The latest long-term forecast from Bloomberg New Energy Finance, entitled New Energy Outlook 2016, charts a significantly lower track for global coal, gas and oil prices than the group did in 2015, while tracking a steeper decline for wind and solar costs and increasing demand for balancing options such as batteries.
The report says that cheap gas and coal will fail to prevent a fundamental transformation of the world electricity system over coming decades towards renewable sources.
The forecast, covering the period out to 2016 has mixed news on carbon emissions, showing all the talk about the role of gas at APPEA may have been either wishful thinking, economic trickery or just hot air – if BNEF is correct and senior energy economist Elena Giannakopoulou’s dire prediction for gas bulls is on the money.
“One conclusion that may surprise is that our forecast shows no golden age for gas, except in North America. As a global generation source, gas will be overtaken by renewables in 2027. It will be 2037 before renewables overtake coal,” she said.
She said there will be only a limited tradition role for gas outside the US, with only 3% growth in gas demand for power to 2040, and generation peaking in 2027.
Weaker GDP growth in China and a rebalancing of its economy will mean emissions there will peak as early as 2025, however, rising coal-fired generation in India and other Asian emerging markets indicate that the global emissions figure in 2040 will still be some 700 megatonnes, or 5%, above 2015 levels.
“Some $US7.8 trillion will be invested globally in renewables between 2016 and 2040, two thirds of the investment in all power generating capacity, but it would require trillions more to bring world emissions onto a track compatible with the United Nations 2C degree climate target," BNEF’s head of Europe, Middle East and Africa, Seb Henbest, said.
The forecaster found itself reducing its long-term price estimations for coal and gas prices by 33% and 30% respectively, reflecting a projected supply glut for both commodities, and found that while they will be cheap sources of baseload power, levelised costs of generation per MWh for onshore wind will fall 41% by 2040, and solar photovoltaics by 60%, making these two technologies the cheapest ways of producing electricity in many countries during the 2020s and in most of the world in the 2030s.
The group estimates there will be $2.1 billion invested in new coal ($1.2 billion) and gas generation ($892 billion), predominantly in emerging economies, but with almost $8 billion will be spent on renewables they will be left in the shade.
Wind power will attract $3.1 trillion, utility-scale, rooftop and other small-scale solar $3.4 trillion and hydro-electric $911 billion.
However, Henbest said a further $5.3 trillion would be needed to meet zero-carbon power targets by 2040 to prevent CO2 in the atmosphere rising above the Intergovernmental Panel on Climate Change’s ‘safe’ limit of 450 parts per million.
BNEF also tips a bright future for electric cars, leaving more liquid fuels for other uses. It expects EVs will add 2701TWh, or 8%, to global electricity demand in 2040, securing a 35% of the world’s new light-duty vehicle sales, 90-fold growth on 2015.
NEO 2016 is based on a combination of the project pipeline in each country, current policies, plus modelled paths for future electricity demand, power system dynamics and technology costs.
It does not assume any further policy measures post-2020, to speed up decarbonisation.
Some 65 specialist analysts worked on the forecast.
