New Energy Outlook – Looking to 2040

Bloomberg New Energy Finance has launched its New Energy Outlook Report 2017 which presents their long-term economic forecast for the world’s power sector. The key findings of the report are reproduced below:

  1. The global installed capacity is expected to nearly double to about 13,000GW by 2040, up from 6,800GW today.  While solar and wind are only about 12% of the installed capacity today, they will be approximately 50% of that installed capacity by 2040.
  2. From 2017 to 2040, the world is going to invest about US$10.2 trillion in new generation technologies and capacity.  86% of this expected investment is going to be zero carbon (renewable energy and nuclear) and 14% will come from fossil fuels.
  3. In terms of the breakdown by technology, wind is going to attract the most investment at about 3.3 trillion, followed by solar at 2.8 trillion, and then nuclear at 1.4 trillion. Gas will be about 800 billion and coal will be 700 billion.
  4. The largest provider of electricity in 2040 is still going to be coal, at 22%, followed by gas at 16%, and hydro and onshore wind tied at 15%.  So, fossil fuels are still going to generate a good chunk of the electricity in 2040, but the proportion of renewable generation is going to increase significantly from 6% today to more than 15% in 2040.
  5. Coal-fired generation is on a continuous decline in US and Europe.  It’s going to keep falling gradually over this time in terms of the amount of coal generation in the mix.  China, the leading generator of coal, is going to see its coal generation capacity peak at about 2025, and then come down dramatically after that.  India and SouthEast Asia will continue to see an increase in coal generation, but both countries, or regions, rather, are far smaller in terms of coal generation than China. Hence, global coal generation is going to also peak around 2025, around the time of China’s peak, and going to gradually come down after that.
  6. Gas-fired power will see $804 billion in new investment and 16% more capacity by 2040. However, except in the US where gas is plentiful and cheap, gas plants will mainly act as one of the flexible technologies needed to help meet peaks and provide system stability
  7. Solar is already at least as cheap as coal in Germany, Australia, the U.S., Spain and Italy. The levelized cost of electricity from solar is set to drop another 66% by 2040.
    By 2021, it will be cheaper than coal in China, India, Mexico, the U.K. and Brazil as well.
  8. Onshore wind levelized costs will fall 47% by 2040, thanks to cheaper, more efficient turbines and advanced OPEX regimes. In the same period, offshore wind costs will slide a whopping 71%, helped by experience, competition, and economies of scale.
  9. By 2040, rooftop PV will account for as much as 24% of electricity in Australia, 20% in Brazil, 15% in Germany, 12% in Japan, and 5% in the U.S. and India.  This, combined with the growth of large-scale renewables, reduces the need for existing large-scale coal and gas plants.
  10. In Europe and the U.S., EVs will account for 13% and 12% of electricity demand by 2040.  Charging EVs flexibly, when renewables are generating and wholesale prices are low, will help the system adapt to intermittent solar and wind.
  11. Carbon dioxide emissions from power generation increase by a tenth before peaking in 2026, falling faster than previously estimated, lining up with China’s peak coal generation.  However, a further $5.3 trillion investment in 3.9TW of zero-carbon capacity would be required to keep the planet on a 2-degrees-Celsius trajectory.
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