Renewable surge to accelerate coal ‘collapse’ — report

Source: Christa Marshall, E&E News reporter • Posted: Monday, June 19, 2017

Solar and wind power are set to “dominate” the future of global electricity and push coal plants out of business faster than expected, said a report released this morning from Bloomberg New Energy Finance, an analysis firm.

Renewables are projected to constitute three-quarters of the $10 trillion invested globally by 2040 in new generation, largely because of a plunge in costs, BNEF said. Solar energy costs will likely fall an additional 66 percent by 2040, while onshore wind costs will likely plunge 47 percent, said the report.

“The greening of the world’s electricity system is unstoppable,” said Seb Henbest, BNEF analyst and lead author of the report.

During a U.S. EPA budget hearing this morning, Rep. Hal Rogers (R-Ky.) said the Obama administration’s environmental policies killed thousands of coal mining jobs. But the report conforms with other independent analysts who say market forces have also been key.

BNEF forecast “coal-fired power collapses in Europe and the U.S.”

The renewables growth will allow global carbon dioxide emissions to peak by 2026 and be 4 percent lower in 2040 than they were last year.

Still, the world needs to invest an additional $5 trillion in low-carbon energy to hold temperature rise to 2 degrees Celsius, a goal to limit global warming, according to BNEF.

“The Trump administration has voiced support for the coal sector. However … the economic realities over the next two decades will not favor U.S. coal-fired power, which is forecast to see a 51 percent reduction in generation by 2040,” BNEF said. Globally, coal power is projected to peak by 2026, with help from growth in China in the near term.

BNEF’s estimates for renewables are more bullish than other analysts’, partly because of extensive modeling of battery power costs and growth, said BNEF analyst Richard Chatterton. Batteries play a key role in backing up renewables.

Solar is already at least as cheap as coal in many countries, and that cost-competitiveness will spread to China, India and Mexico by 2021, BNEF said.

The report considers planned projects in each country and assumes that existing policies, such as the U.S. investment tax credit for solar, are in place. But it assumes that subsidies expire and takes policy out of the equation altogether after 2020, said Chatterton.

That doesn’t mean policy developments such as the recent U.S. announcement of its withdrawal from the Paris climate agreement are irrelevant. Rather, BNEF examined future power demand and the lowest-cost pathways to meet it, according to Chatterton.

Among BNEF’s forecasts by 2040:

  • Coal use will fall by 87 percent in Europe and peak in China in less than 10 years.
  • Wind and solar will make up 34 percent of electricity generation.
  • The lithium-ion battery market will be worth at least $239 billion. Utility-scale batteries will “increasingly compete” with natural gas to provide system flexibility.
  • China and India will account for almost 40 percent of all new power generation investment.
  • Electric vehicles will help drive down lithium-ion battery costs 73 percent by 2030 and play a central role in helping grids to adapt to intermittent renewables.

The U.S. differs from the global trends somewhat because of the availability of cheap natural gas. That is helping to lag renewable development here because gas is competing with wind and solar, Chatterton said. At the same time, cheap gas is eroding the competitiveness of U.S. coal much faster, he said.

Click here to read the report.