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 of the “beautiful math” of declining solar and wind costs.
Peak Fossil Fuel Usage
In contrast to peak oil forecasts that have been in vogue, BNEF says the World is on the Brink of Peak Fossil Fuels for Electricity.
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.
Seven of Eight
That was one of the best Bloomberg articles I have seen in 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.
Geopolitical Questions and Consequences
- How much carnage did the US needlessly cause in the Middle-East over oil?
- How quickly will the oil producing countries be in serious trouble?
- Are tensions with India about to pick up?
- Other than India (and perhaps even India), countries sitting on stockpiles of coal, may have little use for those stockpiles.
It remains to be seen if things play out that way, but if so, huge changes are coming, by 2025.
For trends of a different nature, please see Mary Meeker on Internet Trends – An Excellent Presentation.
Mike “Mish” Shedlock