Tag: Bloomberg New Energy Finance

Bloomberg New Energy Finance’s outlook shows renewables will be cheaper almost everywhere in just a few years.

Solar power, once so costly it only made economic sense in spaceships, is becoming cheap enough that it will push coal and even natural-gas plants out of business faster than previously forecast.

That’s the conclusion of a Bloomberg New Energy Finance outlook for how fuel and electricity markets will evolve by 2040. The research group estimated solar already rivals the cost of new coal power plants in Germany and the U.S. and by 2021 will do so in quick-growing markets such as China and India.

The scenario suggests green energy is taking root more quickly than most experts anticipate. It would mean that global carbon dioxide pollution from fossil fuels may decline after 2026, a contrast with the International Energy Agency’s central forecast, which sees emissions rising steadily for decades to come.

“Costs of new energy technologies are falling in a way that it’s more a matter of when than if,” said Seb Henbest, a researcher at BNEF in London and lead author of the report.

The report also found that through 2040:

  • China and India represent the biggest markets for new power generation, drawing $4 trillion, or about 39 percent all investment in the industry.
  • The cost of offshore wind farms, until recently the most expensive mainstream renewable technology, will slide 71 percent, making turbines based at sea another competitive form of generation.
  • At least $239 billion will be invested in lithium-ion batteries, making energy storage devices a practical way to keep homes and power grids supplied efficiently and spreading the use of electric cars.
  • Natural gas will reap $804 billion, bringing 16 percent more generation capacity and making the fuel central to balancing a grid that’s increasingly dependent on power flowing from intermittent sources, like wind and solar.

BNEF’s conclusions about renewables and their impact on fossil fuels are most dramatic. Electricity from photovoltaic panels costs almost a quarter of what it did in 2009 and is likely to fall another 66 percent by 2040. Onshore wind, which has dropped 30 percent in price in the past eight years, will fall another 47 percent by the end of BNEF’s forecast horizon.

That means even in places like China and India, which are rapidly installing coal plants, solar will start providing cheaper electricity as soon as the early 2020s.

“These tipping points are all happening earlier and we just can’t deny that this technology is getting cheaper than we previously thought,” said Henbest.

Coal will be the biggest victim, with 369 gigawatts of projects standing to be cancelled, according to BNEF. That’s about the entire generation capacity of Germany and Brazil combined.

Capacity of coal will plunge even in the U.S., where President Donald Trump is seeking to stimulate fossil fuels. BNEF expects the nation’s coal-power capacity in 2040 will be about half of what it is now after older plants come offline and are replaced by cheaper and less-polluting sources such as gas and renewables.

In Europe, capacity will fall by 87 percent as environmental laws boost the cost of burning fossil fuels. BNEF expects the world’s hunger for coal to abate starting around 2026 as governments work to reduce emissions in step with promises under the Paris Agreement on climate change.

“Beyond the term of a president, Donald Trump can’t change the structure of the global energy sector single-handedly,” said Henbest.

All told, the growth of zero-emission energy technologies means the industry will tackle pollution faster than generally accepted. While that will slow the pace of global warming, another $5.3 trillion of investment would be needed to bring enough generation capacity to keep temperature increases by the end of the century to a manageable 2 degrees Celsius (3.6 degrees Fahrenheit), the report said.

The data suggest wind and solar are quickly becoming major sources of electricity, brushing aside perceptions that they’re too expensive to rival traditional fuels.

By 2040, wind and solar will make up almost half of the world’s installed generation capacity, up from just 12 percent now, and account for 34 percent of all the power generated, compared with 5 percent at the moment, BNEF concluded.

Cheaper coal and gas will do nothing to derail the renewable energy revolution according to BNEF’s New Energy Outlook 2016.

Bloomberg New Energy Finance states 60% of installed capacity will be zero-emission energy sources by 2040 and wind and solar power will take the lion’s share of new power generation capacity added – 64%.

Solar power is forecast to be the cheapest generation technology in most countries by 2030 and account for 3.7TW, or 43%, of new capacity added in 2016-40. This will represent $3 trillion of new investment.

A very important point in the report is that around 2027, new wind and solar will be cheaper than running existing coal and gas generators, particularly where carbon pricing has been implemented. In just over a decade we may see a marked uptick in current fossil fuel generation plants being shuttered. The report says there will be a net closure of 286GW of coal in OECD economies by 2040.

By 2040, BNEF states Australia will have wind and solar penetration of more than 50%.

Another prediction will get electric vehicle supporters excited – BNEF’s modeling suggests EV’s will comprise a quarter of the global car fleet by 2040. This is also good news for the residentialand commercial solar sector as it will accelerate a reduction in battery costs through technology development, economies of scale and enhanced manufacturing know-how.

BNEF sees a very healthy future for small-scale solar power, with it accounting for 10% of global generating capacity by 2040. With regard to home battery systems, Bloomberg expects solar energy storage to be commonly deployed alongside rooftop solar panel systems by 2020.

Behind-the-meter energy storage generally will see a sharp rise from around 400MWh today to nearly 760GWh in 2040.

While the news is upbeat about renewables generally, forecasted additions won’t be enough to rein in carbon emissions to the required degree.

“Some $7.8 trillion will be invested globally in renewables between 2016 and 2040, two thirds of the investment in all power generating capacity, but it would require trillions more to bring world emissions onto a track compatible with the United Nations 2°C climate target,” said Seb Henbest, lead author of the report and head of Europe, Middle East and Africa for BNEF.

BNEF suggests approximately USD $5.3 trillion would need to be invested in zero-carbon power by 2040 to prevent carbon dioxide levels rising above 450 parts per million.