2018 report first to herald huge role of battery storage
Bloomberg New Energy Finance (BNEF) published earlier today its annual long-term analysis of the future of the global electricity system and cited batteries as the technology set to facilitate a massive boom in wind and solar power. The firm predicted those two forms of renewable generation will hit "50 by 50" – half the world's power generation by 2050.
Titled "New Energy Outlook (NEO) 2018," the 150-page report drew on detailed research by a team of over 65 analysts around the world, including sophisticated modeling of power systems country-by-country, and of the evolving cost dynamics of different technologies. The "50 by 50" prediction was based on what the firm called precipitous reductions in cost in solar and wind power – and the advent of ever cheaper batteries that will enable electricity to be stored and discharged to meet shifts in demand and supply.
This year's outlook was the first to highlight the huge impact that falling battery costs will have on the electricity mix over the coming decades, the firm said earlier today in publicizing the report. BNEF predicted lithium-ion battery prices, already down by nearly 80% per MWH since 2010, will continue to tumble as EV manufacturing builds up through the 2020s.
"We see $548 billion being invested in battery capacity by 2050, two thirds of that at the grid level and one third installed behind-the-meter by households and businesses," said Seb Henbest, head of Europe, Middle East and Africa for BNEF and lead author of the report. "The arrival of cheap battery storage will mean that it becomes increasingly possible to finesse the delivery of electricity from wind and solar, so that these technologies can help meet demand even when the wind isn't blowing and the sun isn't shining.
"The result will be renewables eating up more and more of the existing market for coal, gas, and nuclear."
The report predicted renewables will hit 55% of generation in the US by 2050 and noted a shift to more decentralization in some countries such as Australia, where by mid-century, consumer PV and batteries would account for 43% of all capacity.
The firm analyzed the impact of the electrification of transport on power consumption, estimating electric cars and buses will be using 3,461 TWH (terawatt hours) globally in 2050, equivalent to 9% of total demand. About half of the necessary charging is expected to be done on a dynamic basis, taking advantage of times when power prices are low because of high renewables output, the firm said.
This analysis drew on BNEF's latest "Electric Vehicle Outlook," published May 21, which predicted EVs would account for 28% of global new car sales by 2030, and 55% by 2040. Electric buses are expected to dominate their market even more decisively, reaching 84% global share by 2030.
The firm expects $11.5 trillion to be invested globally in new power generation capacity between 2018 and 2050, with $8.4 trillion of that going to wind and solar and a further $1.5 trillion to other zero-carbon technologies such as hydro and nuclear. This investment will produce a 17-fold increase in solar PV capacity worldwide, and a six-fold increase in wind power capacity, the firm said.
The levelized cost of electricity, or LCOE, from new PV plants is expected to fall another 71% by 2050, while that for onshore wind drops 58% more. These two technologies have already seen LCOE reductions of 77% and 41% respectively from 2009 to 2018, it added.
"Coal emerges as the biggest loser in the long run," said Elena Giannakopoulou, head of energy economics at BNEF, in prepared remarks. "Beaten on cost by wind and PV for bulk electricity generation, and batteries and gas for flexibility, the future electricity system will reorganize around cheap renewables. Coal gets squeezed out."
The role of gas in the generation mix will evolve, with gas-fired power stations increasingly built and used to provide back-up for renewables rather than to produce so-called base-load, or round-the-clock, electricity, the firm said. BNEF sees $1.3 trillion being invested in new capacity to 2050, nearly half of it in gas "peaker" plants rather than combined-cycle turbines.
Gas-fired generation is seen rising 15% between 2017 and 2050, although its share of global electricity declines from 21% to 15%, it added.
Carbon goals not met
The bearish outlook for coal means the report offered a more upbeat projection for carbon emissions than the equivalent report a year ago, the firm said. BNEF now sees global electricity sector emissions rising 2% from 2017 to a peak in 2027, and then falling 38% to 2050.
But this would still mean electricity failing to fulfill its part of the effort to keep global CO? levels below 450 parts per million – the level considered by the Intergovernmental Panel on Climate Change to be consistent with limiting the rise in temperatures to less than two degrees Celsius, it added.
"Even if we decommissioned all the world's coal plants by 2035, the power sector would still be tracking above a climate-safe trajectory, burning too much unabated gas," said Matthias Kimmel, energy economics analyst at BNEF, in prepared remarks. "Getting to two degrees requires a zero-carbon solution to the seasonal extremes, one that doesn't involve unabated gas."
The prediction in the report took into account the evolving economics of different power technologies, and projections for power demand such as population and gross domestic product. It assumed existing energy policy settings around the world would remain in place until their scheduled expiry, and that there are no added government measures, the firm said.
The report was not yet available at the time this story was written, but the previous annual report appeared only to be available to BNEF clients.
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