On June 19, Bloomberg New Energy Finance (BNEF) released the new annual global power system long-term analysis report "2018 New Energy Market Long-term Outlook".
The rapidly falling costs of wind and photovoltaic, combined with the falling cost of the battery storage that provides the flexibility to power systems, are expected to account for 50 percent of global power generation, according to the report.
This year's outlook is the first to highlight the impact that falling battery costs will have on the structure of the electricity market over the coming decades. The price per megawatt hour of lithium-ion batteries has fallen nearly 80 per cent since 2010 and is expected to continue falling as electric vehicle manufacturing scales up in the first two decades of the 21st century, BNEF noted.
"Between now and 2050, $548 billion in new investment will go into battery storage, two-thirds of which will be on the generation and grid side and one-third on the consumer side," said Seb Henbest, head of research for Europe, Middle East and Africa at BNEF and lead author of the New Energy Market Long-Term Outlook 2018. The advent of cheap battery storage means wind and PV are easier to regulate and can still provide electricity even when there is no wind or sun, allowing renewables to further eat into the share of electricity generation currently taken by coal, gas and nuclear."
Between 2018 and 2050, $11.5 trillion of new power generation will be invested globally, with $8.4 trillion in wind and photovoltaic power and another $1.5 trillion in other zero-emission technologies such as hydropower and nuclear power, according to the report. These investments will lead to a 17-fold increase in global PV installations and a six-fold increase in wind installations. Between now and 2050, the levelled kilowatt-hour cost (LCOE) for new PV plants will be reduced by 71%, while the LCOE for onshore wind will be reduced by 58%. LCOE for these two technologies declined 77 percent and 41 percent, respectively, between 2009 and 2018.
Elena Giannakopoulou, chief energy economist at BNEF, said: "In the long term, coal power will be the biggest loser. From the point of view of kilowatt-hour cost, coal power will not be able to compete with wind and photovoltaic; In terms of system flexibility, coal will not be able to compete with gas-fired generation and storage. Eventually, most coal power assets will be driven out of the market."
The role of gas-fired power generation will also change. More and more new gas-fired units will be designed as back-up sources of renewable energy, rather than all-weather baseload power. BNEF expects $1.3 trillion to be invested in new gas-fired generating units from 2018 to 2050, with nearly half of that going to new peak-balancing units that meet peak demand, rather than combined-cycle units that are better suited to providing base load. Between 2017 and 2050, gas-fired power generation will grow by 15 per cent, but its share of the global total will fall from 21 per cent to 15 per cent.
Clearly, global fuel consumption trends are very negative for coal and more positive for natural gas extraction. In its report, BNEF predicts that coal consumption in the global power sector will fall 56 per cent between 2017 and 2050, while gas consumption will rise 14 per cent. Global carbon emissions forecasts are more optimistic than a year ago because of the decline of coal power.
According to BNEF, global emissions from the power sector will peak in 2027, 2% above 2017 levels, and then fall all the way down to 38% below peak levels in 2050. But even so, the power sector will not help meet the 2C target.
The United Nations Intergovernmental Panel on Climate Change says carbon emissions should not exceed 450 parts per million (PPM) to keep global temperature rises below 2 degrees Celsius. "Even if we phase out all coal plants globally by 2035, the emissions trajectory of the power sector is still higher than required under the 2-degree scenario. To do so requires a carbon-neutral solution that can be adapted to carbon intensity in all seasons." BNEF energy economist Matthias Kimmel.
According to BNEF's projections, the share of renewables in several electricity markets will rise significantly: 87% in Europe, 55% in the US, 62% domestically and 75% in India by 2050.
Notably, the report predicts that electric passenger cars and buses will generate 3.461 trillion kilowatt-hours of global electricity demand by 2050, equivalent to 9% of total global demand, with about half of all charging being more flexible, taking advantage of times of high renewable energy generation and low electricity prices.