Bloomberg New Energy Finance has released a New Energy Outlook report for 2017, in which it says ‘solar and wind dominate the future of electricity’. The key findings of the report include an estimate that 72% of the $10.2 trillion spent on new power generation worldwide will be invested in new wind and solar PV plants by 2040. BNEF predict that by 2040, rooftop solar will account for ‘as much as 24% of electricity in Australia, 20% in Brazil, 15% in Germany, 12% in Japan and 5% in the US and India.
A boost for renewables
The rapid rise in solar and wind investments will be boosted by investments in utility-scale batteries and falling levelised costs. In fact, BNEF reported that solar is already as cheap as coal in Germany, Australia, the US, Spain and Italy and predicts that by 2021 this will also be the case in China, India, Mexico, the UK and Brazil. The levelised cost of wind power is expected to fall by as much as 47% by 2040 for onshore wind and a huge 71% for offshore wind.
Electric vehicles are also expected to contribute. In Europe and the US electric vehicles are expected to account for 13% and 12% of electricity demand by 2040. BNEF said that systems will adapt to an intermittent solar and wind supply by flexible charging, using power from renewables when wholesale prices are low.
The demise of coal
Perhaps the starkest figures are for the coal industry, which BNEF predicts will see a significant decline. Coal use is expected to fall by 87% in Europe and 45% in the US. ‘A mere 18% of planned new coal power plants will ever get built. That means 369GW of projects stand to be cancelled.’ Whilst we will see new investment in gas-fired power, gas will predominantly be used as one of the flexible technologies used to meet peak demand and offer system stability.
In all, BNEF expects wind and solar to provide a third of global electricity by 2040.
Who produced the report?
The New Energy Outlook report received input from over 80 market and technology specialists in 12 countries. The Financial Times has highlighted that its findings are vastly different to the recent forecast provided by Exxon, which estimates all renewable sources (excluding hydro power) will provide just 11 per cent of the world’s electricity in 2040.
A government-backed research group called the International Energy Agency suggests that the adoption of wind and solar power is on course to be faster than expected by Exxon, but much slower than is suggested by BNEF, unless there is a greater policy push.