Under Paris agreement, electric cars will hurt oil demand well before power supply: report
Electricity grid substation
Electric vehicles have the potential to upend energy markets as their adoption becomes more widespread.
But how much of an effect will they have? And on which specific markets?
According to a recent report by Wood Mackenzie, the global power grids are likely safe for quite a while, but another market may be turned on its head.
The report, which assumes 125 million vehicles will join the global vehicle fleet by 2035, predicts some 1.8 million barrels per day of oil demand could be displaced.
At the same time, global demand for electricity to recharge those cars would increase some 350 terawatt-hours.
Global oil demand displaced by EVs, courtesy Wood Mackenzie
These numbers shouldn't be a massive shock to energy markets; both gas and electricity markets would be able to handle this shift in energy needs, even though such a gas-demand decrease represents close to 7 percent of global demand.
However, Wood Mackenzie also ran numbers on a carbon-constrained market consistent with the Paris Agreement, predicting a much higher number of plug-in electric vehicles on the road: almost 350 million.
In that scenario, there could be significant disruption to oil marketsódisplacing some 6.8 million barrels of oil demand per dayówell before any cause for alarm in the power sector and its capabilities.
That's not to say the situation is completely rosy for electric vehicles.
Areas of high EV penetration may need to fortify electricity infrastructure as demand increases on the grid.
Battery production could also be an issue in the future.
The report dug into battery supply, predicting a likely production of 268 gigawatt-hours in batteries by 2020.
Global EV battery demand, courtesy Wood Mackenzie
However, without significant increases in battery production, demand would exceed supply by 2028 and production would need to triple by 2035 to keep up with EV manufacturing.