28 July 2017 2017 09:15 AM GMT

New BNEF Report Highlights A Massive Shift to Wind And Solar, While Coal Fades

A new independent report from Bloomberg New Energy Finance (BNEF) states that clean energy such as wind and solar will account for almost 75% of investment in power generation worldwide, between now and 2014.  In New Energy Outlook 2017, its latest long-term forecast, BNEF estimates that overall $10.2 trillion will be spent on power generation technology in the next 22 years, with $7.4 trillion being spent on renewables. New Energy Outlook 2017 also shows earlier progress than its equivalent a year ago towards decarbonisation of the world’s power system – with global emissions projected to peak in 2026 and to be 4% lower in 2040 than they were in 2016.

The following are some key findings from this year’s forecast:

Solar and wind dominate the future of electricity. We expect $7.4 trillion to be invested in new renewable energy plants by 2040 – which is 72% of the $10.2 trillion that is projected to be spent on new power generation worldwide. Solar takes $2.8 trillion and sees a 14-fold jump in capacity. Wind draws $3.3 trillion and sees a fourfold increase in capacity. As a result, wind and solar will make up 48% of the world’s installed capacity and 34% of electricity generation by 2040, compared with just 12% and 5% now.

Solar energy’s challenge to coal gets broader. The levelized cost of electricity from solar PV, which is now almost a quarter of what it was just in 2009, is set to drop another 66% by 2040. By then a dollar will buy 2.3 times as much solar energy than it does today. Solar is already at least as cheap as coal in Germany, Australia, the U.S., Spain and Italy. By 2021, it will be cheaper than coal in China, India, Mexico, the U.K. and Brazil as well. (For definition of levelized costs, see note below.)

Onshore wind costs fall fast, and offshore falls faster. Offshore wind levelized costs will slide a whopping 71% by 2040, helped by development experience, competition and reduced risk, and economies of scale resulting from larger projects and bigger turbines. The cost of onshore wind will fall 47% in the same period, on top of the 30% drop of the past eight years, thanks to cheaper, more efficient turbines and streamlined operating and maintenance procedures.

China and India are a $4 trillion opportunity for the energy sector. China and India account for 28% and 11% of all investment in power generation by 2040. Asia Pacific sees almost as much investment in generation as the rest of the world combined. Of this, just under a third goes to wind and solar each, 18% to nuclear and 10% to coal and gas.

Batteries and new sources of flexibility bolster reach of renewables. We expect the lithium-ion battery market for energy storage to be worth at least $239 billion between now and 2040. Utility-scale batteries increasingly compete with natural gas to provide system flexibility at times of peak demand. Small-scale batteries installed by households and businesses alongside PV systems will account for 57% of storage worldwide by 2040. We anticipate renewable energy reaching 74% penetration in Germany by 2040, 38% in the U.S., 55% in China and 49% in India.

Electric vehicles bolster electricity use and help balance the grid. In Europe and the U.S., EVs account for 13% and 12% respectively of electricity generation by 2040. Charging EVs flexibly, when renewables are generating and wholesale prices are low, will help the system adapt to intermittent solar and wind. The growth of EVs pushes the cost of lithium-ion batteries down 73% by 2030.

Homeowners’ love of solar grows. By 2040, rooftop PV will account for as much as 24% of electricity in Australia, 20% in Brazil, 15% in Germany, 12% in Japan, and 5% in the U.S. and India. This, combined with the growth of utility-scale renewables, reduces the need for existing large-scale coal and gas plants, the owners of which will face continued pressure on revenue despite some demand growth from EVs.

Coal-fired power collapses in Europe and the U.S., continues to grow in China, but peaks globally by 2026. Sluggish demand, cheap renewables and coal-to-gas fuel switching will slash coal use by 87% in Europe by 2040. In the U.S., coal use in power drops 45% as old plants are not replaced and others start burning cheaper gas. Coal generation in China grows by a fifth over the next decade but reaches a peak in 2026. Globally, we expect 369GW of planned new coal plants to be cancelled, a third of which are in India, and for global demand for thermal coal in power to decline by 15% over 2016-40.

Gas is a transition fuel, but not in the way most people think. Gas-fired power sees $804 billion in new investment and 16% more capacity by 2040. Gas plants will increasingly act as one of the flexible technologies needed to help meet peaks and provide system stability in an age of rising renewable generation, rather than as a replacement for ‘baseload’ coal. In the Americas, however, where gas is plentiful and cheap, it plays a more central role, especially in the near term.

Global power sector emissions peak in just over ten years, then decline. CO2 emissions from power generation increase by a tenth before peaking in hit a high in 2026. Emissions then fall faster than we previously estimated, lining-up with China’s peak coal generation. We expect India’s emissions will be 44% lower than in our NEO 2016 analysis as it embraces solar and invests $405 billion to construct 660GW of new PV. Globally, emissions will have dropped to 4% below 2016 levels by 2040, not nearly enough to keep the global average temperature from rising more than 2 degrees Celsius. A further $5.3 trillion investment in 3.9TW of zero-carbon capacity would be consistent with keeping the planet on a 2-degrees-C trajectory.

