5ºC climate targets now has a <3% chance of success, for reasons that cause decision-makers to backtrack, and instead focus on climate adaptation and broader competitiveness? This 14-page report reviews the challenges. Can our Roadmap to Net Zero be salvaged?

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The goal of research is neither to cheerlead for what you want to happen, or to whine about what you don’t want to happen. It should be to predict what will happen. Even when you don’t like the predictions.

Hence every December we have attempted to distil our research from the previous year, into a Roadmap to Net Zero, which suggests the most likely trajectory where the world could reach zero net CO2 emissions by 2050, thereby limiting climate change to 1.5 – 2.0ºC of warming.

Unfortunately, this year, we increasingly fear our Roadmap to Net Zero is not what will happen. The purpose of this note is to explain why.

The first challenge is that we are seeing lower willingness to pay for decarbonization than we expected, per the evidence on pages 5-6.

The second challenge is a more adversarial world, where issues such as defence, self-sufficiency and competitiveness threaten themes such as coal-to-gas switching and climate coordination, per pages 7-11.

The third challenge is slow progress with CCS and CDRs. We find it unlikely that gross emissions will fall below 30GTpa by 2050, but can anything close to 30GTpa be captured and/or offset, per pages 12-13?

Hence our most likely scenario is now for Net Zero to be delayed by 2-3 decades and for 2.5-3ºC of warming by 2100. Around 1.3ºC of this warming has already happened.

What could still salvage a 1.5-2.0ºC Climate Scenario, versus the 2.5-3ºC world that increasingly looks more likely, could be some game-changing technology, emerging at the bottom of the cost curve: AI breakthroughs, thermo-electrics, solar + battery costs collapsing sharply, fusion, electrochemical DAC.

And maybe we should not fixate too much on achieving Net Zero by 2050, or the precise level of warming in 2100, which no one really knows anyway. If you can find good opportunities, which boost competitiveness (and are not overly reliant upon fickle policy support!!), then these are the ways to improve the world’s energy system from the bottom up.

Solar trackers are worth $10bn pa. They typically raise solar revenues by 30%, earn 13% IRRs on their capex costs, and lower LCOEs by 0.4 c/kWh. But these numbers are likely to double, as solar gains share, grids grow more volatile, and AI unlocks further optimizations? This 14-page report explores the theme and who benefits?

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A solar module is a 2.7 m2 rectangle, whose internal semiconductors convert incoming electromagnetic radiation into a direct current via the photovoltaic effect. To maximize energy production, ideally, the entire 2.7 m2 rectangle will be pointed directly at the sun and receive full sunlight. But this is challenging as the sun arcs across the sky, tracing a different path every day of the year, and varying with latitude, as shown on page 2.

Solar trackers orient solar modules towards the sun. The market size, key parameters of different systems, and “how solar trackers work” are succinctly explained on pages 3-4.

The energy uplifts from solar trackers have been estimated at 10-50% in different studies. But we can do better than this broad range, and actually calculate both the energy uplift and the revenue uplift from first principles, on pages 5-8.

The economics of solar trackers can therefore be modeled more effectively. Our base case yields 13% IRRs and deflates solar LCOEs by 0.4 c/kWh. We can also model how steepening duck curves, battery co-deployments, and AI optimizations will further improve the case for solar trackers, on pages 9-10.

The solar tracker industry is worth $10bn pa, relatively concentrated, and relatively unusual for a solar supply chain in that it is still dominated by US companies. We discuss key conclusions from our screen of solar tracker companies on pages 11-13.

A key mega-theme that has permeated our 2024 research has been the rise of AI, and the benefits of greater digitization and optimization. It is interesting to end by noting that solar trackers, once again, fit this trend, and amplify demand for sensor equipment.

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Energy transition is a triple challenge: to meet energy needs, abate CO2 and increase competitiveness. History has now shown that ignoring the part about competitiveness gets you voted out of office?! We think raising competitiveness will be the main focus of the new administration in the US. So this 15-page report discusses overlooked angles around energy competitiveness, and updates our outlook for different themes.  

