Wind and solar are set to surge to almost “50 by 50” — 50 percent of world generation by 2050 — on the back of precipitous reductions in cost and the advent of cheaper batteries that will enable electricity to be stored and discharged to meet shifts in demand and supply, according to Bloomberg New Energy Finance (BNEF). BNEF’s annual long-term analysis of the future of the global electricity system — New Energy Outlook (NEO) 2018 — draws on detailed research by a team of more than 65 analysts around the world, including modeling of power systems country-by-country, and of the evolving cost dynamics of different technologies.
This year’s outlook is the first to highlight the impact that falling battery costs will have on the electricity mix during the coming decades. BNEF predicted that lithium-ion battery prices, already down by nearly 80 percent per megawatt-hour since 2010, will continue to tumble as electric vehicle manufacturing builds up through the 2020s.
Seb Henbest, head of Europe, Middle East, and Africa for BNEF and lead author of NEO 2018, said, “We see $548 billion being invested in battery capacity by 2050, two thirds of that at the grid level and one third installed behind-the-meter by households and businesses. The arrival of cheap battery storage will mean that it becomes increasingly possible to finesse the delivery of electricity from wind and solar so that these technologies can help meet demand even when the wind isn’t blowing and the sun isn’t shining. The result will be renewables eating up more and more of the existing market for coal, gas, and nuclear.”
NEO 2018 forecasts $11.5 trillion being invested globally in new power generation capacity between 2018 and 2050, with $8.4 trillion of that going to wind and solar and $1.5 trillion to other zero-carbon technologies such as hydro and nuclear. This investment will produce a 17-fold increase in solar photovoltaic (PV) capacity worldwide, and a sixfold increase in wind power capacity. The levelized cost of electricity (LCOE) from new PV plants is forecast to fall a further 71 percent by 2050, while that for onshore wind drops by a further 58 percent. These two technologies have already seen LCOE reductions of 77 percent and 41 percent, respectively, between 2009 and 2018.
Elena Giannakopoulou, head of energy economics at BNEF, said, “Coal emerges as the biggest loser in the long run. Beaten on cost by wind and PV for bulk electricity generation, and batteries and gas for flexibility, the future electricity system will reorganize around cheap renewables — coal gets squeezed out.”
The role of gas in the generation mix will evolve, with gas-fired power stations increasingly built and used to provide back-up for renewables rather than to produce base-load electricity. BNEF forecasts $1.3 trillion being invested in new capacity to 2050, nearly half of it in “gas peaker” plants rather than combined-cycle turbines. Gas-fired generation is seen rising 15 percent between 2017 and 2050, although its share of global electricity declines from 21 percent to 15 percent.
NEO 2018 also analyzes the impact of the electrification of transport on electricity consumption. It estimates that electric cars and buses will be using 3,461 terawatt hours of electricity globally in 2050, equivalent to 9 percent of total demand. About half of the necessary charging is forecast to be done on a “dynamic” basis, taking advantage of times when electricity prices are low because of high renewables output.
This analysis draws on BNEF’s latest Electric Vehicle Outlook, published in May, which predicted that EVs would account for 28 percent of global new car sales by 2030 and 55 percent by 2040. Electric buses are expected to dominate their market even more decisively, reaching 84 percent global share by 2030.
More information on BNEF’s New Energy Outlook 2018 is available at https://about.bnef.com/new-energy-outlook.
Information provided by Bloomberg New Energy Finance (https://about.bnef.com).