According to a major new outlook published by Bloomberg New Energy Finance (BNEF) the world’s energy sector is on course to source half its power from wind and solar technologies by 2050.
The BNEF report said wind and solar were set to surge to almost “50 by 50”, 50 per cent of world generation by 2050, on the back of precipitous reductions in cost, and the advent of cheaper and cheaper batteries that will enable electricity to be stored and discharged to meet shifts in demand and supply.
BNEF has just published its annual long-term analysis of the future of the global electricity system, New Energy Outlook (NEO) 2018.
The 150-page report draws on detailed research by a team of more than 65 analysts around the world, including sophisticated modelling of power systems country-by-country, and of the evolving cost dynamics of different technologies.
This year’s outlook is the first to highlight the huge impact that falling battery costs will have on the electricity mix over the coming decades.
BNEF predicts that lithium-ion battery prices, already down by nearly 80 per cent per megawatt-hour since 2010, will continue to tumble as electric vehicle manufacturing builds up through the 2020s.
Seb Henbest, head of Europe, Middle East and Africa for BNEF and lead author of NEO 2018, said: “We see US$548 billion being invested in battery capacity by 2050, two thirds of that at the grid level and one third installed behind-the-meter by households and businesses.
“The arrival of cheap battery storage will mean that it becomes increasingly possible to finesse the delivery of electricity from wind and solar, so that these technologies can help meet demand even when the wind isn’t blowing and the sun isn’t shining.
“The result will be renewable energy eating up more and more of the existing market for coal, gas and nuclear.”
NEO 2018 sees US$11.5 trillion being invested globally in new power generation capacity between 2018 and 2050, with US$8.4 trillion of that going to wind and solar and a further US$1.5 trillion to other zero-carbon technologies such as hydro and nuclear.
This investment will produce a 17-fold increase in solar photovoltaic capacity worldwide, and a sixfold increase in wind power capacity.
Elena Giannakopoulou, head of energy economics at BNEF, said: “Coal emerges as the biggest loser in the long run.
“Beaten on cost by wind and PV for bulk electricity generation, and batteries and gas for flexibility, the future electricity system will reorganise around cheap renewable energy, coal gets squeezed out.”
The role of gas in the generation mix will evolve, with gas-fired power stations increasingly built and used to provide back-up for renewable energy rather than to produce so-called base-load, or round-the-clock, electricity.
Fuel burn trends globally are forecast to be dire in the long run for the coal industry, but moderately encouraging for the gas extraction sector.
NEO 2018 sees coal burn in power stations falling 56 per cent between 2017 and 2050, while that for gas rises 14 per cent.
The bearish outlook for coal means that NEO 2018 offers a more upbeat projection for carbon emissions than the equivalent report a year ago.
BNEF now sees global electricity sector emissions rising two per cent from 2017 to a peak in 2027, and then falling 38 per cent to 2050.
However, this would still mean electricity failing to fulfil its part of the effort to keep global CO? levels below 450 parts per million, the level considered by the Intergovernmental Panel on Climate Change to be consistent with limiting the rise in temperatures to less than two degrees Celsius.
Matthias Kimmel, energy economics analyst at BNEF, commented: “Even if we decommissioned all the world’s coal plants by 2035, the power sector would still be tracking above a climate-safe trajectory, burning too much unabated gas.
“Getting to two degrees requires a zero-carbon solution to the seasonal extremes, one that doesn’t involve unabated gas.”
Among the other highlights of NEO 2018 are high penetration rates for renewable energy in many markets (87 per cent of total electricity supply in Europe by 2050, and 55 per cent for the United States, 62 per cent for China and 75 per cent for India).
It also highlights a shift to more ‘decentralisation’ in some countries such as Australia, where by mid-century consumer PV and batteries account for 43 per cent of all capacity.
NEO 2018 also analyzes the impact of the electrification of transport on electricity consumption.
It estimates that electric cars and buses will be using 3461TWh of electricity globally in 2050, equivalent to nine per cent of total demand, up from just 0.2 per cent today.
This analysis draws on BNEF’s latest Electric Vehicle Outlook, which predicted that EVs would account for 28 per cent of global new car sales by 2030, and 55 per cent by 2040.
Electric buses are expected to dominate their market even more decisively, reaching 84 per cent global share by 2030.
More information on BNEF’s New Energy Outlook 2018 can be found at https://about.bnef.com/new-energy-outlook/ including a free public report with high-level findings.