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A common framework is to call the energy transition a “dual challenge”. The first task is meeting the energy needs of human civilization. And the second task is abating the world’s CO2 emissions. But we increasingly think this framework is incomplete. Energy transition is a triple challenge. The third component is raising competitiveness.

If we only solve for energy supply and CO2 reduction, then there is a danger of backing technologies that achieve both of these things at very high costs; which inflates living costs for consumers, and worsens competitiveness in countries that adopt them (pages 2-3).

The distinction between CO2 abatement and competitive CO2 abatement is illustrated by contrasting CCS and nature-based solutions, in a detailed case study on pages 4-6.

It is really worth thinking about this distinction. Our sense is that the incoming Trump administration is not anti-decarbonization per se. It is simply pro-competitiveness. Hence, we have re-visited our outlook for energy markets and energy transition themes from this lens.

How can developed world economies improve their competitiveness with emerging world economies that have lower labor costs, lower energy costs, and lower environmental costs? Our answer hinges on minimizing the difference in energy costs, then producing better products, via better technology, helped by better infrastructure (page 7).

High-quality infrastructure clearly boosts competitiveness, but can it also be considered an energy transition category? A fiber optic cable moves 1 GB of data with 15,000x less energy than physically transporting it. Bridges, canals, railways and transmission lines save MT-scale CO2. Examples and case studies are on pages 8-10.

Boosting the competitiveness of an industrial economy is helped by selecting low-cost sources of energy and de-selecting expensive ones. Hence, we revisit our electricity cost curves. Especially in the US, we grow more constructive on gas production, gas pipelines, gas turbines on pages 11-12.

Some solar and onshore wind deployments genuinely can improve the competitiveness of energy systems, when deployed in the right place, and in the right quantities. Our outlook for renewables under the new US administration is on page 13.

Incentivizing new technology is another area where we think the new US administration may introduce surprising policies. One proposal that resonates with us is a “first mover tax credit” to help companies justify investments that will de-risk new technologies that later benefit others. Technologies that excite us are re-capped on pages 14-15.

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Gas turbines should be considered a key workhorse for a cleaner and more efficient global energy system. Installations will double to 100GW pa in 2024-30, and reach 140GW in 2030, surpassing their prior peak from 2003. This 16-page report outlines four key drivers in our gas turbine outlook, and their implications.

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25% of global electricity came from burning 150bcfd of natural gas in 2023, generating 6,750 TWH of electricity from a fleet of 1.9 TW of gas turbines. The basic functioning, cost and efficiency of a typical gas turbine are described on pages 2-3.

Our goal in this report is to forecast the market for gas turbines through 2030. To predict the future, however, it is first necessary to predict the past and present, estimating the total market for gas turbines from 1985 to 2023. Our methodology and conclusions are on pages 4-6.

The first reason we think gas turbines will continue gaining share in the global power mix is that they are genuinely a better technology, in thermodynamics terms, than thermal generation via Rankine steam engines, which makes up 50% of global electricity today. This is why the CO2 intensity of a gas CCGT can be 65% below coal-fired power.

There are four key drivers that will accelerate demand in our gas turbine outlook. They are linked to the rise of AI, energy policy in China, the rise of renewables lowering utilization rates across the global generation fleet and pushing baseload facilities to run more like peakers, and rising retirement rates from early-2000s installations. These ideas are discussed on pages 9-13.

Our outlook above suggests a sharp acceleration should be underway in gas turbine orders. Interestingly, we can find evidence that this is occurring, based on the leading indicators discussed on pages 14-15.

Another attribute of the gas turbine market is its high market concentration. Leading companies in gas turbines are noted on page 16.

