These bullet points are taken from the five-page Executive Summary authored by Bloomberg New Energy Finance. Register for the complete summary here: https://goo.gl/WPShWV
- Growth in power demand increasingly decouples from GDP, however – we expect the intensity of electricity consumption per unit of GDP to fall by 27% over 2016-40.
As many as 1.9 million customers are expected to use some form of customer choice by the end of 2017.
• We expect $10.2 trillion will be invested in new power generation capacity worldwide to 2040. Of this, 72% goes to renewables, or $7.4 trillion. Solar takes $2.8 trillion and wind $3.3 trillion. Investment in renewable energy increases to around $400 billion per year by 2040, a 2 to 3% average annual increase. Investment in wind grows faster than solar – wind increasing 3.4% and solar 2.3% per year on average.
• Wind and solar account for 48% of installed capacity and 34% of electricity generation worldwide by 2040. This compares with just 12% and 5% today. Installed solar capacity increases 14-fold and wind capacity fourfold by 2040. We anticipate renewable energy reaching 74% penetration in Germany, 38% in the U.S., 55% in China and 49% in India by 2040 as batteries and new sources of flexibility bolster the reach of renewables.
• The levelized cost of new electricity from solar PV drops by 66% by 2040. By then, a dollar will buy 2.3 times as much solar energy than it does today. The levelized cost of new electricity from onshore wind drops 47% by 2040, thanks to more efficient turbines and streamlined operating and maintenance procedures.
• Onshore wind costs fall fast but offshore falls faster. We expect the levelized cost of offshore wind to decline 71% by 2040, helped by development experience, competition and reduced risk, and economies of scale resulting from larger projects and bigger turbines.
• Consumer-driven PV becomes a significant part of the power sector. By 2040, rooftop PV will account for as much as 24% of electricity generation in Australia, 20% in Brazil, 15% in Germany, 12% in Japan, and 5% in the U.S. and India.
• Electric vehicles bolster electricity use and help balance the grid. In Europe and the U.S., EVs account for 13% and 12% respectively of electricity generation by 2040. Charging EVs flexibly when renewables are generating and wholesale prices are low, will help the system adapt to intermittent solar and wind. The growth of EVs pushes the cost of lithium-ion batteries down 73% by 2030.
• We expect lithium-ion batteries for energy storage to become a $20 billion per year market by 2040, a tenfold increase from today. Small-scale batteries installed by households and businesses alongside PV systems account for 57% of installed storage capacity worldwide by 2040.
• By 2030, wind and PV start to undercut existing coal plants on an operational basis in some countries, prompting an acceleration in the deployment of renewables and the decline of coal generation. Only 35% of new coal power plants that are in planning ever get built. That means 369 GW of projects stand to be canceled and global demand for thermal coal in 2040 ends up 15% lower than in 2016.
• Global coal-fired power generation peaks in 2026. Growth in coal demand is centered on Asia, but is offset by sharp declines in Europe and the U.S. Coal-fired generation in China is set to peak within the next 10 years.
• Gas is a transition fuel, but not in the way most people think. Gas-fired capacity increases 16% by 2040 but gas plants will increasingly act more as a source of flexible generation needed to meet peaks and provide system stability rather than as a replacement for ‘baseload’ coal. In North America, however, where gas is plentiful and cheap, it plays a more central role, especially in the near term.
• Asia Pacific sees almost as much investment in a generation as the rest of the world combined. China and India alone are a $4 trillion opportunity for the energy sector. China accounts for 28% and India 11% of total regional investment over 2017-40. Wind and solar both account for around a third of total investment.
• Powering China and India presents a $4 trillion opportunity. These countries account for 28% and 15% of all investment in power generation to 2040. Asia Pacific sees almost as much investment as the rest of the world combined, at $4.8 trillion. Of this, just under a third goes to wind, a third to solar, 18% to nuclear and 10% to coal and gas.
• Peak coal is in sight in Asia. Peak coal capacity occurs in 2024, and peak generation in 2028, as retirements begin to outpace new additions. By the mid-2020s, cheap wind and PV begin to undercut new coal on a levelized basis throughout the region, trimming average installations to just 9GW a year. Coal, however, remains the bedrock of the region’s power supply, providing 34% of electricity in 2040 – a larger share than any other fuel.
• China will go big on renewables, with wind and solar capacity increasing eight-fold to 2040. Coal consumption in China peaks in 2026, but at a level 20% higher than today. Nevertheless, China remains the world’s largest coal consumer and emitter, with that fuel still accounting for 30% of the generation mix in 2040.
• India significantly expands its coal fleet over the next five years, adding over 40GW of new coal plants. Following that, we expect coal new build to slow but existing plant utilization to increase, pushing up coal consumption by around 3% per year through the 2020s. From 2030, solar begins to sideline coal in India, with the pace of PV additions more than doubling from the 2020s to the 2030s.
• Japan and South Korea shift from gas to coal, and then to solar. Gas generation declines in both countries as over 30 GW of coal capacity is commissioned over the next decade. Japan and Korea are the only two members of the OECD to build significant volumes of new coal in our forecast. Power sector gas demand in Japan and South Korea declines by over 50% in the next ten years with possible ramifications for the global LNG market as the two countries account for half of current demand for seaborne gas.
• Australia’s electricity system becomes one of the most decentralized in the world. By 2040, around 45% of Australia’s power generating capacity is located behind-the-meter. Its fossil-fuel dominated grid also transforms into a predominantly renewable system, as wind, PV, and batteries replace retiring coal.
• European investment in renewables grows by 2.6% per year on average out to 2040, averaging $40 billion per year. Total investment in renewables across Europe reaches almost $1 trillion over 2017-40. Europe’s firm generating capacity shrinks by 29%, replaced by variable and flexible capacity.
• Half of European electricity supply in 2040 comes from variable renewables, posing challenges for grid and generators. With 97% of fossil fuel capacity in 2040 required for peak demand, under-utilized thermal plants are the norm. The changing grid creates opportunities for 103 GW of new flexible capacity, including 56 GW of batteries. These help with peak load, ancillary services, shifting demand or renewable supply and regulating frequency.
• Gas in Europe benefits from a wave of coal and nuclear retirements over the next decade, but power sector gas consumption never returns to the record level set in 2008 as the role of gas shifts from providing firm capacity to providing flexible generation. Nuclear generation drops 50% and the combination of sluggish demand, cheap renewables, and coal-to-gas fuel switching slashes coal use by 87% by 2040. This drives down power sector emissions by 73% over 2017-40.
Filed Under: News
