Renewable energy is set to dominate the energy landscape over the next two decades, while coal use will lose more than 50 percent of its market to natural gas, solar and wind, according to the latest energy outlook released Thursday by Bloomberg's analytical wing.
"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," according to Seb Henbest, the lead author of Bloomberg New Energy Finance's annual New Energy Outlook.
The outlook says $7.4 trillion is expected to be invested in new renewable energy power plants by 2040, which is 72 percent of the $10.2 trillion that is estimated to be spent on new electricity plants worldwide.
The outlook showed that $2.8 trillion would go to solar worldwide, while wind would draw $3.3 trillion. "As a result, wind and solar will make up 48 percent of the world's installed capacity and 34 percent of electricity generation by 2040, compared with just 12 percent and 5 percent now," a summary read.
The Energy Information Administration said Wednesday that wind and solar produced 10 percent of the nation's electricity for the first time in March.
The big loser is coal, which will see its share of the market greatly diminished in that period, displaced primarily by solar. "Solar energy's challenge to coal gets broader," the summary read. That is mainly because of the cost of electricity from solar panels dropping another 66 percent over the next two decades. Solar cost already are a quarter of where they were just eight years ago.
"By then a dollar will buy 2.3 times as much solar energy than it does today. Solar is already at least as cheap as coal in Germany, Australia, the U.S., Spain and Italy," according to the report. "By 2021, it will be cheaper than coal in China, India, Mexico, the U.K. and Brazil as well."
Natural gas also will erode the coal market, even as China is set to hit the peak of its coal use by the end of the next decade, according to the outlook's projections.
"Coal-fired power collapses in Europe and the U.S.," while it "peaks in China in less than 10 years," according to the summary. "Sluggish demand, cheap renewables and coal-to-gas fuel switching will slash coal use by 87 percent in Europe by 2040," it stated. The outlook is similar in the U.S., where coal use for electricity generation will drop 51 percent as older coal plants are retired and not replaced, and "others start burning cheaper gas."
The Bloomberg report showed that coal power generation will peak in China by 2026, while only "a mere 18 percent of new coal power plants that are in planning will ever get built." The outlook projects 465 gigawatts of coal projects being scrapped as global demand for thermal coal used in electricity generation ends up 15 percent lower than it was in 2016.
"In the U.S., the Trump administration has voiced support for the coal sector. However, [the report] indicates that the economic realities over the next two decades will not favor U.S. coal-fired power, which is forecast to see a 51 percent reduction in generation by 2040. In its place, gas-fired electricity will rise 22 percent, and renewables 169 percent," the summary read.
Oil giant BP this week released its 66th edition of energy projections, where it said coal was already taking a big tumble in demand in both the West and Asia.
"It feels to me like we're seeing a decisive break with coal, relative to the past," said Spencer Dale, the oil company's senior economist. "I think the big story here is coal getting squeezed." The BP projections showed that coal use has dropped for two consecutive years, with a slim outlook for recovery.
Bloomberg also showed that electric car use will increase by 2040 with the anticipated development of more efficient and low-cost battery technologies, which will help propel renewable energy use. Renewable energy is an intermittent resource, which means it only produces when the sun is shining and the wind is blowing. But if there was a way to store that electricity and use it at times when energy production is low, the result would be more reliable, 24-hour-a-day renewable electricity.
"This year's forecast shows [electric vehicle] smart charging, small-scale battery systems in business and households, plus utility-scale storage on the grid, playing a big part in smoothing out the peaks and troughs in supply caused by variable wind and solar generation," said Elena Giannakopoulou, senior analyst on the New Energy Outlook.
But renewables and electric cars won't be completely over their fossil fuel dependence. The Bloomberg report showed natural gas becoming a transition fuel, "but not in the way most people think," the outlook stated. "Gas plants will increasingly act as one of the flexible technologies needed to help meet peaks and provide system stability in an age of rising renewable generation, rather than as a replacement for ‘baseload' coal." Baseload refers to power plants that provide a minimum level of power to keep the grid stable on a 24-hour-a-day, seven-day-a-week basis. "In the Americas, however, where gas is plentiful and cheap, it plays a more central role, especially in the near term."
Natural gas power plants are projected to receive $804 billion in new investment over the next two decades, resulting in 16 percent more generating power by 2040, the summary read.