New Energy Outlook Forecasts Cheaper Renewables and Batteries, Shrinking Role of Fossil Fuels
Photo by American Public Power Association
story highlights

The 2018 New Energy Outlook reviews regional energy trends, the increasing role of renewable technologies and sources, and estimated changes in costs.

The report projects that 50% of global electricity production will come from wind and solar energy by 2050, with fossil fuels declining to 29%.

According to the study, between 2018 and 2050, US$8.4 trillion will be invested in wind and solar energy, out of a total US$11.5 trillion.

19 June 2018: Bloomberg New Energy Finance (BNEF) has published its ‘New Energy Outlook 2018,’ which focuses on technologies that drive change in energy markets. The report includes price forecasts to 2050 for coal, oil and natural gas, and looks at how changes in both production and demand will impact the use of fossil fuels and renewables alike.

Grounded in economic analysis, the report finds that wind and solar energy sources are expected to drastically increase, generating 50% of the world’s electricity by 2050. BNEF notes that, in 2050, coal is projected to supply 11% of global electricity, down from 38% today. However, BNEF’s Matthias Kimmel cautions that even if all coal plants in the world were decommissioned by 2035, “the power sector would still be tracking above a climate-safe trajectory.”

The report’s section on regional trends finds that the highest renewable energy penetration rates will be in Europe, with 87% of electricity deriving primarily from wind and solar sources, the region having shifted away from fossil fuels and nuclear production. India features as having the second-highest penetration rate, at 75%. Other major economies also show progress, including China (62%) and the US (55%).

These increases, the report notes, derive in large part from three key dynamics and technological advances: 1) photovoltaic (PV) module prices continuing to drop, keeping pace with learning rates and capacity increases; 2) the continued development of larger and more efficient wind turbines; and 3) decreasing costs for battery packs, in part due to rising electric vehicle sales, that have applications for stationary energy storage. Noting their economies of scale, BNEF projects a 66% drop in battery packs’ cost by 2030.

Renewable energy will remain a consistently viable and flexible option for electricity, given advances in battery technology.

With renewable energy sources proliferating worldwide and emerging in some contexts as the cheapest options, the report notes that flexibility will be a key sticking point. Critics of wind and solar have argued that “the wind doesn’t always blow and the sun doesn’t always shine.” With declining battery costs, the report explains that renewable energy will remain a consistently viable and flexible option for electricity, given advances in battery technology. BNEF estimates that batteries will comprise 44% of “dedicated flexible capacity” by 2050.

In the transportation sector, BNEF finds that growth in electric vehicle production and demand is poised to add over 3,400 terawatt hours (TWh) of new electricity demand by 2050. While the report notes that charging points for these vehicles will be “dynamic,” leveraging times when electricity prices are low or there is excess supply, consumers’ charging practices (whether at night, mid-day, at public or private charging points) will ultimately depend on the final form that charging infrastructure takes. The report’s findings on transport build on BNEF’s Electric Vehicle Outlook.

Across these sections and regions, the report expects the vast majority of finance for new power generating capacity to go towards renewables. Between 2018 and 2050, BNEF projects US$8.4 trillion to be invested in wind and solar energy, out of a total US$11.5 trillion. [Publication: New Energy Outlook 2018] [BNEF Press Release]

related posts