Over $13trn in new investment is forecast to flood into the renewable energy sector between now and 2050, as storage-backed wind and solar power takes up half the baseload supply within the global energy system, according to BloombergNEF's (BNEF) latest New Energy Outlook.
Electricity demand is set to increase 62% to mid-century, as global generating capacity almost triples, with capital spending on wind swelling to $5.3trn and solar to $4.2trn as the sectors capitalise on their growing status as the least expensive source of new power-generating capacity.
“Our power system analysis reinforces a key message from previous New Energy Outlooks – that solar modules, wind turbines and lithium-ion batteries are set to continue on aggressive cost reduction curves, of 28%, 14% and 18% respectively for every doubling in global installed capacity,” Matthias Kimmel, the 2019 New Energy Outlook’s lead analyst, said.
“By 2030, the energy generated or stored and dispatched by these three technologies will undercut electricity generated by existing coal and gas plants almost everywhere,” he added, noting that BNEF sees these technologies “ensuring that – at least until 2030 – the power sector contributes its share toward keeping global temperatures from rising more than 2C”.
Elena Giannakopoulou, head of energy economics at BNEF, added that with the projected growth of renewables through 2030 “many nations” are to undergo the transition to zero-carbon economies “without introducing additional direct subsidies for existing technologies such as solar and wind”.
“The days when direct supports such as feed-in tariffs are needed are coming to an end,” she said. “Still, to achieve this level of transition and de-carbonisation, other policy changes will be required – namely, the reforming of power markets to ensure wind, solar, and batteries are remunerated properly for their contributions to the grid.”
Europe is expected to decarbonise its grid the most rapidly with 92% of its electricity supplied by renewables by 2050, while the US, with its low-priced shale gas, and China, still paying down its modern fleet of coal-fired plants, follow “at a slower pace”.
BNEF’s annual New Energy Outlook compares the costs of competing energy technologies through a levelised cost of energy analysis. Alongside its forecast for wind and solar power production, which the analyst group foresees growing from 7% of generation today to 48% by 2050, the report found coal's role in the global power mix collapsing from 37% today to 12% by 2050 while oil-fired power is “virtually eliminated” and output of hydro, natural gas, and nuclear “remain roughly level on a percentage basis”.
The New Energy Outlook returned a “mixed” outlook for the world keeping global emissions and so temperature increases to 2°C or less, with the authors noting that the build-out of solar, wind and batteries “will put the world on a path that is compatible with these objectives at least until 2030 [but that] a lot more will need to be done beyond that date to keep on that 2°C path”.
BNEF’s New Energy Outlook director, Seb Henbest, stated: “Our analysis suggests that governments need to do two separate things – one is to ensure their markets are friendly to the expansion of low-cost wind, solar and batteries; and the other is to back research and early deployment of these other technologies so that they can be harnessed at scale from the 2030s onwards.”