Bloomberg sees a solar power takeover

Bloomberg New Energy Finance foresee that by 2030 the world’s power mix will have transformed: from today’s system with two-thirds fossil fuels to one with over half from zero-emission energy sources. Renewables will command over 60% of the 5,579GW of new global capacity and 65% of the $7.7 trillion of power investment.

The analysis, led by Australian Seb Henbest, solar PV will dominate, taking up a fifth of the capacity additions and investment to 2020. But fossil fuels by virtue of its historical dominance will maintain a 54% share of generation – albeit down from 67% in 2013.

The chart below details BNEF’s view about new power generation capacity additions to 2030 with solar PV in yellow.

Global gross annual capacity additions by technology, 2013-30 (GW)

Source: Bloomberg New Energy Finance (2014) 2030 Market Outlook

BNEF optimistically declare, “economics - rather than policy - will increasingly drive the uptake of renewable technologies.”

However they also note a word of caution that in developed nations where electricity demand growth is stagnating and even declining, and capital in fossil fuel capacity is largely sunk, government policy will be required to substantially reduce carbon emissions.

By 2030 solar PV and wind power will increase their share of global generation from 3% last year to 16% and potentially up to 18%, depending on technological progress in renewables’ costs.

They note that in some countries the share of solar and wind may reach such high levels that governments need to consider how to better manage its variability of output.

For example in some countries such as Germany, they forecast wind and solar PV will account for 52% of generation by 2030. They note that this is likely to require additional investment in fast response power supply sources to help manage variability. BNEF note such high penetration levels are not without precedent and can be supported with some combination of additional gas capacity, energy storage (such as batteries), transmission interconnectors, demand response or dispatch controls.

Bloomberg’s outlook for where new capacity will be installed is outlined in the chart below, with the Asia Pacific as the epicentre. The region will add more power generating capacity over 2013-30 (2,794GW) than the rest of the world combined (2,647GW). By 2030, renewable capacity will expand almost fourfold in the region, of which just under half will be PV.

Gross capacity additions by region and technology, 2013-30 (GW)

Source: Bloomberg New Energy Finance (2014) 2030 Market Outlook

BNEF expect China will be the biggest market for new power generation, including renewables. It will add some 1,000GW of renewable capacity over 2013-30, of which most will be solar PV and wind. They credit this to improving economics and continued government support this decade. Coal generation will dominate the power mix for the next 10 years but will peak in 2024.