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BNEF: Coal and gas to stay cheap

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The 2016 edition of BNEF's long-term forecast expects US$11.4 trillion investment in global power generation capacity over 25 yrs, with electric vehicles boosting electricity demand by 8% in 2040. Low prices for coal and gas are likely to continue.

The latest long-term forecast from Bloomberg New Energy Finance, the New Energy Outlook 2016, charts a significantly lower track for global coal, gas and oil prices than did the equivalent projection a year ago. It shows a steeper decline for wind and solar costs as well.

The forecast covers the 2016-40 period. Weaker GDP growth in China and a rebalancing of its economy is expected to peak in 2025. However, rising coal-fired generation in India and other Asian emerging markets indicate that the global emissions figure in 2040 will still be 5% above 2015 levels.

Seb Henbest, Head of Europe, Middle East and Africa for BNEF, and lead author of NEO 2016, commented: "Some US$7.8 trillion will be invested globally in renewables between 2016 and 2040, two thirds of the investment in all power generating capacity, but it would require trillions more to bring world emissions onto a track compatible with the United Nations 2°C climate target."

Highlights from NEO 2016:

  • Coal and gas prices to stay low. Bloomberg New Energy Finance has reduced its long-term forecasts for coal and gas prices by 33% and 30%.
  • Wind and solar costs to fall sharply with the levelised costs of generation per MWh for onshore wind falling 41% by 2040, and solar photovoltaics by 60%.
  • Investment in coal and gas generation will continue, predominantly in emerging economies. Some US$1.2 trillion will go into new coal-burning capacity, and US$892 billion into new gas-fired plants.
  • US$7.8 trillion will be invested in green power, with onshore and offshore wind attracting US$3.1 trillion, utility-scale, rooftop and other small-scale solar US$3.4 trillion, and hydro-electric US$911 billion.
  • The NEO 2016 states that the world would need to invest another US$5.3 trillion in zero-carbon power by 2040 to prevent CO2 in the atmosphere rising above the Intergovernmental Panel on Climate Change's 'safe' limit of 450 ppm.
  • Electric car boom supports electricity demand. EVs will add 8% to global electricity demand in 2040.
  • Small-scale battery storage, a US$250 billion market. EVs will drive down the cost of lithium-ion batteries, making them increasingly deployed alongside residential and commercial solar systems. Total behind-the-meter storage will rise dramatically from 400MWh now to nearly 760GWh in 2040.
  • China coal-fired generation will follow weaker trend than previously projected. Changes in the Chinese economy, and a move to renewables, mean that coal-fired generation there in 10 years' time will be 1,000TWh, or 21% below, the figure predicted in BNEF in last year's NEO.
  • That makes India the key to the future global emissions trend. Its electricity demand is forecast to grow 3.8 times between 2016 and 2040. Despite investing US$611 billion in renewables in the next 24 years, and US$115 billion in nuclear, it will continue to rely heavily on coal power stations to meet rising demand. This is forecast to result in a trebling of its annual power sector emissions by 2040.
  • Renewables to dominate in Europe, to overtake gas in the US. Wind, solar, hydro and other renewable energy plants will generate 70% of Europe's power in 2040, up from 32% in 2015. In the US, their share will jump from 14% in 2015 to 44% in 2040, as that from gas slips from 33% to 31%.
Edited from press release by

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