Share

Six massive shifts in global power markets

Johannesburg - The renewable-energy boom is here. Trillions of dollars will be invested over the next 25 years, driving some of the most profound changes yet in how humans get their electricity. That's according to a new forecast by Bloomberg New Energy Finance that plots out global power markets to 2040.

Here are six massive shifts coming soon to power markets near you:

1. Solar prices keep crashing

The price of solar power will continue to fall, until it becomes the cheapest form of power in a rapidly expanding number of national markets. By 2026, utility-scale solar will be competitive for the majority of the world, according to BNEF. The lifetime cost of a photovoltaic solar-power plant will drop by almost half over the next 25 years, even as the prices of fossil fuels creep higher.

Solar power will eventually get so cheap that it will outcompete new fossil-fuel plants and even start to supplant some existing coal and gas plants, potentially stranding billions in fossil-fuel infrastructure. The industrial age was built on coal. The next 25 years will be the end of its dominance.  

2. Solar billions become solar trillions

With solar power so cheap, investments will surge. Expect $3.7 trillion in solar investments between now and 2040, according to BNEF. Solar alone will account for more than a third of new power capacity worldwide. Here's how that looks on a chart, with solar appropriately dressed in yellow and fossil fuels in pernicious gray:  

 Electricity capacity additions, in gigawatts. Source: BNEF

3. The revolution will be decentralised

The biggest solar revolution will take place on rooftops. High electricity prices and cheap residential battery storage will make small-scale rooftop solar ever more attractive, driving a 17-fold increase in installations.

By 2040, rooftop solar will be cheaper than electricity from the grid in every major economy, and almost 13% of electricity worldwide will be generated from small-scale solar systems.

$2.2 trillion goes to rooftops by 2040

Rooftop (small-scale) solar in yellow. Renewables account for about two-thirds of investment over the next 25 years.

4. Global demand slows

Yes, the world is inundated with mobile phones, flat screen TVs, and air conditioners. But growth in demand for electricity is slowing. The reason: efficiency.

To cram huge amounts of processing power into pocket-sized gadgets, engineers have had to focus on how to keep those gadgets from overheating. That's meant huge advances in energy efficiency. Switching to a LED light bulb, for example, can reduce electricity consumption by more than 80%.

So even as people rise from poverty to middle class faster than ever, BNEF predicts that global electricity consumption will remain relatively flat. In the next 25 years, global demand will grow about 1.8% a year, compared with 3% a year from 1990 to 2012. In wealthy OECD countries, power demand will actually decline.  

This watercolor chart compares economic growth to energy efficiency. Each colour represents a country or region. As economies get richer, growth requires less power.

The beauty of efficiency

Source: BNEF

5. Natural gas burns briefly

Natural gas won't become the oft-idealised "bridge fuel" that transitions the world from coal to renewable energy, according to BNEF. The US fracking boom will help bring global prices down some, but few countries outside the US will replace coal plants with natural gas. Instead, developing countries will often opt for some combination of coal, gas, and renewables.  

Even in the fracking-rich US, wind power will be cheaper than building new gas plants by 2023, and utility-scale solar will be cheaper than gas by 2036.

Fossil fuels aren't going to suddenly disappear. They'll retain a 44% share of total electricity generation in 2040 (down from two thirds today), much of which will come from legacy plants that are cheaper to run than shut down.

Developing countries will be responsible for 99% of new coal plants and 86% of new gas-fired plants between now and 2040, according to BNEF. Coal is clearly on its way out, but in developing countries that need to add capacity quickly, coal-power additions will be roughly equivalent to utility-scale solar.

Source: BNEF

6. The climate is still screwed

The shift to renewables is happening shockingly fast, but not fast enough to prevent perilous levels of global warming.

About $8 trillion, or two thirds of the world's spending on new power capacity over the next 25 years, will go toward renewables. Still, without additional policy action by governments, global carbon dioxide emissions from the power sector will continue to rise until 2029 and will remain 13% higher than today's pollution levels in 2040.

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 worst consequences of climate change.

CO2 emissions from the power sector don't peak until 2029. Source: BNEF

The report assumes there will be no further policies supporting renewable energy from 2018 onward. The EPA's Clean Power Plan and any unforeseen climate agreements could change the forecast. The share of total generation from renewables will be higher, at 46%. The world's power capacity mix will go from two-thirds fossil fuels today to 56% zero emissions, according to BNEF.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.89
+0.3%
Rand - Pound
23.82
+0.4%
Rand - Euro
20.37
+0.3%
Rand - Aus dollar
12.30
+0.3%
Rand - Yen
0.12
+0.3%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders