‘Unstoppable’ renewables to reach new heights as costs tumble, report finds
Renewable energy sources will account for around three quarters of the expected $10trn global investment into power generating technologies between now and 2040, a new report from Bloomberg New Energy Finance (BNEF) has claimed.
Released last week (15 June), BNEF’s New Energy Outlook 2017 report predicts that global emissions will peak by 2026. A $10.2trn investment is projected to be spent on power generation worldwide, of which $7.4trn will be funneled towards renewables.
According to the report, solar can expect a 14-fold jump in capacity, driven by a $2.8trn investment. Wind capacity will be backed by a $3.3trn investment and is expected to increase fourfold as a result.
The increase in solar capacity will be partly facilitated by a reduced levelized cost of electricity from solar PV, which is already a quarter of what it was in 2009, and is set to shrink by another 66% by 2040. Wind energy costs, on the other hand, will fall by 71% for offshore installations and 47% for onshore projects.
“This year’s report suggests that the greening of the world’s electricity system is unstoppable, thanks to rapidly falling costs for solar and wind power, and a growing role for batteries, including those in electric vehicles, in balancing supply and demand,” BNEF’s lead author Seb Henbest said.
Analysis from the 65-strong team at BNEF found that solar will account for 48% of the world’s installed capacity and 34% of electricity generation by 2040 – compared to 12% and 5% today.
By 2040, $1 will purchase 2.3 times as much solar energy as it does currently. Solar is already level or below coal costs in Germany, Australia, the US, Spain and Italy. By 2021, it will be cheaper than coal in the UK, China, India, Mexico and Brazil.
As the rise of intermittent renewables continues, critics worry how variable generation can be balanced and accommodated. BNEF expects the lithium-ion battery market for energy storage to reach at least $239bn by 2040. According to the report, batteries would compete with natural gas to provide grid and systems flexibility.
Small-scale batteries for business and domestic systems integrated with solar PV will account for 57% of global storage by 2040. In Europe and the US, electric vehicles (EVs) will be used to help balance the grid. EVs will account for around 13% of electricity generation in these two areas by 2040 and will help the system adapt to the variable nature of renewables. The growth of EVs will also reduce the costs of lithium-ion batteries by more than 70% by 2030 and will likely represent 35% of all new car sales.
BNEF’s lead analyst Elena Giannakopoulou said: “This year’s forecast shows EV smart charging, small-scale battery systems in business and households, plus utility-scale storage on the grid, playing a big part in smoothing out the peaks and troughs in supply caused by variable wind and solar generation.”
In the US, President Trump has been vocal in his support for the coal sector, but the BNEF report highlights that the economic shift over the next two decades does not align to his vision. Coal use is expected to drop by 45% in the US – compared to 87% in Europe – and BNEF expects 369GW of planned coal plants to be cancelled globally.
In the aftermath of President Trump’s admission that the US will withdraw from the Paris Agreement, China has emerged as one of the new leaders of the low-carbon transition. BNEF’s report notes that China will account for more than a quarter of all investment into power generation by 2040, with Asia Pacific nations accounting for almost as much investment as the rest of the world combined. Of this, around a two-thirds will be spent on wind and solar, 18% to nuclear and 10% to coal and gas.
BNEF’s horizon-scanning report arrives just one week after a report from REN21, a network of public and private sector groups covering 155 nations and 96% of the world’s population, found that renewables were boosted globally by a record amount in 2016.
The report noted that new renewables capacity cost $242bn in 2016, which was 23% cheaper than investment in 2015, despite the record number of installations.