Global electricity demand is set to climb, growing by an average of 3.4% annually through 2026[1]. Companies across the natural resources industry are being challenged to evolve their business and operating models to meet the changing and growing demands of electrification.
Choose your location
Select the location and the language that you prefer
main content, press tab to continue
Article
The buzz of electrification: why renewable energy networks need to grow by 2050
The future is electric for companies across the natural resources industry, and business leaders have a core role in driving sustainable change for their business.
The bottom line is global grid capacity needs to grow 2.5 times its current size, with annual expenditure on grids more than doubling to $970 billion by 2050[2]. This projected increase in global electricity demand is driven by several key factors:
01
Widespread industrial electrification will need powering
Commitments to decarbonization are driving natural resources companies to reduce emissions and build a sustainable business now and into the future. Although transmission and distribution issues endure, key industry sectors, including oil and gas, chemicals, power, mining, metals and renewables are all actively pursuing opportunities to electrify their operations.
Carbon capture and storage (CCS) is emerging as a core focus for the sector in the medium-term[3]. But alongside CCS, upstream and downstream energy companies are also electrifying processes to reduce carbon emissions by converting or replacing equipment running on fossil fuels, to equipment that runs on electricity. The adoption of electric drilling equipment is a growing trend in the upstream sector, while refineries, being the largest producers and consumers of hydrogen, are exploring ways to utilize low-carbon hydrogen through electrical processes in the downstream sector. Collaborative energy hubs are also emerging in Europe to optimize and stabilize energy flow.
The mining sector has a fundamental role in driving the clean energy transition: supplying the critical minerals, such as lithium, nickel and cobalt (essential to battery production) and copper (for grid expansion). However, several mining companies are facing barriers to decarbonizing their own operations. Some mining companies are exploring options for coal-to-gas switching, others are adopting trolley-assist systems for their haul trucks or trialling EVs in the mines to replace diesel-powered vehicles, which thus increases their electricity demand. To this end, many mining companies are building solar and other renewable plants to supply their energy – particularly to stabilize operating efficiencies and costs in areas where grids are unreliable.
The power sector is driving change[4]. Companies like National Grid are leading by example by electrifying their vehicle fleets. They have committed to transitioning to a 100% electric fleet by 2030 for light-duty vehicles, which not only reduces emissions but also promotes the adoption of electric vehicles (EVs) within the communities they serve[5], increasing the demand for electricity. The strong growth in coal-fired power generation in 2023 – especially in China and India in response to reduced hydropower output – was responsible for the rise in the sector’s CO2 emissions, but as clean electricity supply continues to expand rapidly, the share of fossil fuels in global generation is set to fall below 60% (54%) for the first time in IEA records[1]. To accommodate this changing balance of the energy mix, significant investments are being made in building new and upgrading existing transmission and distribution infrastructure, and energy storage solutions to stabilize supply.
02
The rise of data centers and digital technologies will drive demand
As the global population continues to increase, particularly in emerging economies, the need for reliable electricity supply will continue to increase. Computers accounted for 1-2% of global electricity use in 2018, but this figure is on track to hit 8-21% by 2030[6]. This exponential rise – driven by trends such as advancements in artificial intelligence and cloud computing – is being met with a proportionate boom in data centers. Electricity consumption from data centers, artificial intelligence (AI) and the cryptocurrency sector could double by 2026 to a figure that’s comparable to the electricity consumption of Japan[1]. These facilities are power-intensive, and their expansion is projected to continue driving up overall consumption.
03
From AC to EVs: People are changing their energy consumption habits
Alongside the reliance on electricity in a digital world, rising temperatures linked to climate change are leading to greater reliance on air conditioning systems, particularly in warmer regions. This trend is expected to drive up electricity consumption significantly as more households and businesses install cooling systems. This, alongside the shift to electric vehicles[7] which could account for up to 50% of new car sales globally by 2035 and necessitating extensive charging infrastructure, is further boosting global electricity consumption [8]. Despite energy price hikes dampening consumption across Europe in recent years, EU electricity demand growth is forecast to rise by an average 2.3% in 2024-26[1].
04
Economic growth will open the door for innovation
Emerging and developing economies are the engines of global electricity demand growth. About 85% of additional electricity demand through 2026 is set to come from outside advanced economies, with China contributing to this demand with levels that exceed half of the European Union’s current annual electricity consumption[1] . Strong economic activity, especially in developing regions, will enhance electricity demand as industries expand and living standards improve.
Clean electricity supply is forecast to meet the world’s demand growth through 2026
The renewables and clean energy sector is at the core of the energy transition, providing zero- and low-emission energy to (and through) the natural resources industry and beyond. The International Energy Agency (IEA) projects that low-emissions sources, which will reduce the role of fossil fuels in producing electricity globally, are forecast to account for almost half of the world’s electricity generation by 2026, up from 39% in 2023[1] .
Clean and renewable energy is set to provide more than one-third of total electricity generation globally by early 2025, overtaking coal[1]. Much work is being undertaken to connect and collaborate with fossil-fuel-intensive companies. This can be through forming strategic partnerships through joint ventures and merger and acquisition activity, as well as investment from debt raising and private equity, though financing challenges persist.[9]
In building a more interconnected global natural resources system, risk managers will need to be a voice in the room as functional leaders guide decision-making.
Managing risk will become increasingly complex and interconnected
Greater numbers of diverse energy users and producers will be adopting increasingly decentralized energy generation strategies, utilizing new storage technologies (e.g. battery energy storage systems and CCS) and integrating flexibility into their energy mix. In tackling emerging, interconnected and complex risks, future-ready risk leaders across all natural resources sectors are looking to sophisticated solutions.
Prioritize where to invest in risk management: In taking control of risk, specialist engineers test the current controls and management guidelines for risks, and provide actionable insights on where your investments in risk controls would be best spent – helping to build resilience in the business and demonstrate diligence to stakeholders and insurers.
Make future-ready decisions, backed by data: Achieving long-term success will demand a strategic approach. Identify exposures, forecast the likelihood of future exposures across multiple different scenarios, and implement an optimized risk strategy that accounts for the entire risk portfolio.
The pathway to building a robust risk strategy
from a reactive approach to risk, to a proactive strategy, to a strategic position that makes risk decisions on a portfolio view.
Pinpoint the optimal risk financing decision: Backed by data, innovative tools model each individual risk and generate a band of optimized pathways or decisions in terms of risk spend. This is where you can reach a balance of retention and transfer that aligns with your risk tolerance, knowing there will be no better option for you.
Contact our team to find out how your business can make strides in an electrified future.
Footnotes
- Executive summary Return to article
- DNV New Power Systems report: Global grid infrastructure to double by 2050 to meet surging electricity demand Return to article
- Global Clean Energy Survey 2025 Return to article
- The future is electric: How the power sector is driving change Return to article
- Electrifying National Grid’s fleets Return to article
- The hidden costs of AI: Impending energy and resource strain Return to article
- Although international political tensions are impacting EV sales in some regions in early 2025, the International Energy Agency’s Global EV Outlook, forecasts EVs to compose 50% of total global car sales by 2035. Return to article
- Global electricity demand set for ‘strong rise’ – plus other top energy stories Return to article
- How renewable energy companies can unlock project financing Return to article
Contacts
