A multi-trillion dollar investment surge in solar is set to play a central role in a “seismic” shift in the global electricity system between now and 2040, according to Bloomberg New Energy Finance.
BNEF’s ‘New Energy Outlook 2015’ identifies PV’s falling costs and growing adoption by homeowners and businesses as a distributed generation source as two of the five dominant trends that will shape the global power system over the next 25 years.
Overall, BNEF foresees a US$3.7 trillion investment boom in solar at all scales as further declines in the cost of PV technology propel it forward.
Of this BNEF estimates some US$2.2 trillion will be channelled into distributed PV systems as consumers seize the opportunity to generate their own power, in combination with battery storage systems.
According to BNEF, a proliferation in small-scale solar systems will result in the capacity of rooftop, local and building-integrated PV growing 17-fold from 104GW in 2014 to nearly 1.8TW in 2040. Behind this massive growth BNEF said would be a 47% “crash” in the per-megawatt cost of solar projects, a consequence of increasing cell conversion efficiencies, a shift to news materials and streamlined production costs.
Another key driver in the growth of solar and other renewables will be the increasingly important role of emerging economies. According to BNEF’s analysis, of the projected US$12.2 trillion that will be invested in global power generation over the next 25 years, some 78% of that will come from “power-hungry” emerging markets, and of this around two-thirds will be from renewable sources.
Jenny Chase, chief solar analyst at Bloomberg New Energy Finance, said: "Up to now, small-scale solar investment has been dominated by wealthy countries such as Germany, the US and Japan. By 2040, developing economies will have spent US$1 trillion on small PV systems, in many cases bringing electricity for the first time to remote villages."
Larger-scale PV also has a strong role in BNEF’s forecast scenario, increasing 24-fold to 1.9TW by 2040. Alongside this the deployment of so-called “flexible capacity” – ways of balancing variable renewable resources, such as battery storage – will also grow strongly, reaching 858GW by 2040, a 17-fold increase.
But the report also foresees a continuing role for coal in world power, with sufficient investment in coal-fired capacity in developing countries to ensure CO2 levels keep on rising to 2029.
Michael Liebreich, chairman of the advisory board at Bloomberg New Energy Finance, said: "NEO 2015 draws together all of BNEF’s best data and information on energy costs, policy, technology and finance. It shows that we will see tremendous progress towards a decarbonised power system.
“However, it also shows that despite this, coal will continue to play a big part in world power, with emissions continuing to rise for another decade and a half, unless further radical policy action is taken."
Seb Henbest, BNEF’s head of Europe, Middle East and Africa and lead author of the report, added: "The CO2 content of the atmosphere is on course to exceed 450 parts per million by 2035 even if emissions stay constant, so the trend we show of rising emissions to 2029 makes it very unlikely that the world will be able to limit temperature increases to less than two degrees Centigrade.
"The message for international negotiators preparing for the Paris climate change conference in December is that current policy settings – even combined with the vast strides renewables are making on competitiveness – will not be enough. Further policy action on emissions will be needed."