Bloomberg New Energy Finance has news for the electrical power industry. Renewable energy is the new heavyweight champion. Coal is dead. Even cheap natural gas from fracking won’t be able to compete with solar and wind power. BNEF says the changeover is less than 10 years away.
You can read the entire Bloomberg New Energy Outlook 2016 yourself if you are willing to share your name and e-mail address with Bloomberg. Otherwise, here are the highlights. The reports major conclusion is as follows:
Cheaper coal and cheaper gas will not derail the transformation and decarbonisation of the world’s power systems. By 2040, zero-emission energy sources will make up 60% of installed capacity. Wind and solar will account for 64% of the 8.6TW of new power generating capacity added worldwide over the next 25 years, and for almost 60% of the $11.4 trillion invested.
Their conclusion is in line with a the finding by the International Energy Agency last November, when it said, “Driven by continued policy support, renewables account for half of additional global generation, overtaking coal around 2030 to become the largest power source.”
BNEF has translated most of its findings into easy to understand charts and graphs. In a section headlined, “Solar and Wind Prices Plummet,” it says “The chart below is arguably the most important chart in energy markets. It describes a pattern so consistent, and so powerful, that industries set their clocks by it.”
Dropping prices for renewable energy will lead to a more than $6 trillion investment in wind and solar power between now and 2040. “These two technologies [will be] the cheapest ways of producing electricity in many countries during the 2020s and in most of the world in the 2030s, Bloomberg says.
Gas2 readers are well aware that the changeover from fossil fuels to renewable energy sources and electric cars won’t happen until the economics of each make it sense. Business is driven by market considerations, not calculations of social good. Likewise, car buyers may want to help save the environment, but their first loyalty is to the family budget.
Bloomberg envisions the day, not long from now, when traditional power plants are nothing more than expensive backup facilities for renewable energy installations. Once built and online, wind and solar facilities require very little money to maintain. There is no “fuel” to buy going forward. Bloomberg concludes with this thought: The marginal cost of operating a solar and wind plan is “pretty much zero — free electricity — while coal and gas plants require more fuel for every new watt produced.”
Utilities will not be able to ignore for long the compelling economics of the new paradigm in electrical power.
Source: Think Progress, Bloomberg