In Climate clippings 175, Item 4, I made reference to the Bloomberg New energy outlook, 2016 report which identifies eight “massive” shifts coming soon to power markets. In this post I’d like to take a closer look.
The summary sentence tells us that “coal and gas will begin their terminal decline in less than a decade”. Frequently the title of an article and the summary lead-in sentence are not written by the authors. In this case the “terminal decline” of coal and gas is more than a little misleading.
They do say that demand for coal and gas is peaking ahead of schedule because electric cars and affordable battery storage for renewable power are arriving faster than expected, as are changes in China’s energy mix. But what does this actually mean as the scenario is played out? We’ll look briefly at each shift they nominate.
1. There will be no golden age of gas
Gas has decimated the US coal market, but on a global scale the costs of wind and solar power are falling too quickly for gas ever to dominate. This is how they see the market working out:
The peak comes in 2025, but then coal and gas plateau rather than decline.
2. Renewables attract $7.8 trillion
The lifetime cost of wind and solar is already less than the cost of building new fossil fuel plants in many regions.
Investment in new capacity will be $7.8 trillion in renewables, including $3.4 trillion for solar and $3.1 trillion for wind, plus $911 billion for hydro power. New gas and coal will attract $2.1 trillion through 2040. Here’s the graph:
The pink bits at the top are batteries and other flexible capacity. They say that by 2028, batteries will be as ubiquitous as rooftop solar is today.
To me it does not seem enough, and I suspect that gas delivered through the grid may play a bigger role than some expect.
Old coal and gas retired will be matched by new, it seems.
3. Electric cars rescue power markets
Electric cars are becoming mainstream and are on the verge of disrupting oil markets. However, they will require power, also at night, constituting additional demand for electricity.
4. Batteries join the grid
- The scale-up of electric cars increases demand for renewable energy and drives down the cost of batteries. And as those costs fall, batteries can increasingly be used to store solar power.
5. Solar and wind prices plummet
For every doubling in the world’s solar panels, costs fall by 26 percent:
Wind-power prices are also falling too — 19 percent for every doubling.
6. Capacity factors go wild
The wind doesn’t blow full blast all the time. Averaged over a year a wind turbine might yield 30% of maximum capacity. However, with better design some wind farms in Texas are now achieving capacity factors of 50%.
Wind and solar once built are free at the margin, so they are being preferred to gas and coal when available.
- As natural gas and coal plants are increasingly idled in favor of renewables, their capacity factors will take a big hit, and lifetime cost of those plants goes up. Think of them as the expensive back-up power for cheap renewables.
7. A new polluter to worry about
China looks as though it may reach peak emissions soon. However India represents an emerging threat:
Frankly, the China graph looks optimistic.
Here are the top 10 emitters:
In per capita terms India is by far the lowest. Yet if they stay on course they’ll cook the planet.
Update: Here’s the per capita emissions of the top ten:
8. The transformation continues
The transformation of the energy markets continues to surprise, but as the matter stands we are going nowhere:
Which is better than we had been doing. Bloomberg estimates that we need another $5.3 trillion to limit warming to two degrees, which as you know is folly.