London and New York: Wind and solar are set to surge to almost “50 by 50” – 50% of world generation by 2050 – on the back of precipitous reductions in cost, and the advent of cheaper and cheaper batteries. The estimate was published June 19 in Bloomberg NEF’s (BNEF) annual long-term analysis of the future of the global electricity system – New Energy Outlook (NEO) 2018.
The 150-page report draws on detailed research by a team of more than 65 analysts around the world, including sophisticated modeling of power systems country-by-country, and of the evolving cost dynamics of different technologies.
This year’s outlook is the first to highlight the huge impact that falling battery costs will have on the electricity mix over the coming decades. BNEF predicts that lithium-ion battery prices, already down by nearly 80% per megawatt-hour since 2010, will continue to tumble as electric vehicle manufacturing builds up through the 2020s.
Seb Henbest, head of Europe, Middle East and Africa for BNEF and lead author of NEO 2018, said: “We see $548 billion being invested in battery capacity by 2050, two thirds of that at the grid level and one third installed behind-the-meter by households and businesses.
“The arrival of cheap battery storage will mean that it becomes increasingly possible to finesse the delivery of electricity from wind and solar, so that these technologies can help meet demand even when the wind isn’t blowing and the sun isn’t shining. The result will be renewables eating up more and more of the existing market for coal, gas and nuclear.”
NEO 2018 sees $11.5 trillion being invested globally in new power generation capacity between 2018 and 2050, with $8.4 trillion of that going to wind and solar and a further $1.5 trillion to other zero-carbon technologies such as hydro and nuclear.
BNEF says the investment will produce a 17-fold increase in solar photovoltaic capacity worldwide, and a sixfold increase in wind power capacity. The levelized cost of electricity, or LCOE, from new PV plants is forecast to fall a further 71% by 2050, while that for onshore wind drops by a further 58%. These two technologies have already seen LCOE reductions of 77% and 41% respectively between 2009 and 2018.
Elena Giannakopoulou, head of energy economics at BNEF, said: “Coal emerges as the biggest loser in the long run. Beaten on cost by wind and PV for bulk electricity generation, and batteries and gas for flexibility, the future electricity system will reorganize around cheap renewables – coal gets squeezed out.”
The role of gas in the generation mix will evolve, BNEF expects, with gas-fired power stations increasingly built and used to provide back-up for renewables rather than to produce so-called base-load, or round-the-clock, electricity. BNEF sees $1.3 trillion being invested in new capacity to 2050, nearly half of it in ‘gas peaker’ plants rather than combined-cycle turbines. Gas-fired generation is seen rising 15% between 2017 and 2050, although its share of global electricity declines from 21% to 15%.
More information on BNEF’s New Energy Outlook 2018 can be found at https://about.bnef.com/new-energy-outlook/ including a free public report with high-level findings.