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The age of electricity

Author

Listed:
  • Dieter Helm
  • Cameron Hepburn

Abstract

The age of electricity is coming, driven by rapid technological change. On the demand side, the digitalization of many processes is leading to technologies that require electricity, rather than liquid or solid fuels. On the supply side, renewable energy technologies provide electricity directly, at falling cost. Electrification, directly and indirectly (e.g. using electricity to produce hydrogen fuel) can aid the decarbonization of the economy; strong climate policy would accelerate electrification. The big question is when, not if, and the transition is not occurring anywhere near fast enough to meet the Paris climate goals. The immediate impact of the coming age of electricity is the transformation of electricity markets, which need to adapt to near zero marginal costs and intermittency. In the longer term, the impact on fossil fuels will be radical. Fossil fuel prices will fall with demand, and the oil and gas majors will either completely transform themselves or will harvest profits and exit.

Suggested Citation

  • Dieter Helm & Cameron Hepburn, 2019. "The age of electricity," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 35(2), pages 183-196.
    • Handle: RePEc:oup:oxford:v:35:y:2019:i:2:p:183-196.
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    File URL: http://hdl.handle.net/10.1093/oxrep/grz005
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    Citations

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    Cited by:

    1. Paul J. Burke, 2023. "On the way out: Government revenues from fossil fuels in Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 67(1), pages 1-17, January.
    2. Best, Rohan & Burke, Paul J., 2023. "Small-scale solar panel adoption by the non-residential sector: The effects of national and targeted policies in Australia," Economic Modelling, Elsevier, vol. 120(C).
    3. Stoknes, Per Espen & Aslaksen, Iulie & Goluke, Ulrich & Randers, Jorgen & Garnåsjordet, Per Arild, 2024. "Plausible futures for the Norwegian offshore energy sector: Business as usual, harvest or rebuild?," Energy Policy, Elsevier, vol. 184(C).

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