Bloomberg New Energy Finance has forecast continuing cheap coal and gas power but it will not be enough to contain a global transformation to renewables, as wind and solar energy continues to drop rapidly in cost.
BNEF’s New Energy Outlook predicts $11.4 trillion will be invested in global power generation capacity over the next 25 years, with the trend towards electric vehicles boosting electricity demand by 8 per cent in 2040.
The outlook charts a significantly lower track for global coal, gas and oil prices than did the equivalent projection a year ago. Crucially, however, it also shows a steeper decline for wind and solar costs.
The world will struggle to bring down emissions to the requisite levels without significantly more investment. Chinese emissions could peak as early as 2025 but rising coal-fired power generation in India and other Asian emerging markets indicate that the global emissions figure in 2040 will still be some 700 megatonnes, or 5 per cent, above 2015 levels.
Seb Henbest, head of Europe, Middle East and Africa for BNEF, and lead author of NEO 2016, commented: “Some $7.8 trillion will be invested globally in renewables between 2016 and 2040, two thirds of the investment in all power generating capacity, but it would require trillions more to bring world emissions onto a track compatible with the United Nations 2à‚°C climate target.”
Meanwhile the group’s analysis forecasts that the levelised costs of generation per MWh for onshore wind will fall 41 per cent by 2040, and solar photovoltaics by 60 per cent, making these two technologies the cheapest ways of producing electricity in many countries during the 2020s and in most of the world in the 2030s.
Investment in coal and gas generation will continue, predominantly in emerging economies. Some $1.2trn will go into new coal-burning capacity, and $892bn into new gas-fired plants.à‚
However this will be dwarfed by the some $7.8trn expected to be invested in green power, with onshore and offshore wind attracting $3.1trn, utility-scale, rooftop and other small-scale solar $3.4 trn, and hydro-electric $911bn.