Energize Weekly, June 27, 2018
The pace for global investment in renewable energy will continue to grow—totaling an estimated $8.4 trillion in the next three decades—so that by 2050, half of all electricity generation will come from renewables, according to Bloomberg New Energy Finance (BNEF).
BNEF’s New Energy Outlook projects that other generation technologies that do not emit carbon dioxide, such as hydropower and nuclear, will see about $1.5 trillion in investment, so that by 2050, 71 percent of all electricity will come from zero-carbon sources.
“Since the 1970s, fossil fuels have commanded a consistent 60-70 percent share of the global power generation mix,” the outlook said. “We think this 50-year equilibrium is coming to an end, as cheap renewable energy and batteries fundamentally remake electricity systems around the world.”
BNEF projects fossil fuel generation receiving only 14 percent of investment dollars between 2018 and 2050 and fossil fuels’ share of electricity production dropping to 29 percent from 63 percent today.
“Coal is the biggest loser,” the outlook said. “Coal will shrink to just 11 percent of global electricity generation by 2050, from 38 percent currently.”
In its regional analyses, the outlook projects that by 2050, renewables will make up 87 percent of the electricity mix in Europe, with a dominant role played by wind and solar. Renewables will provide 62 percent of the electricity in China and 75 percent in India.
“While we expect coal-fired electricity to continue to grow in India in the short to medium term, by 2050 wind and solar dominate, supported by batteries and flexible gas,” the outlook said.
In the U.S., coal and nuclear are “pushed out” by age and economics, so that by 2050, they disappear from the energy mix and 55 percent of electricity is supplied by renewables. “We do not anticipate a U.S. nuclear renaissance with the current technology,” BNEF said. The nuclear industry is banking on the development of new, small-scale technology.
Consumption of gas for electricity generation is projected to remain flat to 2050, even as capacity is added. Gas will play a key role in backing up renewables, the analysis said.
“There are limits to what renewables and batteries can do together,” BNEF said. “Peaking gas emerges as a critical technology, to back up renewables during the extremes when wind and solar are at a minimum.”
The transition to cleaner generation is fueled by several trends including a continued decline in photovoltaic module prices, which have dropped 28.5 percent in the last 40 years and the development of larger more efficient wind turbines, which will cut costs. Wind turbine prices are already down 32 percent since 2010.
Since 2010, lithium-ion battery costs have also dropped 79 percent, and battery storage plays a key role in permitting the expansion of intermittent generating sources such as wind and solar. BNEF’s lithium-ion battery price index fell from $1,000 per kWh in 2010 to $209 per kWh in 2017.
“The economic case for building new coal and gas capacity is crumbing as batteries start to encroach on the flexibility and peaking revenues enjoyed by fossil fuel plants,” the outlook said.
