Increasingly expensive coal generation will lose 51% of its market in less than 25 years, greenhouse gas emissions from power production will peak in 2026, and wind and solar will deliver 34% of electricity worldwide by 2040, compared to 5% today, according to the annual New Energy Outlook published by Bloomberg New Energy Finance.
Already, BNEF notes, solar electricity is undercutting coal on price—and after falling 75% since 2009, solar costs are on track to shave another 66% by 2040, BNEF projects. “Solar is already at least as cheap as coal in Germany, Australia, the U.S., Spain, and Italy,” the report states. “By 2021, it will be cheaper than coal in China, India, Mexico, the UK, and Brazil, as well.”
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But those projections, and the 2-4% annual growth in wind and solar investment in BNEF’s analysis, still fall short of the Paris target of holding average global warming “well below” 2.0°C. That would require “a further $5.3-trillion investment” beyond commitments to date, the report notes.
Even so, the release has still been greeted as a death knell for coal and an affirmation that the rise of affordable renewables is here to stay.
“This year’s report suggests that the greening of the world’s electricity system is unstoppable,” said lead author Seb Henbest.
“The cost declines that we are seeing with these technologies are so steep that it becomes a matter of time as to when they start crossing over and becoming competitive in different ways,” he told Greentech Media, referring to renewables and lithium-ion batteries. “These things are getting cheaper faster than we thought even a year ago.”
Henbest and his co-authors “predict renewables will capture 72% of the $10.2 trillion spent on new generation in the next 23 years, and will produce 51% of global power generation in 2040,” Greentech notes. “That’s the global average, which means in certain places, zero-carbon penetration will be even higher,” with all renewables combined expected to exceed 80% of electricity demand in countries like Mexico, Chile, Brazil, and Italy, 50% in Australia, China, Germany, and the United Kingdom.
“In just the next five years, large-scale solar will be cheaper than new coal plants in essentially all major economies,” Greentech notes. That will be enough to reduce India’s power plant emissions by 44% between 2016 and 2040, reports InsideClimate News. And BNEF affirms that the Trump administration will fail in its efforts to revive the collapsing coal industry in the United States, though the growth of cheap natural gas will hold renewable energy to only 38% of total electricity demand.
“There is some hope that the report may still be underplaying the pace of transition to green energy,” InsideClimate notes. “That’s because the analysis is based purely on announced projects in each country, and assumes that current subsidies will expire and that energy policies around the world will remain on their current bearing.” That means faster improvements in market conditions, or renewal of popular subsidies like the Production Tax Credit for wind development in the U.S., would shift the numbers.
BNEF anticipates lithium ion battery costs falling 73% by 2030, InsideClimate reports, leading to a global battery market worth at least US$239 billion in 2040 that helps utilities reduce their reliance on natural gas. Electric vehicles will become more popular, and will do their part to help balance peak demand on the grid. And by 2040, rooftop solar will deliver up to 24% of all electricity in Australia, 20% in Brazil, 15% in Germany, 12% in Japan, and 5% in India and the United States.
The report concludes that China and India will draw $4 billion in new power generation investment, about 39% of the global market, and natural gas will receive $806 billion, Bloomberg notes. Offshore wind production costs will fall 71%.