Solar to account for 30% of all generation capacity investment until 2040
A new report by Bloomberg New Energy Finance on the future of energy not only points to solar as the technology that will have the most invested in it, but that costs will fall dramatically over the next 25 years, making it the cheapest energy source for most of the world by 2040.
The New Energy Outlook 2016 by the Bloomberg New Energy Finance (BNEF) has presented an optimistic outlook for the solar PV industry, as the energy source that will have the most invested in it and the one whose costs will drop the lowest. The extensive report, which looks at all sources of energy, also forecasted drops in prices for fossil fuels, but that renewable energies will lead a fundamental transformation of the world electricity system.
BNEF expects a pretty penny to be spent on global power generation capacity increases, to the tune of $11.4 trillion over the next 25 years. The encouraging part of that figure is the $7.8 trillion that will be spent on renewables, of which $3.4 trillion will be spent on solar. That is 30% of the total investment, and more than any other technology.
“Some $7.8 trillion will be invested globally in renewables between 2016 and 2040, two thirds of the investment in all power generating capacity,” said Seb Henbest, head of Europe, Middle East and Africa for BNEF, and lead author of the report, “but it would require trillions more to bring world emissions onto a track compatible with the United Nations 20C climate target.”
Although the report highlights the falling costs of gas and coal, it is renewables which will experience the steepest drops in costs, especially solar PV. In fact, the New Energy Outlook forecasts that costs of solar PV generation per MWh will fall an incredible 60% by 2040, which will make it the cheapest way of producing electricity in most of the world by the 2030s.
With the plummeting costs of renewable energies, these technologies are expected to play a particularly important role in Europe’s energy mix by 2040, accounting for 70% of the continent’s power, according to the report. They will also make a large indent into the U.S. energy mix, going from just 14% in 2015, to 44% by 2040.
“The New Energy Outlook incorporates a significantly lower trajectory for coal and gas prices than the 2015 edition did a year ago but, strikingly, still shows rapid transition towards clean power over the next 25 years,” commented Jon Moore, chief executive of Bloomberg New Energy Finance.
As a result of the huge investment in solar from now until 2040, solar should account for 43% of all new power generation added in that period, eventually having a 15% share of the entire global energy mix by 2040.
The report also highlighted an expected boom in electric cars, which should add 8% demand to global electricity by 2040. Alongside an increase in global demand for electricity, the rise of the electric car should also have a knock on effect on the energy storage market, as the increase in demand should drive down the cost of lithium-ion batteries. BNEF expects this to result in a $250 billion market for small-scale batteries by 2040.
Solar is a rapidly growing industry employing over 230,000 Americans and serving over 1,000,000 customers nationwide.