The continuing decline in costs for wind, solar, and battery storage technology will drive a global power grid half-powered by renewables by 2050, according to new projections published this week by Bloomberg New Energy Finance.
Bloomberg New Energy Finance (BNEF) published its New Energy Outlook 2019 (NEO 2019) this week, its annual comparison of competing energy technology costs based on a levelized cost of energy analysis. The report not only finds that wind, solar, and battery storage will help push towards a global energy grid powered 48% by renewable energy, but also shows that these technologies should ensure the global power sector contributes its share toward keeping global temperatures from rising more than 2°C through to at least 2030.
This year’s NEO also found that wind or solar now represents the lowest-cost option for new generation capacity in two-thirds of the world. This is good news for a number of reasons, not least of all that electricity demand is expected to increase by 62% between 2018 and 2050, resulting in global generating capacity almost tripling. In turn, this will attract power investment of $13.3 trillion, of which $5.3 trillion will be directed towards wind energy and $4.2 trillion for solar. A further $840 billion will go towards batteries and $11.4 trillion towards grid expansion efforts.
“Our power system analysis reinforces a key message from previous New Energy Outlooks – that solar photovoltaic modules, wind turbines and lithium-ion batteries are set to continue on aggressive cost reduction curves, of 28%, 14% and 18% respectively for every doubling in global installed capacity,” said Matthias Kimmel, NEO 2019 lead analyst. “By 2030, the energy generated or stored and dispatched by these three technologies will undercut electricity generated by existing coal and gas plants almost everywhere.”
More importantly, the projected growth of renewables through 2030 portrayed in BNEF’s NEO 2019 is not reliant upon the introduction of new direct subsidies for existing technologies such as wind and solar.
“The days when direct supports such as feed-in tariffs are needed are coming to an end,” said Elena Giannakopoulou, head of energy economics at BNEF. “Still, to achieve this level of transition and de-carbonization, other policy changes will be required – namely, the reforming of power markets to ensure wind, solar, and batteries are remunerated properly for their contributions to the grid. NEO is fundamentally policy-agnostic, but it does assume that markets operate rationally and fairly to allow lowest-cost providers to win.”
As already mentioned, Bloomberg’s New Energy Outlook also believes that the cost declines in wind, solar, and battery storage technology will help the global power sector contribute its share towards ensuring global temperatures do not rise above more than 2°C through to at least 2030. However, beyond that, Bloomberg insists that “a lot more will need to be done beyond that date to keep the world on that 2 degree path.”