As costs for renewable energy tumble, these sources are now expected to account for around 75% of the expected $10trn global investment into power generating technologies between now and 2040, according to a report from Bloomberg New Energy Finance (BNEF).
Of this solar will account for 48% of the world’s installed capacity and 34% of electricity generation.
BNEF’s New Energy Outlook 2017 report predicts that global emissions will peak by 2026. A $10.2trn investment is projected to be spent on power generation worldwide, of which $7.4trn will be funneled towards renewables.
According to the report, solar can expect a 14-fold jump in capacity, driven by a $2.8trn investment. Wind capacity will be backed by a $3.3trn investment and is expected to increase fourfold as a result.
The increase in solar capacity will be partly facilitated by a reduced levelized cost of electricity from solar PV, which is already a quarter of what it was in 2009, and is set to shrink by another 66% by 2040. Wind energy costs, on the other hand, will fall by 71% for offshore installations and 47% for onshore projects.
Analysis from the 65-strong team at BNEF found that solar will account for 48% of the world’s installed capacity and 34% of electricity generation by 2040 – compared to 12% and 5% today.
“This year’s report suggests that the greening of the world’s electricity system is unstoppable, thanks to rapidly falling costs for solar and wind power, and a growing role for batteries, including those in electric vehicles, in balancing supply and demand,” BNEF’s lead author Seb Henbest said.
By 2040, $1 will purchase 2.3 times as much solar energy as it does currently. Solar is already level or below coal costs in Germany, Australia, the US, Spain and Italy. By 2021, it will be cheaper than coal in the UK, China, India, Mexico and Brazil.
Small-scale batteries for business and domestic systems integrated with solar PV will account for 57% of global storage by 2040. In Europe and the US, electric vehicles (EVs) will be used to help balance the grid. EVs will account for around 13% of electricity generation in these two areas by 2040 and will help the system adapt to the variable nature of renewables. The growth of EVs will also reduce the costs of lithium-ion batteries by more than 70% by 2030 and will likely represent 35% of all new car sales.
BNEF’s report notes that China will account for more than a quarter of all investment into power generation by 2040, with Asia Pacific nations accounting for almost as much investment as the rest of the world combined. Of this, around a two-thirds will be spent on wind and solar, 18% to nuclear and 10% to coal and gas.