By 2040, renewables will unseat coal. This is the scenario outlined by Bloomberg New Energy Finance, in which wind and solar will account for half of the world's installed generation capacity.
Renewable energy sources are pushing coal and natural gas power plants out of the market. With data in hand, Bloomberg New Energy Finance (Bnef) has described the changes we can expect in the energy world between now and 2040 in its latest report, showing that the overtake of renewables over fossil fuels is happening much faster than anticipated.
The scenario put forward by Bloomberg indicates that clean energy is spreading across the world more rapidly than most experts expected. This is good news for the environment and for the possibility of intervening to slow climate change. If this forecast were to come true, it would mean that carbon dioxide pollution from the use of fossil fuels could begin to decline from 2026. A result that, for the moment, contrasts with the projections of the International Energy Agency (Iea), which instead estimates a steady rise in emissions over the decades ahead.
Bnef's reasoning on the growth and eventual overtake of renewables revolves around the costs of technologies such as solar and wind, which in the coming years will be cheaper than fossil fuel sources. It is not a matter of "if" the overtake will happen but rather "when," said Seb Henbest, a researcher at Bnef in London and lead author of the report. Bnef estimates that the cost of offshore wind farms — until recently the most expensive technology among renewables — will fall by 71 per cent. A reduction that will make installing wind turbines at sea extremely cost-effective, in all likelihood attracting new investment.
Not only offshore wind but also onshore installations are set to grow. Over the past eight years, the cost of electricity from a wind farm has fallen by 30 per cent: it is forecast to drop by a further 47 per cent by 2040. Likewise, Bnef's projections expect solar to keep racing ahead. Today, the price of electricity produced by photovoltaic panels costs nearly a quarter of what it did in 2009, and it is likely to fall by a further 66 per cent over the next twenty years. The renewables contest will also be played out on other fronts, particularly that of batteries — a sector in exponential growth, indispensable for storing clean energy and keeping homes, businesses and electric cars constantly powered. Bnef estimates that by 2040 at least 239 billion dollars will have been invested in applied research into energy storage devices.
The data presented by Bnef suggest that wind and solar are rapidly becoming the principal sources of electricity, well beyond the mistaken perceptions that they are too costly to compete with conventional fuels. By 2040, the two sources alone will make up nearly half of the world's installed generation capacity: an exponential increase from today's 12 per cent; together they will represent 34 per cent of all energy produced (compared with the current 5 per cent). A leap that will be made possible by a shift in investment that will increasingly favour renewable energy at the expense of fossil fuels.
In light of Bnef's forecasts, it is clear that the countries currently investing in renewables will find themselves in twenty years' time with an energy sector that has been transformed, competitive and of ever-lower impact. By contrast, the countries in which investment in fossil fuels — particularly coal — is continuing will, already after 2020, begin to feel the effects of the far more competitive prices of electricity produced from renewables. Coal and its associated industries will be the biggest victims, to the extent that Bnef believes 369 gigawatts of projects will have to be cancelled, roughly equivalent to the entire generation capacity of Germany and Brazil combined. Despite President Trump working assiduously to stimulate the fossil fuel sector, the closure of old plants and the adoption of cheaper, less polluting sources will lead to a sharp decline in traditional energy sources. Bnef estimates that in 2040 the energy produced using coal will be half of what it is today. An even steeper collapse will materialise in Europe, where environmental protection laws will increase the costs of fossil fuels and, as a consequence, their contribution to energy production will be seen to fall by 87 per cent.