Forecast projects $7.8T market growth by 2040

Source: Christa Marshall, E&E reporter • Posted: Wednesday, June 15, 2016

Persistent low oil and gas prices will not block ballooning growth in renewables, batteries and energy storage in the next two decades, according to a new forecast from Bloomberg New Energy Finance.

The research group’s annual New Energy Outlook for the 2016-40 period slashes forecasts for coal and gas prices from last year by at least 30 percent because of an ongoing supply glut. Even so, declining costs in generation for wind and solar through 2040 could make those two technologies the cheapest way to produce electricity “in many countries during the 2020s and in most of the world in the 2030s,” the group said.

So even though there will be $2.1 trillion globally in fossil fuel investments, that will be dwarfed by $7.8 trillion in renewable and clean power, BNEF said. Wind and solar alone are expected to attract more than $3 trillion in investments, it said.

A boom in electric cars in the coming years will add 8 percent to global electricity demand by 2040, when they are expected to represent 35 percent of light-duty vehicle sales, according to the forecast. That growth will help drive down the cost of lithium-ion batteries, “making them increasingly deployed alongside residential and commercial solar systems.” BNEF forecast that overall behind-the-meter storage will jump from 400 megawatt-hours to 760 gigawatt-hours in 2040.

Last week, the White House highlighted BNEF’s conclusions that an additional 3,000 gigawatts of renewable energy is needed to hold global temperatures to manageable levels, partly because of growing coal-fired power in India and Asia (Greenwire, June 2). According to today’s report, rising coal-fired generation in India and other Asian emerging markets signals that global greenhouse gas emissions will be 5 percent above 2015 levels by 2040.

The forecast is not likely to end debate about the trajectory of electricity in the decades ahead. The report differs from the forecasts of the U.S. Energy Information Administration, the International Energy Agency and other organizations in its prediction of high penetration of solar and wind.

Elena Giannakopoulou, energy markets economist at Bloomberg New Energy Finance, said that solar and wind are already competitive with coal and gas in a number of countries and that by 2030, “this is going to be the case everywhere.”

“Moreover, contrary to other organizations, we are not sure that gas is the bridge fuel to a lower carbon environment as renewables are competitive, and in the absence of any strict regulatory frameworks, developing countries will keep utilizing their cheap coal reserves to meet their rising demand,” Giannakopoulou said. “Finally, EVs is a big component of our analysis as we expect them to account for 25 percent of the global car fleet by 2040 as a result of the batteries costs reductions.”