Citigroup: solar industry to outperform fossil fuels in long term.

Blue&GreenTomorrow: “Investment bank Citigroup predicts that the solar industry will continue to grow on a global scale and will become competitive with fossil fuels, because of “pure economics” and the need to diversify energy supply over the long term.”
“A report, which was released to Citigroup’s investors earlier this year, entitled Energy 2020: The Revolution Will Not Be televised as Disruptors Multiply, argues that the energy industry is going through a period of “extreme flux” that shows no signs of abating.
Citigroup describes the global solar industry as having an “increasingly bright” outlook. The organisation explains that it believes growth in the global solar sector will be driven by economics, the need for fuel diversity and emerging financing vehicles, as well as some national legislature.
The report says these factors will enable the solar industry to compete with other forms of energy, such as natural gas, over the long term.
It adds that as regulators and new policies encourage fuel diversity, solar costs will plummet leading to improved efficiencies, while natural gas prices will continue to increase.
The growth is expected to come from both established markets, including the UK, China and US, and emerging markets, such as Latin America and India. China in particular is expected to play a dominant role, with the Chinese government setting a high annual installation target.
Whilst the current low gas price environment means fossil fuels are dominant, Citigroup noted that in surveys with US utilities, many have highlighted the need to diversity into other generation sources. This is to ensure that they are protected against future fossil fuel price volatility and risks within the market.
“Besides pure economics, from a utility perspective, the need to diversity is crucial to remove the volatility and possible upward movement in gas prices over the longer term,” the report explains.
It also notes that in many countries residential-scale solar has already reached ‘grid parity’ with average residential electricity prices. More countries are also moving towards grid parity, with the UK expected to achieve this between 2018 and 2021.”
Citi report, 28.7.14: “The energy industry is going through a period of extreme flux and this shows no sign of abating. The shale revolution is spreading from its North American birthplace; inter-fuel substitution is breaking new ground; renewables are becoming viable without subsidies; inter-regional energy trade is being transformed.
Citi has been discussing shale, solar, gas-for-oil substitution, rising fuel efficiencies for several years now. All of these seemingly disparate trends can be pulled into one overarching thesis: the shale revolution represents a step change in terms of supply, while inter-fuel substitution transforms the demand side of the equation; renewables replace coal and gas in power generation and this frees up natural gas to substitute for oil in transportation.
– US gas and International coal prices have already fallen far from their peaks, but oil remains supported by volatile geopolitics. The update to Citi’s global oil demand model shows demand growth continuing through the end of this decade, but at a much diminished rate. This combined with geopolitical turmoil may keep oil prices supported, but this only increases the incentive to find substitutes and gives them more room to compete.
– This note pulls together work from a wide variety of Citi analysts to provide updates both on how the energy industry and Citi’s views are evolving. It includes an update on Citi’s US shale oil and gas supply forecasts and a review of current international shale developments; the potentially disinflationary impact that shale is having on government take in the energy industry; developments in natural gas substituting for oil in trucks in the US and power generation in Latin America; the changing nature of energy demand in China; an update on Citi’s global outlook for solar and the changes afoot in the global automobile industry and much else.
– Tech and energy are intersecting. Google’s purchase of Nest and Apple’s Home Kit signals a new era for energy demand management. The potential for tech giants to monetize negawatts through technology-facilitated energy efficiency may signal the beginning of a confrontation between tech and energy companies with utilities standing in the middle.”