Clean Energy to Get $7.8 Trillion Investment Through 2040

Over the next 25 years, global investment in new electricity generating capacity is expected to total $11.4 trillion dollars. Of that total, new wind and solar generation will account for 64% of the total added capacity of 8.6 terawatts and nearly 60% of the total investment.

The data were published Monday by Bloomberg New Energy Finance (BNEF) in its New Energy Outlook for 2016 and covers the world’s electricity generation system for the 25-year period between 2016 and 2040.

Lower prices for oil, natural gas and coal are expected to be significantly lower over the period than previously estimated, but those lower fuel costs are being offset by declines in the costs of wind and solar.

The outlook for carbon emissions is also mixed. Economic growth in China is slowing, and that means that China’s emissions will peak as soon as 2025. Rising coal-fired generation in India and other emerging Asian countries indicates that carbon emissions will reach 700 million metric tons in 2014, up 5% above 2015 levels. Despite the agreements signed in Paris last year and the expected move toward renewables, BNEF expects that carbon emissions from the power generation sector won’t peak for another 11 years.

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Here are some selected findings from the BNEF Outlook:

• Coal and natural gas costs drop 33% and 30%, respectively, cutting the cost of power generation using these fuels.
• Wind and solar levelized costs drop by 41% for onshore wind and 60% for solar PV.
• New capacity for coal-fired plants will attract $1.2 trillion in investments over the period, and new gas-fired plants will attract $892 billion.
• Renewables will get $7.8 trillion in investment over the period, with wind attracting $3.1 trillion, solar attracting $3.4 trillion and hydro attracting $911 billion.
• Renewables are forecast to generate 70% of European electricity by 2040, up from 32% in 2015.
• Renewable generation is expected to rise to 44% of total generation by 2040, up from 14% in 2015, while the portion of generation from natural gas falls from 33% in 2015 to 31% in 2040.

A Bloomberg economist who worked on the BNEF Outlook, Elena Giannakopoulou, said:

One conclusion that may surprise is that our forecast shows no golden age for gas, except in North America. As a global generation source, gas will be overtaken by renewables in 2027. It will be 2037 before renewables overtake coal.

An executive summary is available from Bloomberg’s website.

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