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Metal Organic Frameworks (MOFs) are a game-changer for industrial separation, which consumes c10% of global energy. Activity is surging. This 18-page report reviews MOFs’ recent progress and future promise. As a case study, CALF-20 can deflate CCS costs by c50%, per Svante’s TSA process, hence the note contains a deep-dive on this process.

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Separating mixtures into their component parts is worth $300bn, absorbing 10% of global energy, and all the more so if CCS/DAC scale up in the future. Costs, energy intensity, CO2 intensity and challenges of separation processes such as refining, chemicals, LNG, hydrogen, biogas, desalination and CCS are summarized on pages 2-5.

Separation is inherently an energy-consuming process, to overcome the Entropy of Mixing, yet today’s industrial separations use 5-30x more energy than their thermodynamic minimum, as outlined on page 6.

Metal Organic Frameworks (MOFs) could be a game-changer for improving industrial separations. But what are MOFs? Why are there 10^15 MOFs in theoretical state space? What are some examples, advantages, disadvantages and costs for MOFs? Answers are on pages 7-9?

What motivated this research note was not simply desperation, due to slower progress and higher costs for many of the post-combustion CCS technologies we have been tracking. We have recently seen some fascinating technical papers, focusing in upon CALF-20, independently replicating claims made by Svante, and helping us to de-risk the idea that MOFs could gain traction for future CCS/DAC, as reviewed on pages 10-12.

What costs for MOFs in CCS? We can de-risk 50% lower CCS costs using MOFs rather than amines, when we take the numbers back to first principles, including the Langmuir Isotherms, MOF material costs, MOF capture rates (in tons of CO2 per year per kg of MOF) per pages 13-14.

Our company screen captures the building momentum behind leading companies in MOFs. Most of these companies are still at venture stage, and some are now reaching growth stage. For public market investors, the momentum of these companies may determine the market for other CCS-related technologies. Key companies and their recent progress are profiled on pages 15-18.

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Modeling US gas supply and demand can be nightmarishly complex. Yet we have evaluated both, through 2035. This 13-page report outlines the largest drivers of demand, requires a +3% pa CAGR from the key US shale gas basins, and argues the balance of probabilities lies to the upside.

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US gas supply-demand matters in the energy transition, in our US energy models and across the shale industry. But the forecasting can be woefully complex, as gas is the bottom of the US LCOE cost curve, and hence it acts as a balancing line.

Hence to forecast US gas consumption, first you need to forecast total US energy consumption, then you need to deduct all other sources of energy supply. Especially in the power sector. In turn, this makes gas demand for power sensitive to all of these other variables.

After five years of research, we actually have done the necessary work to forecast US gas supply and demand, based on the energy consumption of AI, electric vehicles, wind, solar, nuclear, coal phase-outs, grid bottlenecks, gas peakers, global LNG, key export markets, materials demand, reshoring, blue hydrogen, blue ammonia, blue steel, blue chemicals and CCS. It is all connected.

Our definition of US gas markets – what is included and not included in 2023’s 113bcfd market – is spelled out on page 2.

Our outlook for US gas demand in power is discussed on pages 3-5, including bridges of US electricity demand growth, the share that will come from gas, and possible upside on changes in the efficiency of the gas-fired fleet, as baseload plants run more like peakers.

Our outlook for US LNG exports is discussed on pages 6-7. Recent data show countries such as China switching diesel trucks to LNG, and there is upside to our numbers.

Our outlook for gas heating is discussed on pages 8-11. Growth in industrial gas is well underpinned. But after excluding the impacts of weather, recent data suggest a slower phase-back of residential gas heating.

Our outlook for US gas supply, to meet rising demand, is discussed on pages 12-13. It hinges on our US shale forecasts, Marcellus productivity, shale gas economic models, and most interestingly, whether an oil price pullback could pull harder on shale gas basins.

Hence the note concludes by discussing what gas prices might be needed to unlock these requisite volumes. We look forward to discussing our US gas supply-demand outlook with TSE subscription clients.

