Bad news if you’re getting tired of reading new headlines every day about the rapid growth of renewables across the world – they’re only going to keep increasing.
Renewable energy could represent up to 65% of the $7.7 trillion in new power plant investments and 60% of all new capacity additions expected over the next 15 years, forecasts Bloomberg New Energy Finance’s (BNEF) 2030 Market Outlook.
BNEF’s outlook marks a watershed moment in the world’s energy mix – not just a transformation of how we get our electricity, but the moment global carbon dioxide emissions peak and stop growing. Perhaps best of all, BNEF’s renewable electricity forecast tracks with transportation sector predictions across the same time period, meaning rapid decarbonization could be just around the corner.
No Going Back On Renewable Energy’s Dominance
Fossil fuel’s share of power generation is set to fall from 64% today to 44% by 2030, primarily on the basis of market forces and economics, adding 1,073 gigawatts (GW). “Ultimately the forecast is driven by life-cycle cost of building different power generation technologies to meet projected demand,” said Seb Henbest, BNEF Regional Head for Europe, the Middle East, and Africa.
As evidenced in recent years, the rapid fall in solar photovoltaic (PV) costs will power renewables’ rise. Rooftop solar PV is expected to dominate new investments, creating a “small-scale solar revolution” and representing a fifth of all new capacity additions and investment through 2020. But wind energy won’t be left out of the boom – combined with solar, the two technologies will grow their share of global generation from 3% in 2013 to 16% in 2030.
Renewables Boom Means Global Emissions Will Peak
Fossil fuels are expected to retain a presence in the world’s power mix, especially in developing countries where demand is growing fastest. For instance, India’s power demand is expected to rise 200% by 2030 while China’s demand will grow 115%
Coal capacity is expected to shrink in every region except Asia, and natural gas generation will continue to grow across the world due to a lower emissions profile and abundant supply created by the shale gas boom.
Factors like energy efficiency, slow economic growth, and rising retail power prices will help slow overall growth in power demand, but to reach renewables’ full power sector decarbonization potential, BNEF says some form of policy intervention, i.e. carbon pricing or subsidies, will be needed.
Even so, the rapid growth of renewables means we finally get some good news on climate change. “What we are seeing is global CO2 emissions on track to stop growing by the end of next decade, with the peak only pushed back because of fast-growing developing countries,” said Michael Liebriech, Chairman of BNEF’s advisory board.
Major Regional Differences In Future Power Mix
Those disparities become even more apparent by parsing regional data. The fast-growing Asia-Pacific region will dominate new capacity additions, adding more generation (2,794GW) than the rest of the world combined (2,647GW). While this means more new renewables (1,743GW) and investment ($2.5 trillion), it also means continued growth in natural gas capacity (283GW) and coal (434GW) at a clip of one new coal plant every two weeks. Still, BNEF expects 47% of installed capacity and 33% of generated electricity will be from renewables by 2030.
The picture looks different across the North and Latin American region, where $1.3 trillion in investments will build 557GW new power generation capacity through 2026. Natural gas will dominate investment in the United States, Canada, and Mexico, pulling in 24% of new capacity on the strength of shale gas’ boom – but those gains will push coal out, as 100GW of retirements are expected in the U.S. while policy “makes it all but impossible to build new coal in the U.S. and Canada.
Contrasting with those two regions, renewables are about to boom across the European region. Renewables are expected to attract more than 75% of the $1.3 trillion in new power capacity investment through 2030. In fact, BNEF reports renewables will represent 60% of all generation capacity in 2030, with 20% coming from offshore wind. As a result, coal will become an afterthought, with it’s share of generation falling from 19% to 8% However, BNEF warns this renewables boom means Europe’s grid will need flexible capacity – in the form of demand response, energy storage, or fast-ramping natural gas – to balance intermittency.