- Bloomberg New Energy Finance annual report predicts $11.4 trillion to be spent on power generation globally from 2016 to 2040
- Renewables to get $7.8 trillion with solar power attracting the maximum at $3.4 trillion; fossil fuel and nuclear will attract $3.2 trillion
- Demand for electric vehicles will shoot up demand for more power, which in turn will augment the use of batteries to store power
- In the US, the share of renewables in the total power generation will jump from 14% in 2015 to 44% in 2040
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The world will invest around $7.8 trillion on renewables starting from 2016 to 2040, however trillions more are needed to bring world emissions back on track to meet the United Nations 2°C climate target. Investment on fossil fuel will total $3.2 trillion in comparison. The New Energy Outlook (NEO) 2016 report by Bloomberg New Energy Finance (BNEF) predicts that while coal, gas and oil prices decreasing in the future, there will also be a steep decline in the cost of renewables like wind and solar as well. This will lead to a ‘fundamental transformation of the world’s electricity system over coming decades’.
Out of the total money spent on renewables, the different solar segments – utility scale, rooftop and other small-scale solar – will attract $3.4 trillion, with wind following next at $3.1 trillion and hydro-electric $911 billion. According to the report, the world would need to invest an additional $5.3 trillion in zero-carbon power by 2040 to ‘prevent CO2 in the atmosphere rising above the Intergovernmental Panel on Climate Change’s ‘safe’ limit of 450 parts per million’.
Main investment in Asia
Out of the total $11.4 trillion investment on power generation globally from 2016 to 2040, the biggest share will be invested in Asia-Pacific, which, according to this annual report from BNEF, will add as much capacity in the next 25 years as the rest of the world combined.
The report covers the period from 2016 to 2040 during which the levelized costs of generation per MWh for solar photovoltaics is guided to fall by 60%, and 41% for wind. This will make solar and wind the cheapest sources for producing electricity in many nations during the 2020s and in most of the world in the 2030s.
Going forward, electric cars dominate, which will increase electricity demand, adding 2,701 TWh or 8% of the total global electricity demand in 2040. This in turn will drive down the cost of lithium-ion batteries to be deployed alongside residential and commercial solar systems. Behind-the-meter energy storage is expected to increase dramatically from 400 MWh today to 760 GWh in 2040.
Region wise, coal power generation in China will come down significantly, but it will increase in its neighbour country, India. The Indian sub-continent will see its electricity demand growing 3.8 times between 2016 and 2040. While it will invest $611 billion in renewables for the next 24 years and $115 billion on nuclear, it will still depend heavily on coal fired power stations. Solar will account for 29% of new power capacity through 2040.
At the same time, Europe will see renewables generating 70% of its total power in 2040, up from 32% in 2015. The US too will focus on renewables with their share to jump from 14% in 2015 to 44% in 2040.
No golden age for gas
Elena Giannakopoulou, BNEF senior energy economist said, “One conclusion that may surprise is that our forecast shows no golden age for gas, except in North America. As a global generation source, gas will be overtaken by renewables in 2027. It will be 2037 before renewables overtake coal.”
A presentation of the NEO 2016 can be seen online.