Dive Brief:
- Bloomberg New Energy Finance (BNEF) has released its annual analysis of global electricity supply and demand, concluding the world's electric sector remains on track to help keep temperatures from rising more than 2 degrees Celsius above pre-industrial levels, at least through 2030.
- The 2019 New Energy Outlook predicts wind and solar will supply almost half of global electricity demand in 2050. They are now the cheapest sources of power across most of the world, and by 2030 the report concludes they will undercut commissioned coal and gas plants "almost everywhere."
- Coal generation's share of the global power mix will decline from more than a third today to 12% by 2030, according to the analysis. BNEF determined the contributions of hydro, natural gas and nuclear will remain "roughly level on a percentage basis."
Dive Insight:
The declining cost of solar, wind and batteries will lead to a dramatic shift in the global power mix across the next three decades — even as coal use continues to rise for the next seven years, BNEF concluded in its report.
Today, wind and solar make up about 7% of the world's generation, but BNEF expects that will reach 48% by 2050.
Despite the rise in renewables, global coal use will continue to grow until 2026 due to new capacity coming online in Asia. But the long-term trend is toward retiring coal plants, and BNEF expects they will fall significantly from supplying 37% of the world's power today.
BNEF analysts say the conclusions echo past findings of the annual report.
Solar, wind 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," BNEF analyst Matthias Kimmel said in a statement.
By 2030, the three technologies "will undercut electricity generated by existing coal and gas plants almost everywhere," Kimmel added.
BNEF says decarbonization efforts will be most successful in Europe, first.
In Europe, 92% of electricity will be supplied by renewables in 2050, the report found.
"Major Western European economies in particular are already on a trajectory to significantly decarbonize thanks to carbon pricing and strong policy support," the report notes. But efforts to introduce carbon pricing in the United States have so far fallen short.
The United States will follow Europe in decarbonization, as it continues to rely on an abundance of low-priced natural gas. China, leaning on a "modern fleet of coal-fired plants," will "follow at a slower pace," BNEF said.
Aided by batteries, BNEF said the United States' power supply will be 43% renewable by 2050. Ultimately, the large-scale changes are driven by the improving economics of clean energy resources.
"The days when direct supports such as feed-in tariffs are needed are coming to an end,” BNEF's head of energy economics Elena Giannakopoulou said. "Still, to achieve this level of transition and decarbonization, other policy changes will be required."
Specifically, Giannakopoulou said that means power market reforms to properly reward wind, solar and batteries for their grid contributions.
The report "is fundamentally policy-agnostic, but it does assume that markets operate rationally and fairly to allow lowest-cost providers to win," Giannakopoulou said.
