Royal Dutch Shell Plc says solar power, a business it abandoned four years ago, may expand into the world's biggest source of energy in the next half century.

The proposition that photovoltaic panels will be the main power source by 2070 is one of the New Lens Scenarios Europe’s largest oil company published today in a report on energy demand this century. A second has natural gas as the main fuel by 2030.

“These scenarios show how the choices made by governments, businesses and individuals in the next few years will have a major impact on the way the future unfolds,” Chief Executive Officer Peter Voser said in a statement.

Shell’s solar estimate, which assumes higher energy prices, follows an industry boom that saw capacity grow to about 102 gigawatts in 2012, according to data compiled by Bloomberg New Energy Finance. That compares with a figure of 1 gigawatt in 2000, based on figures from the International Energy Agency.

Lower costs and state support will boost solar to about 600 gigawatts in 2035, or more than 2 percent of power generation, from a small fraction in 2010, the Paris-based group has said.

Shell’s wind, solar and hydrogen projects were suspended by former CEO Jeroen van der Veer in 2009 before Voser took over in July that year. Today’s study is its longest term outlook, after spending $2.3 billion on alternative energy and carbon capture and storage research and development in the past five years.

Energy demand may double in the next 50 years on population growth and rising living standards, according to Shell, based in The Hague. At the same time it sees “global emissions of carbon dioxide dropping to near zero by 2100” under both scenarios.

Prosperous, Volatile

The first scenario, “a more prosperous, volatile world,” projects oil demand plateauing after 2040, and wind power and carbon capture growing more slowly on a lack of public and policy support. Solar power will dominate, making up almost 38 percent of supply, with oil providing 10 percent and natural gas 7.5 percent in 2100, Shell said. Solar is in 13th position now.

In the second scenario, with more moderate economic growth, demand for oil will peak in about 2035. By the century’s end, electric and hydrogen-powered vehicles will dominate roads and there’ll be wide use of technology to trap carbon emissions.

Output of hydrogen now accounts for 2 percent of energy content, mostly for making ammonia and refining oil, Shell said in the second scenario. By 2060, transportation uses of hydrogen will overtake industrial demand, allowing it to rise “phoenix- like” from failed “1990s hype” about hydrogen-powered cars.

Shell decided in 2009 to focus on biofuels in the renewable energy industry and in 2010 set up the Raizen ethanol venture with Cosan SA Industria & Comercio. In 2010, it saw the share of renewables in transport fuel doubling this decade, and since then has focused its research on biofuels made from sugar cane- farm waste after ending an algae project in Hawaii in 2011.

Copyright 2013 Bloomberg

Lead image: Solar panels via Shutterstock