New Delhi: Wind and solar power are set to surge to account for almost 50 per cent 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).
The research agency today published its annual long-term analysis of the future of the global electricity system – New Energy Outlook (NEO) 2018. This year’s outlook highlights the huge impact that falling battery costs will have on the electricity mix over the coming decades. BNEF predicts that lithium-ion battery prices, already down by nearly 80 per cent per megawatt-hour since 2010, will continue to tumble as electric vehicle manufacturing builds up through the 2020s.
“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,” said Seb Henbest, head of Europe, Middle East and Africa for BNEF and lead author of NEO 2018.
NEO 2018 sees $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 a further $1.5 trillion to other zero-carbon technologies such as hydro and nuclear.
“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,” said Elena Giannakopoulou, head of energy economics at BNEF.
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 so-called base-load, or round-the-clock, electricity. BNEF sees $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 by 15 per cent between 2017 and 2050, although its share of global electricity declines from 21 per cent to 15 per cent.
Fuel burn trends globally are forecast to be dire in the long run for the coal industry, but moderately encouraging for the gas extraction sector. NEO 2018 sees coal burn in power stations falling 56 per cent between 2017 and 2050, while that for gas rises 14 per cent.
BNEF now sees global electricity sector emissions rising 2 per cent from 2017 to a peak in 2027, and then falling 38 per cent to 2050. However, this would still mean electricity failing to fulfill its part of the effort to keep global CO₂ levels below 450 parts per million – the level considered by the Intergovernmental Panel on Climate Change to be consistent with limiting the rise in temperatures to less than two degrees Celsius.
Other highlights of NEO 2018 include high penetration rates for renewables in many markets — 87 per cent of total electricity supply in Europe by 2050, and 55 per cent for the U.S., 62 per cent for China and 75 per cent for India. It also highlights a shift to more ‘decentralization’ in some countries such as Australia, where by mid-century consumer PV and batteries account for 43 per cent of all capacity.