A Bloomberg New Energy Finance (BNEF) report plots out global power
markets for the next 25 years.
If accurate, solar energy will soon dominate, and electric cars will go
mainstream.
The forecast states coal and gas are in terminal decline because the of
the “beautiful math” of declining solar and wind costs.
It’s not that we running out, but rather solar and wind will become so
cheap, it will cost too much to use fossil fuels.
Here are the eight shifts BNEF sees coming.
1. There Will Be No Golden Age of Gas
The cost of wind and solar power are falling too quickly for gas ever to
dominate on a global scale. “You can’t fight the future,” said Seb Henbest,
the report’s lead author. “The economics are increasingly locked in.” The
peak year for coal, gas, and oil: 2025.
2. Renewables Attract $7.8 Trillion
Already in many regions the lifetime cost of wind and solar is less than
the cost of building new fossil fuel plants, and that trend will continue.
But by 2027, something remarkable happens. At that point, building new wind
farms and solar fields will often be cheaper than running the existing coal
and gas generators. “This is a tipping point that results in rapid and
widespread renewables development,” according to BNEF. By 2028, batteries
will be as ubiquitous as rooftop solar is today.
3. Electric Cars Rescue Power Markets
By 2028, batteries will be as ubiquitous as rooftop solar is today.
4. Batteries Join the Grid
The scale up of electric cars increases demand for renewable energy and
drives down the cost of batteries. And as those costs fall, batteries can
increasingly be used to store solar power. In expensive electricity markets
like Hawaii, battery storage for solar already makes economic sense, and it
won’t be long before that becomes the norm.
5. Solar and Wind Prices Plummet
The chart below is arguably the most important chart in energy markets. It
describes a pattern so consistent, and so powerful, industries set their
clocks by it. It’s the beautiful math of declining solar costs.
The chart is on a logarithmic scale, so the declines are even more
profound than at first glance. For every doubling in the world’s solar
panels, costs fall by 26 percent, a number known as solar’s “learning rate.”
6. Capacity Factors Go Wild
One of the fast-moving stories in renewable energy is the shifts in what’s
known as the capacity factor. That’s the percentage of a power plant’s
maximum potential that’s actually achieved over time.
Consider a wind farm. Even at high altitudes, the wind isn’t consistent
and varies in strength with the time of day, weather, and the seasons. Here’s
a watercolor plot of wind power capacity factors over time. Some wind farms
in Texas are now achieving capacity factors of 50 percent, according to BNEF.
7. A New Polluter to Worry About
China, the biggest and fastest-growing polluter, became a major global
concern over the last few decades. But that perception is changing fast.
China’s evolving economy and its massive shift from coal to renewables mean
it will have the greatest reduction in carbon emissions of any country in the
next 25 years, according to BNEF. That’s good news for the climate and is a
significant change for the global energy outlook.
That leaves India, which is emerging as the biggest threat to efforts to
curb climate change. India’s electricity demand is expected to increase
fourfold by 2040, and the country will need to invest in a variety of energy
sources to meet this overwhelming new demand. India has hundreds of millions
of people with little or no access to electricity, and the country sits atop
a mountain of coal. It intends to use it.
8. The Transformation Continues
Without additional policy action by governments, global carbon dioxide
emissions from the power sector will peak in the 2020s and remain relatively
flat for the the foreseeable future. That’s not enough to prevent the surface
of the Earth from heating more than 2 degrees Celsius, according to BNEF.
That’s considered the point of no return for some of the worst consequences
of climate change.
That was one of the best Bloomberg articles I have seen on a long time.
BNEF laid out some nice ideas to consider, marred slightly with global
warming nonsense in point eight.
If the report is even close to being accurate, geopolitical questions and
concerns hit the spotlight.
It remains to be see if things play out that way, but if so, huge changes
are coming, by 2025.
