June 17, 2016: The solar industry worldwide is expected to grow significantly and attract huge investments, much more than fossil fuels, in the next few decades, according to an estimation from Bloomberg New Energy Finance (BNEF).
It is likely that around $7.8 trillion will be invested into the renewable energy industry by 2040 which is more than double the $3.2 trillion that the industry specialists expect.
More astounding is the fact that all renewable energy technologies are likely to gain as much or more investment dollars as compared to the whole fossil fuel industry. For instance, it is likely that around $3.1 trillion will be invested in onshore and offshore wind, while $3.4 trillion will be invested in rooftop and utility-scale solar, more money than the entire oil wells, natural gas wells and coal mines. Solar and wind arrest 64% the 8.6 terawatts of new power capacity likely to be installed within the coming next 25 years.
BNEF has forecasted a rise in the production of electricity from fossil fuels by 2025, a tipping point after which the industry goes into demur. Solar and wind are likely to become too cheap for coal and gas.
Renewable energy to be cheaper than ever
Whilst solar and wind are already able to vie with coal-fired power plants on cost, by the middle of the next decade renewable energy will be cheaper than even the present coal-fired power and gas plants.
Solar and wind, as technologies, view costs turn down the more they are deployed. Fossil fuels, as natural resources, do not benefit from the same price structures. It is certain that companies can squeeze extraction practices, nevertheless natural resources undergo upward cost pressure the more they are extracted and consumed.
Seb Henbest, the lead author of the BNEF report said that the future can’t be fought as the economics are more and more locked in. By 2030, solar and wind are likely to become the cheapest source of electricity across the globe, added Henbest.
$7.8 trillion investments likely in global solar industry by 2040
BNEF predicts a stable rise in renewable energy across the world. By 2040, renewable energies will account for 70% of electricity generation in Europe. On the other hand, the US will lag a bit behind. However, renewable will rise from 14% in 2015 to 44% in 2040.
More interestingly China is also shifting rapidly to renewables. By 2040, 73% of the new electricity faculty additions are likely to be renewable. Coal capacity in China will increase in 2020 and then begin to decline.
Internationally, 60% of electricity generation is likely to come from zero-emissions sources in 2040. Whilst the precise market share figures are clearly moving targets, the direction, in any case, is very obvious.
Shift to greener energy
The shift to greener energy in the electric power segment is already in progress, however, for transportation segment, the changeover will be slower. Nonetheless, the end outcome is the same: EVs will gradually take up market share at the expenditure of oil.
This shift from fossil fuels to clean energy will lead to a dark future for companies who are into oil, gas and coal production. As demand rises and slows down, costs will never come back, chiefly for coal. Short-term price bumps are likely, but the tendency over the next numerous decades is clear – flat or deteriorating demand will result in an excess in supply, keeping prices depressed.
In the end, the above figures only take into deliberation today’s policies. And remarkably, the shift towards clean energy under the BNEF projection will still lead to a world that falls diminutive of the 2-degree celsius weather objective that the global community is hoping to stay under. This means that more weather policies are likely over time, which will only increase the shift away from fossil fuels.