New BNEF Outlook Far More Bullish on Clean Energy Growth Through 2040 than EIA

Bloomberg New Energy Finance (BNEF) is out this morning with its New Energy Outlook 2017, and there’s a great deal to digest. Mostly, it’s great news for clean energy and for cleantech more broadly, as we’ll get into below.

But first, here’s a graphic from the U.S. Energy Information Administration (EIA)’s last International Energy Outlook, showing its latest forecast for the world power mix in 2040. According to EIA: “In the IEO2016 Reference case, the coal share of total generation declines from 40% in 2012 to 29% in 2040, even as world coal-fired generation increases by 25% through 2040. At the same time, the shares of total generation for both renewable energy sources and natural gas expand: from 22% in 2012 to 29% in 2040 for renewables and from 22% in 2012 to 28% in 2040 for natural gas.”

Let’s compare that forecast to BNEF’s new 2040 outlook. In short, BNEF is much more bullish on clean energy than EIA, with BNEF forecasting that “[w]ind and solar account for 48% of installed capacity and 34% of electricity generation world-wide by 2040.” Note that BNEF’s projected 34% share is for solar and wind only, not for “other renewables,” which as you can see from the graph below, are significant. Add those in and you’re around 50% for “renewables,” compared to EIA’s reference case projection of just 29% “renewables” (hydropower and what it calls “other renewables” – wind and solar, mostly) by 2040.

Given BNEF’s plummeting cost projections for clean energy — “By 2021 electricity from solar will be cheaper than coal in China, India, Mexico, UK & Brazil” and “Cost of electricity from onshore wind falls 47% by 2040, plunges 71% for offshore wind” —  we honestly wonder if even BNEF, let alone EIA (which has consistently been far too bearish on clean energy) is being too conservative in its forecasts for clean energy penetration by 2040.

Buttressing the case for an optimistic clean energy – and more broadly cleantech – outlook to 2040, here are a few tweets worth highlighting, courtesy of BNEF analyst Nathaniel Bullard:

  • “Solar & wind dominate future of electricity w/ 72% of $10.2tn spent on new power-gen to 2040”
  • “China & India lead in energy investment, accounting for 28% & 11% of global figures to 2040”
  • “By 2040, renewable energy reaches 74% penetration in Germany, 38% in the US, 55% in China, 49% in India”
  • “EVs will bolster electricity use while helping to balance the grid, thx to flexible charging”
  • “By 2040 rooftop PV will make up 24% of electricity in Australia, 20% in Brazil, 12% in Japan”
  • “Only 18% of planned new coal power plants will ever get built = 369GW stand to be cancelled”
  • “Gas will be mainly used as flexible tech to meet peaks & provide system stability, except in Americas”
  • “CO2 emissions from power-gen increase, peak in 2026, then fall – still not enough for 2C goal”
  • “Solar will be cheaper than coal in China in four years”
  • “In the U.S., [solar] is _already_ cheaper than coal-fired power”

“By 2040, wind and solar are 34% of all power generation”

  • “Solar costs just keep on dropping too. -50% in sub-Saharan Africa, -67% in U.S., -85% in Japan”
  • “Coal-fired power is in a steady, inexorable decline in the U.S. and Europe”
  • “Coal goes from 300GW+ capacity in U.S. to 100GW; ~190GW in Europe to ~50GW”
  • “Follow the money: it’s invested mostly in renewable energy generation from here on out”
  • “And there will be lots of energy storage – more of it in homes+business than in grid applications by 2027”

In sum, the future looks extremely bright for clean energy, and for cleantech more broadly. The question isn’t whether these sectors will grow rapidly, but simply how rapidly they’ll grow. On that, we’d argue that EIA is far too conservative (or pessimistic, if you prefer), while BNEF is quite possibly too conservative as well, although they appear to be much closer to the mark than EIA’s typically bearish-on-renewables, bullish-on-fossil-fuels forecasts.

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