The oil industry must brace for five energy “tsunamis” that threaten to drag prices as low as $10 a barrel in less than a decade, according to Engie SA’s innovation chief.
The falling cost of solar power and battery storage, rising sales of electric vehicles, increasingly “smart” buildings and cheap hydrogen will all weigh on crude, Thierry Lepercq, head of research, technology and innovation at the French energy company, said in an interview.
“Even if oil demand continues to climb until 2025, its price could drop to $10 if markets anticipate a significant fall in demand,” Lepercq said at his office near Paris. Crude last slumped to that level in 1998.
“Solar, battery storage, electrical and hydrogen vehicles, and connected devices are in a ‘J’ curve,” he said. “Hydrogen is the missing link in a 100 percent renewable-energy system, but technological bricks already exist.”
The former French gas monopoly, which is now the world’s largest non-state power producer following a decade of acquisitions, is investing in renewables while selling coal-fired plants and exploration assets to shield itself from commodity-price swings. It plans to spend 1.5 billion euros ($1.57 billion) by 2018 on technologies including grid-scale battery storage, hydrogen output, “mini-grids” that serve small clusters of homes, and smart buildings that link up heating, lighting and IT systems to save energy and cut costs.