Further falls in costs due for solar, wind and batteries – BNEF

In its New Energy Outlook 2019 (NEO), BNEF sees these technologies ensuring that the power sector contributes its share toward keeping global temperatures from rising more than 2°C, at least until 2030.

According to the report, wind and solar will grow from 7% of generation today to 48% by 2050. Over the same time period, electricity demand is set to increase 62%, resulting in global generating capacity almost tripling between 2018 and 2050. This will attract around $13tn in new investment, of which wind will take $5tn and solar $4tn. In addition to the spending on new generating plants, $840bn will go to batteries and approximately $11tn to grid expansion.

The costs of solar, wind and battery technologies are set to fall, by ‘28%, 14% and 18% respectively for every doubling in global installed capacity,’ said Matthias Kimmel, NEO 2019 Lead Analyst.

By 2030, energy generated and stored from these technologies will ‘undercut electricity generated by existing coal and gas plants almost everywhere,’ he added. These cost reductions, says the report, may negate the need for direct subsidies for existing technologies in many countries.

The overall outlook on global emissions is mixed, though. On the one hand, the buildout of solar, wind and batteries will put the world on a path that is compatible with these objectives at least until 2030. However, the report asserts that a lot more will need to be done with technologies other than solar and wind power – such as nuclear, biogas, hydrogen and carbon capture and storage – beyond 2030 to keep the global temperature increases below 2°C.

Elena Giannakopoulou, Head of Energy Economics at BNEF, said: ‘To achieve this level of transition and decarbonisation, other policy changes will be required – namely, the reforming of power markets to ensure wind, solar, and batteries are remunerated properly for their contributions to the grid.’

BNEF’s NEO director, Seb Henbest added: ‘Governments need to do two separate things – one is to ensure their markets are friendly to the expansion of low-cost wind, solar and batteries; and the other is to back research and early deployment of these other technologies so that they can be harnessed at scale from the 2030s onwards.’