Wind, solar, hydro and other renewable energy plants will generate the vast majority of Europe’s power by 2040 according to a new analysis by Bloomberg.
Bloomberg expects solar and wind technology to be the cheapest ways to produce electricity in many countries during the 2020s, and in most of the world by the 2030s.
The report was released on Monday (12 June), just days after the European Commission announced it is preparing the way for a quick ratification of Paris Agreement – despite some national hurdles in a few of the EU’s member states.
Spirit of Paris
“We are determined to maintain the momentum and spirit of Paris and ensure the early ratification – and the swift implementation – of this historic agreement,” the EU’s climate and energy commissioner Miguel Arias Cañete said on Friday (10 June).
— Miguel Arias Cañete (@MAC_europa) 10 Juni 2016
This summer, the European Commission is set to propose new ways to reduce greenhouse gas emissions in sectors not already covered by the European Union’s Emissions Trading System, such as transport, agriculture and buildings.
Bloomberg’s latest long-term forecast charts a significantly lower track for global coal, gas and oil prices than it did a year ago. But it also shows a steeper decline for the cost wind and solar power.
“Some $7.8 trillion will be invested globally in renewables between 2016 and 2040, two thirds of the investment in all power generating capacity,” said Seb Henbest, head of Europe, Middle East and Africa at Bloomberg’s new energy finance division and lead author of the New Energy Outlook 2016 report.
The report is based on a combination of current policies and modelled paths for future electricity demand, power system dynamics and technology costs. It does not assume any future policy measures to speed up decarbonisation that could still be introduced in the years ahead.
More measures will be needed, as it would require trillions more to bring world emissions onto a track compatible with the United Nations 2 degrees Celsius climate target, according to Henbest.
— COP22 (@COP22) 14 Juni 2016
10 Key Conclusions
Here are a few key conclusions from the report:
- Coal and gas prices to stay low. The long-term forecasts for coal and gas prices have been reduced, reflecting a projected supply glut for both commodities. This cuts the cost of generating power by burning coal or gas.
- Wind and solar costs fall sharply. The costs of power generation though 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.
- Fossil fuel power attracts $2.1 trillion. Investment in coal and gas generation will continue, predominantly in emerging economies. Some $1.2 trillion will go into new coal-burning capacity, and $892 billion into new gas-fired plants.
- But renewables take lion’s share. Some $7.8 trillion will be invested in green power, with onshore and offshore wind attracting $3.1 trillion, utility-scale, rooftop and other small-scale solar $3.4 trillion, and hydro-electric $911 billion.
- The 2 degrees Celsius scenario would require much more money. On top of the $7.8 trillion, the world would need to invest another $5.3 trillion in zero-carbon power by 2040 to prevent carbon levels in the atmosphere rising above the Intergovernmental Panel on Climate Change’s ‘safe’ limit of 450 parts per million.
- Electric car boom supports electricity demand. Electric vehicles are set to add 8 per cent to global electricity demand in 2040 – reflecting Bloomberg’s forecast that they will represent 35 per cent of worldwide new light-duty vehicle sales in that year, equivalent to 41 million cars – some 90 times the 2015 figure.
- Small-scale battery storage, a $250 billion market. The rise of electric vehicles will drive down the cost of lithium-ion batteries, making them increasingly attractive to be deployed alongside residential and commercial solar systems.
- China coal-fired generation will follow weaker trend than previously projected.Changes in the Chinese economy, and a move to renewables, mean that coal-fired generation there in 10 years’ time will be 21 per cent below the figure predicted by Bloomberg in last year’s forecast.
- That makes India the key to the future global emissions trend. Its electricity demand is forecast to grow 3.8 times between 2016 and 2040. Despite investing $611 billion in renewables in the next 24 years, and $115 billion in nuclear, it will continue to rely heavily on coal power stations to meet rising demand. This is forecast to result in a trebling of its annual power sector emissions by 2040.
- Renewables to dominate in Europe, to overtake gas in the US. Wind, solar, hydro and other renewable energy plants will generate 70 per cent of Europe’s power in 2040, up from 32 per cent in 2015. In the US, their share will jump from 14 per cent in 2015 to 44 per cent in 2040, as that from gas slips from 33 per cent to 31 per cent.