LONDON — Improvements in cost-competitiveness mean that renewable energy will account for between 69 percent and 74 percent of new global power capacity added by 2030, new research by Bloomberg New Energy Finance shows.
This latest forecast comes despite difficult market conditions and suggests that annual investment in new renewables is set to rise by a factor of between two and four or more by then. Indeed, according to Bloomberg, the most likely scenario will see investment jump by 230 percent, to US$630 billion per year by 2030, driven by further improvements in the economics of wind and solar, as well as an increase in the roll-out of despatchable renewable resources like hydro, geothermal and biomass.
In this latest analysis their most likely outcome projects a total installed renewable energy capacity that is 25 percent higher than in the previous forecast, at 3500 GW. Under the two other scenarios’ investment also increases for renewables, though it could reach anywhere between $470-$880 billion by 2030. In terms of electricity production, overall the share of renewables will increase from 22 percent in 2012 to 37 percent in 2030, the report finds.
Guy Turner, head of economics and commodities for BNEF noted that renewable technologies will form the anchor of new generating capacity additions, saying: “The main driver for future growth of the renewable sector over this timeframe is a shift from policy support to falling costs and natural demand.”
The new BNEF analysis joins recent five-year forecasts from bodies such as the Global Wind Energy Council and the European Photovoltaic Industry Association (GWEC and EPIA), which largely echo the longer-term findings but are rather more pessimistic in the shorter term.
For example, in its outlook to 2017, GWEC has downgraded from its advanced to its moderate scenario but remains ultimately bullish on wind, predicting that worldwide installed capacity will pass 500 GW by 2017. For the second year running, BTM Consult ApS also predicts a reduction in market value for the next five years. And it too has downgraded its wind market outlook in the short term, though remains optimistic. EPIA reports a similar scenario for solar PV.
What these various forecasts reveal is that despite the on-going economic challenges there is a place for renewable energy at the table and its share of the market is one which will certainly grow over time, backed by policy initiatives based on their environmental performance, their ease of use and their improving economics.
Michael Liebreich, BNEF chief executive neatly summarises, explaining that while the news today is dominated by stories of pain caused by supply side overcapacity and cheap shale gas, this is playing out against the falling costs of renewable energy and of the various technologies required to integrate it into the existing energy system. Most tellingly he says, “…and falling costs win.” That’s a safe bet.
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