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Greater digitization of gas networks looks increasingly important, as gas, biogas, hydrogen and CCS all aim to shore up their futures. This 15-page note started as a deep-dive into the true leakage rates in downstream gas; and ended up finding opportunities in sensors and pipeline monitoring.

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Gas sensing is going to be increasingly important, to detect and remediate leaks in the gas network. And all the more so, as gas networks aim to earn their keep in the evolving energy system, while perhaps expanding to include more biogas, hydrogen and/or CCS.

But debatably, there is little point to other clean initiatives if the industry cannot improve monitoring and leakage within its gas networks, and especially gas distribution networks. Our outlooks for biogas, hydrogen, CCS and US gas volumes are on pages 2-3.

Methane leaks matter for the future of gas value chains and require digitization of gas networks. Climate goals have now spawned a large drive to mitigate methane. The key numbers and breakdowns of methane leaks, by industry and sub-industry are re-capped on pages 4-5.

1-5% less gas is metered flowing out of a typical downstream gas network than flows in. This is known as Unidentified Gas (UIG) in the UK or Lost and Unaccounted For Gas (LAUF) in the US. These numbers are increasingly controversial and open the door to gas critics. Our review of the numbers and controversies is on pages 7-10.

Digitizing the downstream gas network is the most widely discussed solution, to detect and remediate leaks in real time, while also potentially lowering the operating and maintenance costs across the network. Costs of methane mitigation are stress-tested on page 11.

We have screened a dozen companies that are specialized in gas pressure sensing and monitoring, and added them to our screen of technologies for mitigating methane leaks. Sensing is a fascinating industry worth $200bn pa across all sectors. Our highlights and observations about these dozen companies are on pages 12-15.

Can GDP decouple from energy demand? Wealthier countries’ energy use has historically plateaued after reaching $40k of GDP per capita. Hence could future global energy demand disappoint? This 15-page report argues it is unlikely. Adjust for the energy intensity of manufacturing and imports, and energy use continues rising with incomes.

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Some commentators argue that energy demand will naturally plateau as GDP rises in the future – or at least the beta between energy use and GDP will fall dramatically. As evidence, the energy consumption within developed world countries has hardly increased over the past 20-years, even as GDP per capita rose by 25%. But can this really be right?

Our outlook for global energy demand is re-capped, with charts illustrating different nations’ energy demand versus incomes, on pages 2-3.

The debate about whether energy demand plateaus with income also matters as markets are starting to price in a re-acceleration of energy, and especially electricity, in many regions, linked to the rise of AI.

At the micro level, there is a strong correlation between income levels and different underlying forms of energy consumption, within wealthy nations, as shown on pages 5-6.

At the macro level, there is also a strong correlation between income levels and underlying forms of energy consumption between nations, where demand markers are still rising steadily, as shown on pages 7-8.

We argue that a shift in global Manufacturing almost fully explains the apparent slowdown in energy demand in wealthier countries. This argument is illustrated in six different ways on pages 9-14.

Manufacturing GDP is 8x more energy intensive than Services GDP. Underlying energy demand is still rising steadily with incomes in the developed world, once we factor in the energy that is embedded in an ever-increasing share of imported products, whose manufacturing we have found convenient to outsource to the emerging world, especially China.

Can GDP decouple from energy demand? Only if you are comparing apples and oranges. Underlying energy demand clearly rises with incomes. Global energy demand will continue rising with global GDP. But where the energy is used depends on which countries do the manufacturing.

Manufacturing activity is thus the crucial variable for the future of energy demand. We see this in our breakdown of global energy demand. And we do see more global manufacturing ahead amidst the largest manufacturing project in human history, aka energy transition.

Many factors drive global energy demand from one year to the next: macro conditions, weather, prices and policies. We still think that efficiency gains (for converting primary energy into useful energy) will step up from 0.8% pa historically to 1.2% pa globally as part of the energy transition. But we do not find much evidence that energy use flatlines beyond some magic income threshold.