In the U.S., the Trump administration has voiced support for the coal sector. However, NEO 2017 indicates that the economic realities over the next two decades will not favour U.S. coal-fired power, which is forecast to see a 51% reduction in generation by 2040. In its place, gas-fired electricity will rise 22%, and renewables 169%.

One of the big questions for the future of electricity systems is how large amounts of variable wind and solar generation can be accommodated, and yet keep the lights on at all times. Sceptics worry about ultra-cheap renewables depressing power prices and squeezing out base-load coal, gas and nuclear plants. Elena Giannakopoulou, the lead analyst on the NEO 2017 project, 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.”

Jon Moore, chief executive of BNEF, said: “NEO reflects the understanding our team has built up over more than a decade of how technology costs and system dynamics have evolved, and are evolving. This year’s NEO shows an even more dramatic low-carbon transition than we have projected in previous years, with steeper drops in wind and solar costs and faster growth for storage.”

Note: Levelized cost of electricity covers all lifetime expenses of generation from a new plant. These costs include site development, permitting, equipment and civil works, finance, operations and maintenance and feedstock (if any).

An executive summary of NEO 2017 and related materials can be downloaded from the micro-site on this link.

Figure 1: Global electricity generation mix to 2040

Source: Bloomberg New Energy Finance, New Energy Outlook 2017

Bloomberg New Energy Finance (BNEF) is an industry research firm focused on helping energy professionals generate opportunities. With a team of 200 experts spread across six continents, BNEF provides independent analysis and insight, enabling decision-makers to navigate change in an evolving energy economy. Leveraging the most sophisticated new energy data sets in the world, BNEF synthesises proprietary data into astute narratives that frame the financial, economic and policy implications of emerging energy technologies. Bloomberg New Energy Finance is powered by Bloomberg’s global network of 19,000 employees in 192 locations, reporting 5,000 news stories a day.

January 28th 2018
EV, Renewables See CO2 Emissions Plateau By 2030, But Far From 2 Degree Pathway

Major shifts in the global energy landscape, particularly related to electric vehicles (EVs) and renewable energy sources, mean that MEI expects global CO₂emissions to plateau by 2030. However, increased global energy demand means emissions will remain at more than double the level required for a 2 degrees Celsius warming pathway. Ole Rolser, Associate Partner and Solution Leader at MEI, comments: “Despite the significant momentum around EVs and renewable energy sources taking an increasing share of the power market, to realise the 2 degrees pathway scenario, we’d have to see much broader, much more disruptive change than what we’re seeing now.”

December 6th 2017
Renewables Provide 17.8% Of Total US Electricity. Solar Now 2.0% And Wind 6.0%

According to the latest issue of the U.S. Energy Information Administration’s (EIA) “Electric Power Monthly” report, U.S. electrical generation from renewable energy sources (i.e., biomass, geothermal, hydropower, solar – inc. distributed solar, wind) rose by 14.69% during the first three-quarters of 2017 compared to the same period in 2016. Simultaneously, electrical generation by fossil fuels and nuclear power combined declined by 5.41%. Nuclear power and coal both dropped by 1.5%, natural gas (including “other” gas) was down by 10.7%, and oil (i.e., petroleum liquids and petroleum coke) plunged by 17.1%.

January 28th 2018
Masdar City To Test Latest Concepts In Autonomous Electric Vehicles

ICONIQ Motors, a China-based EV company, has reached agreement to test its autonomous driving concept at Masdar City. The ICONIQ SEVEN, one of the world’s latest EV models is a futuristic vehicle, built on an intelligent, connected vehicle platform integrated with Microsoft’s AZURE cloud technology; and is set to hit the market in 2019. “Masdar City has put smart and sustainable mobility at the centre of its strategy, as highlighted by the historic success of its flagship driverless Personal Rapid Transit (PRT) system,” said Yousef Baselaib, Executive Director of Sustainable Real Estate at Madsar. “It is the ideal location to test innovative autonomous driving concepts.”

December 27th 2017
Rooftop PV Presents a $23 Billion Opportunity in India Over The Next 5 Years

India is accelerating development of renewable energy projects to provide cheap, reliable and clean power to its 1.3 billion people. The country’s per-capita on-grid electricity consumption has increased significantly over the four years; due to increased industrial activity, higher uptake of electrical appliances by residential electricity users and the addition of new consumers to the grid. During this period, the cost of electricity from rooftop PV has halved, due to fierce competition in the market and a drop in equipment prices. In contrast, average retail electricity rates have increased by 22% in the same period. This has made rooftop PV cheaper than commercial and industrial grid tariffs in all major states in India.

January 8th 2018
Vestas Sets 10.6 GW Record In 2017 After Year-End Surge; Ups Cashflow Guidance

Vestas has received a firm and unconditional order for 190 MW of 4 MW platform turbines in the U.S. taking the global order intake for the company in 2017 to 10.6 GW, surpassing 2016’s record order intake of 10.5 GW. The surge of orders at the end of the year has resulted in the company revising its guidance for free cashflow upwards. It now expects the free cashflow for 2017 to be €1.15bn-€1.25bn, as compared with the previous guidance of €450m-€900m. Markets have reacted favourably with the company share price experiencing an increase of 5%. 


 

   

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